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Economic Reportof the PresidentTransmitted to the CongressFebruary 1994TOGETHER WITHTHE ANNUAL REPORTOF THECOUNCIL OF ECONOMIC ADVISERSUNITED STATES GOVERNMENT PRINTING OFFICEWASHINGTON : 1994For sale by the U.S. Government Printing OfficeSuperintendent of Documents, Mail Stop: SSOP, Washington, DC 20402-9328ISBN 0-16-043028-3

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ECONOMIC REPORTOF THE PRESIDENT

Economic Report of the PresidentTo the Speaker of the House of Representatives and the Presidentof the Senate:America has always thrived on change. We have used the opportunitiesit creates to renew ourselves and build our prosperity. Butfor too long and in too many ways, our Nation has been drifting.For the last 30 years, family life in America has been breakingdown. For the last 20 years, the real compensation of workingAmericans has grown at a disappointing rate. For 12 years a policyof trickle-down economics built a false prosperity on a mountain ofFederal debt. As a result of our national drift, far too many Americanfamilies, even those with two working parents, no longerdream the American dream of a better life for their children.In 1992, the American people demanded change. A year ago, Isought your support for a comprehensive short-term and long-termstrategy to restore the promise of our country's economic future.You responded, and together we replaced drift and gridlock withrenewal and reform. Together we have taken the first necessarysteps to restore growth in the living standards of all Americans.We have created a sound macroeconomic environment andstrengthened the foundations of future economic growth. As a resultof our efforts, the economy is now on a path of rising output,increasing employment, and falling deficits.Establishing the Fiscal Conditions for Sustained GrowthFor more than a decade, the Federal Government has been livingwell beyond its means—spending much more than it has taken in,and borrowing the difference. The resulting deficits have beenhuge, both in sheer magnitude and as a percentage of the Nation'soutput. Since 1981 the Federal debt has been growing faster thanthe economy, reversing the trend of the previous three decades. Asa consequence of this binge of deficit financing, Federal budgetdeficits have been gobbling up an inordinate share of the Nation'ssavings, driving up real long-term interest rates, discouraging privateinvestment, and impeding long-run private sector growth.On August 10, 1993, I signed the historic budget plan that youpassed several days earlier. It will reduce Federal deficits by morethan $500 billion. The plan is a balanced package of cuts in spendingand increases in revenues. The spending cuts are specific, farreaching,and genuine. They will reduce discretionary spending byover 12 percent in real terms in 5 years. The plan increases income

tax rates for only the top 1.2 percent of taxpayers, the group ofAmericans who gained the most during the 1980s and are mostable to pay higher taxes to help reduce the deficit. At the sametime, a broad expansion of the earned income tax credit will helpmake work pay for up to 15 million American families. Nine outof ten small businesses will benefit from more-generous tax breaksthat will help them invest and grow. And new, targeted capitalgains tax relief will encourage investment in new small businesses.Our deficit reduction plan has been the principal factor in thedramatic decline in long-term interest rates since my election inNovember 1992. Lower interest rates, in turn, have sparked an investment-driveneconomic expansion that has created more privatesector jobs during the last year than were created during the previousfour. The fact that investment is leading the recovery is goodnews for living standards, because investment is the key to productivitygrowth and hence to growth in real incomes for all Americans.Investing in Our Nation's FutureLaying the macroeconomic groundwork for sustained growth isthe government's first responsibility, but not its only responsibility.Government also has a vital role to play in providing some of thecritical raw materials for economic growth: science and technology,an educated and well-trained work force, and public infrastructure.For much too long we have underinvested in these areas, in comparisonboth with our global competitors and with our own economichistory. Our overall budget deficit has masked another,equally disturbing deficit—a deficit in the kinds of public investmentsthat lay the foundations for private sector prosperity.Like private investments, well-chosen public investments raisefuture living standards. As a consequence, deficit reduction at theexpense of public investment has been and will continue to be selfdefeating.That is why our budget package increases much-neededpublic investment even as it takes steps to reduce the budget deficit.One without the other will not work.With the help of the Congress, our public investment initiativesin the areas of technology, infrastructure, the environment, andeducation and training received about 70 percent of the funding werequested in fiscal year 1994. We increased funding for such provensuccesses as Head Start and the WIC program in the human resourcesarea, and the Advanced Technology Program of the NationalInstitute of Standards and Technology in the area of technologicalresearch. We also launched a number of new initiatives, includingthe National Service program, a new program ofempowerment zones and enterprise communities for urban andrural development, and several new technology programs, including

the Technology Reinvestment Project, designed to help defense contractorsretool to serve civilian markets. We increased funding forresearch into new environmental technologies. In addition, we developeda comprehensive, cost-effective Climate Change ActionPlan, comprising nearly 50 initiatives to reduce U.S. greenhousegas emissions to 1990 levels by the year 2000.As these examples bear witness, we have made significantprogress on our investment agenda, but much more remains to bedone. We will have to work together to find room to fund essentialnew investments even as we reduce real government outlays tomeet tight annual caps on discretionary spending. This will not beeasy. But it is essential, for we face a dual challenge—we must fundamentallychange the composition of discretionary spending evenas we reduce it in real terms.This year my Administration is requesting funding for severalnew investment initiatives. Our Goals 2000 proposal will encouragelocal innovation in and accelerate the pace of school reform. It willlink world-class academic and occupational standards to grassrootseducation reforms all across America. Our School-to-Work initiativewill provide opportunities for post-secondary training for those notgoing on to college. Our reemployment and training program willstreamline today's patchwork of training programs and make thema source of new skills for people who lose their jobs. Finally, ourproposed welfare reform will provide the support, job training, andchild care necessary to move people off welfare after 2 years. Thatis the only way we will make welfare what it ought to be: a secondchance, not a way of life.Reforming Our Health Care SystemThis year we will also make history by reforming the Nation'shealth care system. We face a health care crisis that demands a solution,both for the health of our citizens and for the health of oureconomy over the long run. The United States today spends moreon health care relative to the size of its economy than any otheradvanced industrial country. Yet we insure a smaller fraction ofour population, and we rank poorly on important overall health indicatorssuch as life expectancy and infant mortality. Over 15 percentof Americans—nearly 39 million people—were uninsuredthroughout 1992. And tens of millions more have inadequate insuranceor risk becoming uninsured should they lose their jobs. Meanwhilehealth care costs continue to climb, increasing premiums andmedical bills for American families and aggravating budget crisesat all levels of government. Both the Office of Management andBudget and the Congressional Budget Office have concluded thatunless the system is reformed, rising health care costs will begin

ationalized our export promotion activities to help our producers,workers, and farmers increase their sales around the world.Improving the Efficiency of GovernmentMy Administration is committed to improving the Federal government'sefficiency across the board. The National PerformanceReview (NPR), completed under the bold leadership of Vice PresidentGore, provides a road map for what must be done. The NPR'sreport shows how substantial budgetary savings can be realized bymaking existing programs more efficient and cutting those that areno longer necessary. As a result of our efforts to reinvent how thegovernment performs, we will reduce the Federal bureaucracy by252,000 positions, bringing it down to the lowest level in decades.My Administration is also committed to reducing the burden ofgovernment regulations by improving the regulatory review process.My Executive Order on Regulatory Planning and Review requiresthat all new regulations carefully balance costs and benefits,that only those regulations whose benefits exceed their costs beadopted, and that in each case the most cost-effective regulationsbe chosen.This year we will also work with the Congress to develop thenew regulatory framework required to encourage the developmentof the national information superhighway. We must cooperate withthe private sector to connect every classroom, every library, andevery hospital in America to this highway by the year 2000. Rapidaccess to the most advanced information available will increaseproductivity and living standards, help to educate our children, andhelp health providers improve medical care for our citizens.The Economic OutlookAn economic strategy built on long-run investments will not bearfruit overnight. But there are already signs that our policy initiativesare beginning to pay off. Prospects for sustained economic expansionlook far brighter now than they did a year ago, when myAdministration first asked for your support. Growth of real grossdomestic product increased steadily over the course of 1993, andthe economic expansion has continued into 1994. Consumer spendingshould remain healthy because of continued gains in employmentand output, and investment spending should remain strongbecause of low long-term interest rates and increasing levels of demand.Low interest rates will also continue to support the recentexpansion in residential construction. The Administration forecaststhat the economy will grow at 3 percent in 1994 and will remainon track to create 8 million jobs over 4 years.As 1994 begins, our economy is strong and growing stronger.With continued deficit reduction, more public investment, a re-

formed health care system, increased exports, and a reinventedgovernment, we can create the foundations for an even more prosperousAmerica.THE WHITE HOUSEFEBRUARY 14, 19948

LETTER OF TRANSMITTALCOUNCIL OF ECONOMIC ADVISERS,Washington, D.C., February 4, 1994.MR. PRESIDENT:The Council of Economic Advisers herewith submits its 1993 AnnualReport in accordance with the provisions of the EmploymentAct of 1946 as amended by the Full Employment and BalancedGrowth Act of 1978.Sincerely,Laura D'Andrea TysonChairAlan S. BlinderMemberJoseph E. StiglitzMember11

CONTENTSPageCHAPTER 1. A STRATEGY FOR GROWTH AND CHANGE 21The Legacy of the Recent Past 22Inadequate Recovery from Recession 22Inadequate Productivity Growth 23Worsening Income Inequality 25Large Deficits, Mounting Debt 26Inadequate Public Investment 29Prosperity and Growth: The Benefits of EconomicChange 30Reducing the Deficit to Promote Capital Formation 31Investing in People 39Investing in Public Infrastructure 41Investing in Technology 43Trade Policy and Living Standards 45Health Care Reform 48Summary: Prosperity and Change 49Creating Opportunity 50Summary 53CHAPTER 2. THE U.S. ECONOMY IN 1993 AND BEYOND 55Struggling to Grow 56The End of the Cold War 56Weak Foreign Economies 57The Debt Workout 59Oversupply of Commercial Buildings 61Credit Crunch 63Corporate Downsizings 63The Headwinds Are Mostly Calming 64Overview of the Economy in 1993 64Consumption Expenditures 65Business Fixed Investment 66Inventories 66Residential Investment 68Net Exports 68Employment and Productivity 68Incomes 69Inflation 69Monetary Policy 70Fiscal Policies and the Timing of Output 7013

PageThe Federal Government's Fiscal Stance 75Industrial and Regional Disparities 76Deficit Reduction and the Real Interest Rate 78How Deficit Reduction Reduces Long-Term InterestRates 81Short-Run Effects of Interest Rates 84Long-Term Effects of Deficit Reduction 85The Economy's Response to Higher Income Taxes 87Do Taxes Change Behavior? 88Do Higher Tax Rates Increase Tax Revenues? 89The Economic Outlook 90Risks to the Forecast 92Sources of Long-Run Growth 93Conclusion 95CHAPTER 3. TRENDS AND RECENT DEVELOPMENTS IN THE U.S.LABOR MARKET 97Employment Growth 98A Slow Recovery 99Sources of Job Growth 101Unemployment and Nonemployment 103Trends 103Is the Natural Rate of Unemployment Increasing? ... 110Direct Measures of the Natural Rate 112The Magnitude and Costs of Job Loss 114Slowing Wage Growth and Widening Inequality 115Slow Income Growth 115Growing Inequality 115Explaining Slow Wage Growth 117Explaining the Growth of Inequality 118Job Quality 121Hours of Work 121Job Stability 123Benefits 127Toward a Comprehensive Work Force Policy 128CHAPTER 4. Health Care Reform 131Universal Coverage and Health Security 133Insurance Market Reform 137Insuring Major Risks and Preexisting Conditions 137Community Rating 138Reducing Administrative Costs 139Creating a More Efficient Market and Containing Costs 140Explaining Cost Increases 144Who Pays for Health Care? 145Health Care and Government Budgets 149The Architecture of the Health Security Act 151Elements of Reform 15114

PageProviding Comprehensive Benefits 153Organizing the Insurance Market 154Paying for Insurance 155Providing Discounts 157Using Savings to Guarantee Health Security andReduce the Deficit 159Economic Effects of the Health Security Act 163Macroeconomic Effects 163Sectoral Effects 163Conclusion 167CHAPTER 5. MICROECONOMIC INITIATIVES TO PROMOTE EFFI-CIENCY AND PRODUCTIVITY 169Promoting Efficiency in the Public and Private Sectors ... 170Creating a More Effective Government 170Promoting Competition 173More Efficient Regulation of Natural Monopolies 175Addressing Environmental Externalities 179Managing Resources on Federal Lands 181Climate Change Action Plan 184Superfund Reauthorization: the Administration Position186Sustainable Development and Green Accounting 188Promoting Technology 189Principles of Technology Policy 190The Administration's Technology Initiatives 194Technology Policy, Growth, and Competitiveness 204CHAPTER 6. THE UNITED STATES IN THE WORLD ECONOMY 205Trends in U.S. Trade 206Trade, Jobs, and Wage Inequality 212The Administration's Trade Initiatives 214Domestic Initiatives: The National Export Strategy 214Bilateral Negotiations 215Regional Initiatives 225Multilateral Initiatives: The Uruguay Round 233The Trade Policy Agenda 238Trade and the Environment 238International Trade and Competition Policy 239Regionalism 240Foreign Exchange Market Developments 240The European Monetary System 243The European Currencies in Turmoil 244The Maastricht Treaty on Economic and MonetaryUnion 245Conclusions 24715

LIST OF CHARTSPage1-1 Growth of Real GDP in Recoveries 231-2 Real Income, Productivity, and Compensation 241-3 Shares of Total After-Tax Income by Income Category 25l-4a Federal Budget Deficits With and Without 1993 DeficitReduction Package 28l-4b Net Federal Debt as Percent of GDP 281-5 Federal Civilian Fixed Investment as Percent of GDP 301-6 Federal Deficits and Real Interest Rates 311-7 Correlation of Investment and Productivity 371-8 Ratio of Wages of College Graduates to Wages of HighSchool Graduates 401-9 Ratio of Public to Private Net Nonresidential CapitalStock 431-10 Projected Real Growth Rates of Principal FederalBudget Components 491-11 Shares of Wages and Benefits in Compensation 501-12 Earned Income Tax Credit for Families with Two orMore Children 522-1 Recovery Pattern of Nonfarm Payroll Employment 572-2 National Defense Purchases as Share of GDP 582-3 U.S. Merchandise Exports to Various Trading Partners602-4 U.S. Exports Implied by Industrial Country GDP 602-5 Households: Credit Market Debt as Percentage of DisposableIncome 622-6 Nonfinancial Corporate Business: Credit Market Debtas Percentage of Output 622-7 Defense Spending: Actual Versus Baseline 722-8 Effects of 1992 Tax Withholding Change on PersonalConsumption 732-9 Alternative Measures of the Stance of Fiscal Policy 762-10 772-11 772-12 Ten-Year Treasury Note Yields 792-13 Real Interest Rates 802-14 Federal Debt as Percent of Nominal GDP 822-15 Dynamic Effects of Deficit Reduction 862-16 Personal Income Taxes as a Share of GDP 903-1 Changes in Output and Payroll Employment in FirstEleven Quarters of Recovery 1003-2 Employment and Output in Recoveries 1013-3 Civilian Unemployment Rate 1053-4 Long-Term Unemployment as Share of TotalUnemployment 10617

LIST OF CHARTS—CONTINUEDPage3-5 Long-Term Unemployment and the UnemploymentRate 1063-6 Employment-to-Population Ratios of Women 1073-7 Unemployment Rates by Educational Attainment,March 1993 1083-8 Ratio of White-Collar to Blue-Collar UnemploymentRates 1093-9 Real Hourly Compensation and Wages 1163-10 Average Annual Growth of Mean Family Income byIncome Quintile 1173-11 Productivity Growth and Price Reductions, 1950-90 ... 1183-12 Average Weekly Hours of Production and NonsupervisoryWorkers 1223-13 Help Supply Industry Employment as Share of TotalEmployment 1243-14 Part-Time Employment: Total and Voluntary 1253-15 Reallocation of Employment Between Industries 1264-1 Distribution of Population by Source of Health InsuranceCoverage: 1991 1344-2 Sources of Payment for Health Care by Insurance Status:1994 Estimates 1354-3 Administrative Expenses of Commercial Insurers as aShare of Claims Paid 1404—4 Health Expenditure and Life Expectancy in IndustrialCountries 1414-5 Estimates of Inappropriate Care for Five CommonProcedures 1444-6 Sources of Health Care Financing as Percent of TotalExpenditures 1484-7 Government Spending on Health Care as Percent ofTotal Government Revenues 1504-8 Health Expenditures as Percent of GDP 1624-9 Business Spending on Health Insurance 1656-1 U.S. Trade as Share of Real Gross Domestic Product 2076-2 U.S. Exports of Goods and Services 2086-3 Nominal and Real Effective Dollar Exchange Rates 2416-4 Exchange Rates of the Dollar Against Selected Currencies2426-5 French Franc-Deutsche Mark Exchange Rates 246LIST OF BOXESPage1-1 The New Measure of Unemployment 221-2 Saving, Investment, and Current Account Deficits 2918

LIST OF BOXES—CONTINUEDPage1-3 Credible Deficit Reduction and Real Interest Rates 351-4 A Balanced Budget Amendment to the Constitution? .. 391-5 The National Service Program 421-6 How Does the Earned Income Tax Credit Work? 512-1 The Economic Effects of the Midwest Floods of 1993 672-2 The Economic Effects of Lower Oil Prices 712-3 Are Current Long-Term Interest Rates Sustainable? ... 812-4 Estimating the Long-Run Effects of Deficit Reduction 873-1 The New Current Population Survey 1043-2 Growing Inequality of Employment and Unemployment1163-3 Consequences of Productivity Growth 1193-4 Why Productivity Growth Does Not Cause Unemployment1204—1 Moral Hazard and Adverse Selection 1374-2 Recent Reductions in Health Care Inflation 1464-3 Capped Entitlements 1645-1 Selected National Performance Review Recommendations1725-2 Market Power 1745-3 Natural Monopoly 1765-4 Externalities 1806-1 U.S. Exports: More Than Peanuts 2096-2 The Case of the Polish Golf Carts 2246-3 Mexican Economic Reforms 2266-4 The Asian "Miracle" 2326-5 The Economic Impact of the Uruguay Round 2346-6 The Uruguay Round and U.S. Trade Laws 2376-7 Exchange-Rate Volatility and International Trade 2446-8 Criteria for Joining the Economic and MonetaryUnion 24719

CHAPTER 1A Strategy for Growth and ChangeON ELECTION DAY 1992, the American economy faced a numberof daunting challenges—both short term and long term. Theprincipal short-term problem was that recovery from the 1990-91recession had been disappointing in almost all respects. Real grossdomestic product (GDP) had grown at only a 2.2-percent annualrate from the first quarter of 1991 through the third quarter of1992, less than half the pace of a typical recovery. Payroll employmenthad actually fallen during the first year of recovery and hadrisen a scant 0.4 percent from March 1991 to October 1992. Furthermore,the seesaw pattern that had plagued the recovery raisedfears that the weak economy might relapse into recession.But America's long-run problems ran deeper and their causeswere less well understood. While U.S. workers and firms remainedthe world's most productive, our productivity growth had been sluggishfor almost two decades. In consequence, real hourly compensationand GDP per capita had advanced extremely slowly, and realmedian family income had barely increased at all. In addition, inequalityhad been rising for more than a decade, leaving the Americaneconomy with the most unequal distribution of income in itspostwar history. The combination of stagnant average incomes andwidening dispersion meant that many middle-class and low-incomefamilies had actually suffered declines in their real incomes.Finally, the Federal budget deficit was large and rising, the nationaldebt had been growing faster than GDP for about a decade,and huge amounts of foreign borrowing had transformed the UnitedStates from the world's biggest creditor nation into its biggestdebtor.National economic policy was the major cause of some of our economicdifficulties, such as the Federal budget deficit, but only acontributing factor to others, such as growing income inequality.Although the economic policy agenda of the new Administrationcannot cure all of these problems overnight, steps we have takenhave already contributed to noticeable progress on several fronts.The recovery has solidified. Job growth has resumed. Fiscal policiesthat will reduce the Federal deficit substantially have been put inplace. Although much more needs to be done, taxes have beenmade more progressive and starts have been made on educationand labor market policies that will address the inequality problem.21

And, perhaps most fundamentally of all, the Administration hasembarked on a comprehensive investment agenda designed to raiseproductivity, which is the wellspring of higher living standards inthe long run.This chapter explains the Administration's economic strategy andexamines some of the specific policy initiatives that have been undertakento pursue that strategy. The chapters that follow providemuch more detail.THE LEGACY OF THE RECENT PASTThe policies of any new Administration are dictated in part bythe challenges it faces and the problems it inherits from the past.Because America's current problems are both short run and longrun in nature, the solutions must be, too.INADEQUATE RECOVERY FROM RECESSIONShort-run cyclical problems are, almost by definition, transitory.But when the American macroeconomy performs poorly, that onefact seems to overwhelm all others and crowd out consideration oflonger run problems. In fact, the U.S. economy has been operatingwell below its productive capacity for years now. From 1989through 1992, real GDP grew only 1.5 percent per year, and thecivilian unemployment rate (by what was the standard measureuntil this year—Box 1-1) has remained above 6 percent since November1990. Under such circumstances, public concerns with economicpolicy tend to be summarized in a single word: jobs.Box 1-1 .—The New Measure of UnemploymentBeginning with its February 4 announcement of the January1994 unemployment rate, the Bureau of Labor Statistics haschanged its principal measure of joblessness* The changes, reflectingtechnical improvements in the household survey usedto estimate unemployment (Chapter 3 contains more details),are expected to increase the measured unemployment rate byabout 0.5 to 0.6 percentage point, although the precise amountis impossible to know. All unemployment numbers used in thisReport are measured on the old, traditional basis.As Chart 1-1 shows, the recovery that began in the second quarterof 1991 has been exceptionally slow by historical standards—so slow, in fact, that the unemployment rate was still rising morethan a year into the "recovery." Only in mid-1993 did unemploymentfall back to its rate at the recession trough. Growth has beennot only slow but extremely uneven, proceeding in fits and starts22

which have left consumers and business people wondering how longthe recovery would last.Chart 1 -1 Growth of Real GDP in RecoveriesReal GDP in the current recovery has grown at only about half the rate of thetypical post-World War II recovery.Percent change from trough141 2 3 4 5 6 7 8 9 10 11Quarters after TroughNote: "Average" includes all recoveries from 1954 to 1982, except 1980. The trough quarter for the currentrecovery is first quarter 1991.Sources: Department of Commerce and National Bureau of Economic Research.Thus the Administration's first task was to put the recovery ona sound footing—not to produce a short-run burst of activity, butto lay the groundwork for a sustained expansion that would restoreconfidence and encourage firms to resume hiring. In large measurethis task was accomplished in 1993. (Chapter 2 provides more details.)Sluggish economic growth in the first half of the year gaveway to solid growth in the second half. More important, job growthbegan in earnest: Employers added about 2 million jobs to nonfarmpayrolls between December 1992 and December 1993. As 1994began, the outlook for sustained expansion looked brighter than ithad in a long time.INADEQUATE PRODUCTIVITY GROWTHThe economy's longer run problems will not be dealt with soquickly. They require sustained attention over a long period oftime. Primary among them is the troubling fact that growth in productivityhas been anemic for about two decades.23

Chart 1-2 shows the remarkable slowdown in productivitygrowth that occurred around 1973—from an annual average of 3.1percent in the 1947-73 period to just 1.0 percent since 1973. Inpart, this slowdown is exaggerated by the fact that the first fewpostwar decades were aberrant: There was much catching up to doafter the Great Depression and the Second World War. But America'slong-run average productivity growth rate over the centuryleading up to 1973 was slightly above 2 percent per year; since1973 it has averaged about 1 percent. At 2-percent growth, productivitydoubles in 35 years; at 1-percent growth, doubling takes 70years. Even seemingly modest changes in productivity can havedramatic effects on living standards in the long run. Thus the Nationhas much at stake in improving its productivity growth rate.Chart 1-2 Real Income, Productivity, and CompensationProductivity, real income, and real hourly compensation all slowed markedly around 1973.1992 dollars40,000Index, 1959=10020030,000Real MedianFamily Income(left scale)17515020,00010,000Real Compensationper Hour 1(right scale)Outputper Hour(productivity) 1(right scale)12510075I I I I I I I I1947 1950 1953 1956 1959 1962 1965 1968 1971 1974 1977 1980 1983 1986 1989 19921 Business sector. Compensation deflated by implicit price deflator.Sources: Department of Commerce and Department of Labor.50Labor productivity—output per hour of work—may seem an abstractconcept, of more interest to analysts than to working menand women. But without productivity growth, higher real wageswould lead directly to lower employment as profit-oriented firms reactedto higher labor costs by trimming their work forces. It is onlysteady productivity gains that enable the economy to generatemore jobs and rising real wages at the same time. Chart 1-2 shows24

that growth in both real compensation per hour and real medianfamily income slowed markedly at just about the time that productivitygrowth slowed. This coincidence in time is, of course, no coincidenceat all. Productivity growth is the ultimate source of growingreal wages and family incomes.Nothing is more important to the long-run well-being of the U.S.economy than accelerating productivity growth. Most of the Administration'seconomic strategy is therefore devoted to that end.WORSENING INCOME INEQUALITYStarting some time in the late 1970s, income inequalities widenedalarmingly in America. Chart 1-3 shows that the share of theNation's income received by the richest 5 percent of American familiesrose from 18.6 percent in 1977 to 24.5 percent in 1990, whilethe share of the poorest 20 percent fell from 5.7 percent to 4.3 percent.Part of this change was due to the cuts in taxes and socialspending of the early 1980s, the net benefits of which were heavilyskewed toward the rich. But there was a much more powerful forceat work, one not attributable to fiscal policy: The distribution ofwage rates grew substantially more unequal. In real terms, wagesat the bottom of the distribution fell while wages at the top rose.Chart 1 -3 Shares of Total After-Tax Income by Income CategoryThe richest 5 percent of Americans saw their share of total income rise sharply in the 1980s,while the poorest 20 percent saw their share decline.Lowest QuintileTop 5 Percent1977 • 1990Source: Congressional Budget Office.25

The forces underlying this widening of the wage distribution arenot well understood. (More details are contained in Chapter 3.) Butthe facts are stark. Between 1979 and 1990, the real median incomeof males with 4 years of college fell about 1 percent, but thatof males with only 4 years of high school fell a stunning 21 percent,and high school dropouts fared even worse. A similar patternemerges almost any way one slices the data: Wages near the topof the distribution rose faster than wages near the bottom. Salariesof chief executive officers rose rapidly while the minimum wage fellin real terms. Wages of skilled workers rose faster than those ofthe unskilled. Wages of experienced workers grew faster thanentry-level wages.The widening dispersion of wages accounts for most of thesqueeze on the middle class, because the middle 60 percent of theincome distribution derives about three-quarters of its income fromwages and salaries. And these people do not bring home the highestwages, but those nearer the middle. When middle-class wagesstagnate, middle-class family incomes do, too. That is preciselywhat happened in the 1980s.In sum, for whatever reasons, in the late 1970s our market economybegan to dish out more-handsome rewards to the well-off andstingier ones to the middle class. Government policies compoundedthe problem by weakening the social safety net, lowering the taxburdens of the wealthy, and driving up real interest rates. In concert,the market and the government produced the greatestdisequalization of incomes since at least before World War II.This Administration sees the combination of stagnating averageincomes and rising inequality as a threat to the social fabric thathas long bound Americans together and made ours a society withminimal class distinctions. Although the underlying forces of themarket are vastly more powerful than anything the governmentcan do, the right kinds of policies can make a difference. For example,changes in Federal tax policy have already shifted the burdenof taxation away from the working poor and toward the well-to-do.And several initiatives in the human investment arena, describedlater in this chapter and in Chapter 3, should help mitigate risingwage inequality.LARGE DEFICITS, MOUNTING DEBTOf all the Nation's economic problems, the one most directlytraceable to government policy is the large Federal budget deficit.Although the Federal budget has been in deficit almost every yearof the postwar period, until the 1980s these deficits were smallenough that the ratio of public debt to GDP was stable or falling.In fact, the structural budget (that is, the one that would result ifthe economy were at a high level of employment) after adjustment26

for inflation was on average roughly balanced for decades (Table 1-1). This approximate balance was not achieved by any formal, legalrequirement, but rather through an informal, unstated politicalconsensus.TABLE 1-1.—Structural Budget Deficit as Percent of GDPFiscal yearsAdjusted deficit as percentof GDPi1959-19821983-19931994-1998 (forecast)1 Adjusted deficit is unified structural budget deficit corrected for depreciation of the value of Federal debt due to inflation.Sources: Office of Management and Budget, Congressional Budget Office, and Council of Economic Advisers.The budget picture changed dramatically with the tax cuts of theearly 1980s, and the structural, inflation-adjusted budget began todisplay chronic, large deficits for the first time. The deficit in fiscal1992, the last year before the election of President Clinton, was awhopping $290 billion in the unified budget and $131 billion on astructural, inflation-adjusted basis. Worse yet, both the deficit andthe debt-GDP ratio were expected to rise further (Charts l-4a andDeficits of this magnitude—around 5 percent of GDP—wouldhave been far less worrisome if American households were savingenough to cover both the government budget deficit and the needsof business to finance investment. But, in fact, American householdsaving rates not only are among the lowest in the world, but actuallyfell in the 1980s. So for both of these reasons—declining householdsaving and rising budget deficits—national saving as a shareof GDP dropped sharply in the 1980s.Casual discussions often equate national saving with domesticinvestment, but the two can differ in an open economy (Box 1-2).And in the United States of the 1980s, they differed dramatically.While national saving was falling as a share of GDP, the share ofdomestic investment, although low by international standards, wasroughly constant. To plug the gap between saving and investment,the United States had to import massive amounts of foreign capital.In consequence, our current account balance went from asmall surplus to a large deficit in the 1980s.All this foreign capital had its positive side: By limiting the riseof real U.S. interest rates, it partly shielded investment from theconsequences of huge Federal deficits. But it left the United Statesthe greatest debtor nation in the world. Even more disturbing, allthis borrowing from abroad went to maintaining the Nation's comparativelymeager investment rate, not to increasing it.-0.11.9.827

Chart 1-4a Federal Budget Deficits With and Without 1993 Deficit Reduction PackageBudget deficits will now reverse course. Deficits would have kept risingwithout the reduction package.Billions of dollars350300 -250Without DeficitReduction Package200150100With DeficitReduction Package50_L _L _L _L J_1980 1982 1984 1986 1988 1990 1992Fiscal YearsNote: Data exclude health care reform. Projected for fiscal years 1994-98.Source: Office of Management and Budget.1994 1996 1998Chart 1 -4b Net Federal Debt as Percent of GDPFederal indebtedness as a percent of GDP is expected to plateau after fiscal 1994under OBRA93, instead of rising as estimated without deficit reduction.Percent504030_^ — ^Without DeficitReduction Package-1----*""tWith DeficitReduction Package2010-nI I I I I I I i i1980 1982 1984 1986 1988 1990 1992 1994 1996 1998Fiscal YearsNote: Net federal debt defined as debt held by the public less debt held by the Federal Reserve. Data excludehealth care reform. Projected for fiscal years 1994-98.Sources: Council of Economic Advisers and Office of Management and Budget.28

Box 1-2.—Saving, Investment, and Current Account DeficitsPrivate saving, whether generated by households or by businesses,can be used for one of three purposes: to finance domesticprivate investment, to purchase debt issued by the government,or to purchase foreign assets. If private saving is insufficientto cover the sum of the first two uses—private investmentand the combined deficit of all levels of government—we must borrow the difference from abroad. Such a shortageof saving has characterized the United States for about a decadenow.When Americans borrow from foreigners, we run a surplusin our international capital account. But, since the capital accountand the current account must balance under floating exchangerates, the mirror image of this capital account surplusis an equally large current account deficit. Thus, a country thatsaves less than it invests and runs a large budget deficit isbound to have a large current account deficit. Indeed, chronic,large current account deficits date from precisely the time thatthe United States started running huge fiscal deficits. Between1981 and 1984 the overall government budget deficit rose from1.0 percent of GDP to 2.9 percent. During those same years thecurrent account balance went from a surplus of 0.2 percent ofGDP to a deficit of 2.6 percent of GDP.The legacy of foreign debt was not the only cost of our addictionto foreign borrowing. To attract the needed capital to Americanshores, the United States had to offer interest rates higher thanthose prevailing in the other leading industrialized countries. Thisgap between U.S. and foreign interest rates, in turn, led to a sharpappreciation of the dollar, as foreign investors demanded more dollar-denominatedassets. The sky-high dollar made life exceedinglypleasant for American tourists in Europe in the mid-1980s. But ithandicapped portions of American industry by making many U.S.manufactured goods uncompetitive on world markets. It has takenyears for our manufacturing sector to recover from this shock.INADEQUATE PUBLIC INVESTMENTThe budget deficit and the trade deficit were major national concernsin the 1980s and on into the 1990s. But there was also athird deficit: a shortage of funds for public investment in criticalnational needs like education and training, transportation facilities,and environmental infrastructure.The share of Federal civilian fixed investment in GDP is onlyabout half what it was in the 1960s (Chart 1-5). Furthermore, theshare of the Federal budget devoted to all types of public invest-151-444 0 - 9 4 - 229

ment—including education and research and development, as wellas civilian and military fixed investment—fell from 35 percent in1963 to 17 percent in 1992. As the 1990s started, more and moreAmericans were becoming painfully aware that our public investmentwas not what it should be.Chart 1-5 Federal Civilian Fixed Investment as Percent of GDPRelative to GDP, the Federal government invested little more than half as muchin nonmilitary infrastructure in the 1980s as it had in the 1960s.1960 1964 1968 1972 1976 1980 1984 1988 1992Note: Includes Federal nonmilitary, nonresidential, fixed capital investment.Source: Department of Commerce.PROSPERITY AND GROWTH: THE BENEFITS OFECONOMIC CHANGEThe economic strategy of this Administration follows logicallyfrom this legacy. We must secure the expansion and spur long-termeconomic growth. We must reverse the trend toward rising inequality.We must reduce Federal borrowing and shrink the trade deficit.We must invest more in both private and public capital. Andwe must bolster our human resources.While the Administration's economic policy agenda is broad andvaried, it can be summarized in a single word: investment—investmentin private capital, investment in people, investment in publicinfrastructure, investment in technology, and investment in environmentalpreservation. Six major themes stand out and define theessence of the Administration's economic strategy: deficit reduction;30

investments in human capital; investments in public infrastructure;investments in technology; expanding international trade; andhealth care reform.REDUCING THE DEFICIT TO PROMOTE CAPITALFORMATIONThe legacy of large and growing Federal budget deficits requiredthat first attention be devoted to their reduction, so as to free upresources for expansion of private physical capital—the machines,factories, and offices that make American labor more productive.For too long, Federal budget deficits have been gobbling up an inordinateshare of the Nation's saving, thereby keeping real interestrates too high (Chart 1-6) and leaving the Nation with a Hobson'schoice between lower domestic investment and higher foreign borrowing.Reducing the budget deficit was a necessary part of clearingaway the financial underbrush that had grown up around usin the 1980s—so that economic growth could be put on a sounderand more sustained footing.Chart 1 -6 Federal Deficits and Real Interest RatesInterest rates adjusted for inflation rose and fell sharply in the 1980s, in tandem withthe sharp increase and subsequent decrease in the Federal budget deficit.Percent8Real Yield on 10-YearTreasury Securities(right scale)Percent12Deficit asPercent of GDP(left scale)J1955 1958 1961 1964 1967 1970 1973 1976 1979 1982 1985 1988 1991Note: Real rates are nominal rates minus 10-year forecast of inflation.Sources: Council of Economic Advisers, Department of Commerce, and Department of the Treasury.Deficit reduction is difficult and painful. But the President concludedthat the Nation could not remain on the path bequeathed31

us by the previous Administration—a path on which the nationaldebt was growing faster than GDP and deficits were threateningto explode (Chart 1-4). So he gave first priority to putting the Nation'sfiscal house back in order.Policy changes in the President's deficit reduction package willgradually reduce the Federal deficit after 5 years by 1% percentof GDP. By fiscal 1998, the last year of the program, the deficit isexpected to be $146 billion below what it otherwise would havebeen: falling from $333 billion to $187 billion (Table 1-2). The ratioof debt to GDP at the end of fiscal 1998 falls from a projected 51percent without the deficit reduction program to 46 percent with it.TABLE 1-2.—EffectofOBRA93 on Fiscal 1998 Budget[Billions of dollars]Item Before OBRA93 After 0BRA93 ChangeOutlaysDiscretionary .MandatoryDebt service ..RevenueDeficitNote.—Data exclude health reform.Source: Office of Management and Budget.1,825.5584.3970.6270.51,492.2333.21,738.2548.1945.0245.01,550.8187.4-87.3-36.2-25.6-25.558.6-145.8The Omnibus Budget Reconciliation Act of 1993Because the President did not want to delay deficit reduction foranother year, the fiscal 1994 budget had to be prepared on a compressedschedule. The President introduced a detailed budget planto a joint session of the Congress in February 1993, just 4 weeksafter taking office. The House and Senate passed the final versionof the budget resolution on April 1—the earliest date in the historyof the modern congressional budget process. A spirited congressionaldebate followed, leading to enactment of the Omnibus BudgetReconciliation Act of 1993 (OBRA93) in August.Several principles guided the design of OBRA93. First and foremost,the deficit reduction had to be large, genuine, and credible.To this end, the Administration proposed hundreds of specificspending cuts and increases in revenue. Second, the package hadto be balanced between expenditure cuts and tax increases. Specifically,the $146 billion of deficit reduction in fiscal 1998 consists of$87 billion in net spending cuts—including $25 billion in lowerdebt service—and $59 billion in additional net revenue. Third, thetax increases were highly progressive—heavily skewed toward thepeople who are most able to pay and who benefited most fromthe large tax cuts of the early 1980s. Income tax rates were raisedfor only about the top 1.2 percent of taxpayers. Some 90 percentof the new taxes in OBRA93 will be borne by the upper 6.5 percent32

of the income distribution (Table 1-3). Fourth, even while cuttingthe deficit, room had to be found in the budget for a variety of criticalpublic investments (more on this below).TABLE 1-3.—Distribution of the Change in Taxes Under OBRA93 byIncome CategoryLess than 10,00010,000-20,00020,000-30,00030,000-40,00040,000-50,00050,000-75,00075,000-100,000100,000-200,000200,000 or moreFamily income (dollars) 1All incomes 2Share offamilies(percent)14.017.415.712.69.915.56.85.21.3100.01 Pretax family income (CBO definition).2 Total includes negative incomes, not included in categories above.Source: Congressional Budget Office (CBO).Average changein taxes(dollars per family)-£8-86-415010519231264923,521382Share oftotal changein taxes(percent)The spending cuts touched virtually every part of the budget. Onthe discretionary side, the Congress imposed what amounts to a 5-year freeze on nominal spending, capping fiscal 1998 spending at$548 billion, or about $2.5 billion below the fiscal 1993 level. Withinflation (as measured by the implicit deflator for GDP) projectedto average about 2.8 percent per year over the period, the impliedcut in real discretionary spending is about 13 percent. Furthermore,if inflation comes in lower than the forecast, the caps will belowered commensurately. The budget cuts in OBRA93 include a reductionin the Federal work force by 100,000 positions (since raisedto 252,000 positions), delay of the 1994 cost-of-living adjustment forFederal employees, defense cutbacks beyond those projected by theprevious Administration, and a host of smaller cuts in discretionaryprograms.On the mandatory side of the budget, the largest cuts were in themedicare program (about $18 billion by fiscal 1998). But there werealso reductions in agricultural and veterans' programs, savings inthe student loan program, new receipts from auctioning portions ofthe radio spectrum (discussed in Chapter 5), and savings fromshortening the maturity structure of the national debt. Total cutsin mandatory spending other than debt service are expected toreach $25.6 billion by fiscal 1998.OBRA93 also increased taxes. Higher income tax rates on the top1.2 percent of households constitute the biggest source of new revenueby far: $27.2 billion by fiscal 1998. (The bracket structures be--2.5-3.9-1.71.62.77.85.68.881.3100.033

fore and after OBRA93 are compared in Table 1-4.) In addition,the 2.9-percent payroll tax for medicare, which formerly appliedonly to the first $135,000 of earnings, now applies to all earnings(raising $7.2 billion by fiscal 1998), the taxable portion of Social Securitybenefits was raised for the top 13 percent of recipients ($4.5billion), and the motor fuels tax went up by 4.3 cents per gallonin October 1993 ($5 billion). Finally, OBRA93 increased the top corporatetax rate and closed a variety of business tax loopholes, butalso enhanced or created several tax incentives for investment. Thenet effect of these increases and decreases in business taxes shouldyield about $8 billion in revenue by fiscal 1998.TABLE 1-4.—Changes in Statutory Marginal Tax Rates Under OBRA93 forMarried Individuals Filing JointlyTaxable income (dollars)Marginal rate (percent)0-36,90036,900-89,150 ....89,150-140,000 ..140,000-250,000Over 250,000Source: Department of the Treasury.OBRA93, Interest Rates, and InvestmentAs critical elements of the President's deficit reduction packagestarted to become known, long-term interest rates began to fall—indicating that the financial markets viewed the proposals as substantial,genuine, and credible (Box 1-3). Rates fell dramaticallybetween January and October 1993 before backing off a bit late inthe year.As documented more completely in Chapter 2, the medicine oflow interest rates now seems to be taking hold. Business investmenthas been leading the economy's expansion, with consumer durablesand housing important sources of strength. If we divide GDPinto its interest-sensitive components (business fixed investment,housing, and consumer durables) and everything else, the data tella fascinating story. While the three interest-sensitive pieces typicallyaccount for about 30 percent of GDP growth, in 1993 they accountedfor virtually all of GDP growth. The rest of GDP barely increasedover the year (Table 1-5).It is important to understand why this Administration made deficitreduction a top priority and worked so hard to see it throughthe Congress. One important reason was the concern being expressedin many quarters that deficits were growing out of controland might threaten financial stability—and thereby macroeconomicstability.34

Box 1-3.—Credible Deficit Reduction and Real Interest RatesLong-term nominal and real interest rates dropped sharplyin 1993. The decline in rates was closely linked to the proposaland enactment of the Administration's budget (as argued inChapter 2).Lower deficits reduce real bond yields through several channels:• Lower Federal borrowing reduces interest rates directly,by reducing demand for credit.• A more prudent fiscal policy reduces the likelihood thatthe Federal Reserve will need to pursue a restrictivemonetary policy, and so reduces expected future shorttermrates.• As long as international capital mobility is not perfect,increased national saving leads to an increase in investment,in the long run, the consequent increase in thecapital stock reduces the marginal product of capital andtherefore the interest rate.Because the plan had credibility, financial markets anticipatedthese effects. Since future expected short-term interestrates govern current long-term rates, long rates fell immediatelyIn response to the proposal and enactment of the Ad*ministration's plan. There would have been no such market responseif the plan had lacked credibility. What features of theAdministration's plan account for its apparently high 'credibility?• The plan is based on realistic economic assumptions; itdoes not presume that the economy can "grow its wayout" of the deficit problem,• The President proposed and the Congress enacted manyspecific spending cuts in the fiscal 1994 budget, therebydemonstrating the feasibility of maintaining the discretionaryspending caps.• The tax provisions of the plan by and large result in permanentincreases in revenue; they do not merely shiftfuture revenue into the current budget window.« The President showed himself willing to make difficultchoices to correct the fiscal imbalance: freezing total discretionaryspending; increasing the taxation of Social Securitybenefits for recipients with the highest incomes;and proposing reform of the Nation's health care system.35

TABLE 1-5.—Contributions to Growth of Interest-Sensitive and OtherComponents of GDP[Average annual percent change]ComponentHistoricalaverage(1955-92)Fourth quarter 1992tofourth quarter 19931Interest-sensitive components 2All otherGDP1 Preliminary.2 Business fixed investment, housing,Source: Department of Commerce.0.82.12.9and expenditures on consumer durables.But the central objective of deficit reduction was and remains expenditureswitching—away from consumption and government purchasestoward investment. The lower interest rates brought aboutby deficit reduction are the way the market accomplishes this expenditureswitching.The reasons for wanting to raise the investment share of GDPare straightforward: Workers are more productive when they areequipped with more and better capital, more-productive workersearn higher real wages, and higher real wages are the mainspringof higher living standards. Few economic propositions are bettersupported than these—or more important. As Chart 1-7 shows, investmentrates and productivity growth rates correlate well acrosscountries. Lower budget deficits that raise private investment aretherefore critical to raising the economy's long-run growth rate.However, some people worry that deficit reduction might retardgrowth in the short run by siphoning off aggregate demand. Sucha concern is justified. Deficit reduction by itself certainly does tendto contract the economy. After all, raising taxes and cutting governmentspending reduce the demand for goods and services. But deficitreduction accompanied by sufficient declines in long-term interestrates need not be contractionary. It is, of course, the latter, notthe former, that we experienced in 1993.Economists judge the impact of fiscal policy on aggregate demandby looking at changes in the structural deficit. Table 1-6 showsthat OBRA93 will reduce the structural deficit by about $65 billionfrom fiscal 1993 to fiscal 1995, after which it is expected to riseslightly. The large deficit reductions after fiscal 1995 serve to limitwhat would otherwise have been even larger increases in the structuraldeficit—mainly due to rising expenditures on health care.Analysis by the Council of Economic Advisers suggests that the declinesin long-term interest rates that have occurred since the 1992election, even after the backup late in 1993, are more than enoughto offset the contractionary effects of this decrease in the structural2.6.22.836

Chart 1-7 Correlation of Investment and ProductivityThere is a close correlation between investment rates and productivity growthrates across countries.Average annual per capita real GDP growth rate (1970-90)t.u3.53.02.52.01.51.0_BelgiumTurkey•^Denmark #^ ^ ^ ^ • • NetherlandsU.S. SwedenIreland• Iceland Portugal• *ItalyCanada * _ .^ % SpamFinlandI \^Austria^-^^^^*rmany

is that cutting the annual deficit by about $140 billion to $150 billionover a period of 5 years is roughly the right amount, given thecurrent strength of our economy. Some critics dispute this judgmentand call for much deeper cuts in spending than those providedin OBRA93, or for substantial increases in taxes. The Administrationviews this strategy of more aggressive deficit cutting inthe near term as risky.A small amount of additional deficit reduction would, of course,have only small effects on the economy. But further large spendingcuts or tax increases at this time would require additional large declinesin long-term interest rates to replace the lost aggregate demand.Should interest rates decline by less than the requiredamount, economic growth would slow and jobs would be lost. Forexample, a deficit reduction package substantially larger thanOBRA93 would be needed to comply with the proposed balancedbudget amendment to the Constitution (Box 1-4). The Council estimatesthat it would take a decline in long-term interest rates ofroughly 3 percentage points to offset the contractionary effect ofsuch a large fiscal package. Since a 3-percent long-term interestrate seems quite unlikely, complying with a balanced budgetamendment seems likely to harm the economy—perhaps severely.Deficit Reduction and Public InvestmentOnce it is understood that deficit reduction is not an end in itself,but a means to an end—the end of greater investment—two importantprinciples become evident.First, it is clear that deficit reduction is only a first step. Wemust start to build—to invest in our future. That is why the President'seconomic plan contains more than just deficit reduction; italso includes new proposals to encourage private investment andneeded public investments in education and training, public infrastructure,and technology. We must worry about the debt we bequeathto our children, but we must also worry about the qualityand quantity of capital—broadly conceived—that they will inherit.Second, it is clear that squeezing worthwhile public investmentsout of the budget is the wrong way to reduce the deficit. After all,the main purpose of deficit reduction is to pave the way for moreprivate investment. Cutting public investment to make room formore private investment is like running on a treadmill. Americaneeds more of both, not a swap of one for the other.Shifting Federal spending priorities from consumption to investmentis one of the hallmarks of this Administration's approach toeconomic policy. We seek not only to constrain total governmentspending, but also to reorient it toward more productive uses.Doing so will take time and requires use of the surgical scalpel, notthe meat-ax, in cutting the budget. As the Administration and theCongress struggle together over tight Federal budgets in fiscal38

Box 1~4*~-A Balanced Budget Amendment to the Constitution?To argue that substantial deficit reduction was imperative in1993 is not to argue that the budget deficit must be reducedeven further in the short run—and certainly not to argue thatwe should mandate a balanced budget every year by constitutionalamendment, as some have advocated*This Administration opposes the proposed balanced budgetamendment to the Constitution for many reasons. First andforemost, the amendment would put fiscal policy in a straitjacketthat might imperil macroeconomic stability, thereby abdicatingone of the government's principal responsibilities andraising the specter of mass unemployment. Second, the proposedamendment would lead to budgetary gimmickry—suchas mixing one-time asset sales with recurring income transactions—andwould be almost impossible to enforce. It couldpush economic policy decisions into the courts, or even provokea constitutional crisis.Third, there are many candidate definitions of "the budgetdeficit," making it both hazardous and unwise to enshrine anyparticular definition in the Constitution. For example, do wewant to balance the unified budget or exclude Social Security?Why not the structural deficit, or even the inflation-adjustedstructural deficit? Fourth, the amendment's call for a 60-percentcongressional supermajority to waive the balanced budgetrequirement threatens to reinstall both gridlock and the tyrannyof the minority.Fifth, and finally, the amendment by itself would not reducethe deficit by a single penny; all the hard choices that face usnow would still face us. A deficit reduction package leading toa balanced budget would most likely have to include major newtaxes on the middle class, substantial cuts in Social Securitybenefits, reductions in defense spending that go far beyond theAdministration's proposals, and cuts in Federal spending onmedical care large enough to imperil health reform. The Administrationopposes all of these.1995 and beyond, it is essential that we not allow fiscal myopia tolead to underinvestment in America's future.INVESTING IN PEOPLEThe American work force remains the most productive in theworld. Our aim should be simple: to keep it that way. But the restof the world is not standing still; it is gaining on us, becoming evermore productive. And that is what compels change.39

America has never competed on the basis of low wages, and wemust not start doing so now. It is widely believed that modern industrialprocesses demand workers with higher levels of educationand training; and evidence on the relative wages of, say, collegeeducatedversus high school-educated labor (Chart 1-8) seems tobear this out. In 1981, workers with college degrees earned about45 percent more than workers with only high school degrees; by1992, this gap had reached almost 65 percent.Chart 1 -8 Ratio of Wages of College Graduates to Wages of High School GraduatesWorkers with college degrees earn substantially more than workers without, and the gapbetween the two groups' wages grew during the 1980s.1.40 -1.30 -1.20 -1.10 -1.001974 1976 1978 1980 1982 1984 1986 1988 1990 1992Note: Data for 1991-92 are not strictly comparable with earlier data.Source: Department of Commerce.Some observers claim that average work force quality may actuallyhave deteriorated in the United States in recent decades.Whether or not this is true, few dispute that the supply of workforce skills has failed to keep pace with the growing demand. AlthoughAmericans are, if measured by average years of schooling,among the most educated people on earth, the rate of illiteracy inour country has long been high. Tens of millions of adult Americansare either functionally illiterate or barely literate. Internationaltest scores suggest that our primary and secondary studentsare learning less science and mathematics than their counterpartsin other countries.40

This educational record is not good enough in a world economythat grows ever more competitive and ever more skill-intensive.American workers must build the additional human capital theyneed as a bridgehead to higher wages and living standards. Lifelonglearning must cease being a slogan and become a reality.In a fundamental sense, each American must be responsible forhis or her own education and training. This Administration is committedto creating the requisite opportunities through a comprehensiveagenda of education and training that starts before formalschooling and extends into the workplace. For example:• Head Start will be expanded so that disadvantaged childrenhave a chance to get ahead. Head Start has been proved effectivein preparing these children for primary school, and hasbeen estimated to save about six dollars in future governmentspending for every dollar invested today.• Goals 2000 is a comprehensive legislative package that will sethigher performance standards for American teachers and students.• The Departments of Labor and Education are collaborating ona new School-to-Work transition program that will help studentsget hands-on, work-related training while still in highschool. This is an area of our educational system that has beenneglected for too long.• The new National Service program (Box 1-5) will not only provideopportunities for community service and the acquisition ofjob-related skills, but also help send more Americans to college.• The reformed student loan program will also help more ofAmerica's youth attend college by reducing borrowing costs andoffering, for the first time on a national scale, loans whose repaymentschedules depend on future earnings.• The new program for dislocated workers will have an importantretraining component, which will make opportunitiesavailable to displaced American workers. Some income supportwill be provided so that displaced workers can afford to takeadvantage of the training.Each of these programs will help augment the Nation's stock ofhuman resources, thereby raising the American standard of living.INVESTING IN PUBLIC INFRASTRUCTUREThe most obvious kind of public investment is building new publicinfrastructure—the Nation's highways, bridges, airports, andwater and sewage systems. The Administration believes the UnitedStates has underinvested in its public infrastructure. For example,the Department of Transportation estimates that almost 20 percentof our Nation's highways have poor or mediocre pavement andabout 20 percent of our bridges are structurally deficient.41

Box l-5.—The National Service ProgramIn August 1993 the Congress passed the National and CommunityService Trust Act of 1993, '^d^^ti&^/^^wm N&-tional Service program. National Service provides participantsboth current compensation (at below-market wa^s) aad>duc&tiOTuglgrants of up to $4,725 per year td pay &* college andother post-secondary education. Participants also receive valuableon-the-job training, accumulate exi^loyih^it ^kiEsi tod acquiret^l-worid workexperience.The economic rationale for this program is threefold* First,employers may be reluctant to provide training in skills thatcan be utilized in a wide variety of employment applicationsbecause, if the employee leaves the firm soon thereafter, thefirm will fail to recoup the cost of its investment. Since the accumulationof employment skills is socially desirable, it may beeconomically efficient for the government to finance part of thistraining.Second, the decline in Federal revenue sharing has reducedthe intergovernmental resources available to State and localgovernments. These levels of government often know best whatservices their residents need most. Accordingly, the NationalService program provides in-kind resources (labor services) toprecisely those types of public and nonprofit organizations bestable to determine what services are required.Third, the National Service program provides all Americansthe opportunity to undertake community service positions byrelaxing the tradeoff that workers often face between currentcompensation and the richness of an employment experience.The program ensures that valuable but low-paid public servicepositions will not be the province of the wealthy.The National Service program is funded through an initialappropriation of $300 million over previous funding for relatedprograms. This is scheduled to rise to $500 million in 1995 and$700 million in 1996. At these funding levels, it is expectedthat the program will be able to support approximately 20,000participants in 1994 and about 100,000 participants over the3-year period covered by the legislation.A variety of evidence indicates that there has beenunderinvestment. First, while the statistical evidence is not unequivocal,the weight of it points to handsome rates of return onwell-planned investments in public infrastructure. Second, estimatedbenefit-cost ratios on specific infrastructure projects areoften quite high. Third, the ratio of public to private capital has42

fallen markedly since the 1960s (Chart 1-9). Unless the data aregrossly misleading, the principle of diminishing marginal returnsleaves only two possible conclusions: Either America wasoverinvested in public capital in the early 1970s, or it isunderinvested today.Chart 1-9 Ratio of Public to Private Net Nonresidential Capital StockThe ratio of public to private capital stock declined steadily and markedlyin the 1970s and 1980s.0.50 -0.45 -0.40 -0.351947 1950 1953 1956 1959 1962 1965 1968 1971 1974 1977 1980 1983 1986 1989 1992Note: Public capital stock is defined as Federal and State and local net stock, excluding military capital.Source: Department of Commerce.Finally, there is the evidence of the senses: America's roads andbridges are badly in need of repair, a number of our airports areovercrowded, and our sewage treatment facilities are overburdened.To many thoughtful observers, America's public infrastructure issimply not commensurate with our bounteous private wealth.INVESTING IN TECHNOLOGYBut physical capital is not the only determinant of productivity,nor even the most important. Over long periods of time, rising productivityand hence advances in living standards depend on the upwardmarch of technology. Indeed, studies of long-term economicgrowth attribute a large share of growth to improvements in knowhow(Table 1-7). The history of progress in the industrial world isworking smarter, not working harder.43

TABLE 1-7.—Sources of U.S. Economic Growth[Average annual percent change]Source1947to19731973to1992Labor inputsCapital inputsTotal factor productivity (technological change)Adjustment from nonfarm business output to GDPTOTAL (GDP growth)1.011.451.63-.143.94Note.—Labor and capital inputs are measured for the nonfarm business sector.Detail may not add to totals because of rounding.Sources: Council of Economic Advisers, Department of Commerce, and Department of Labor.0.881.07.40-.042.30Technological change does not come for free. Technology advancesbecause scientists and engineers working in laboratoriesand on shop floors make new discoveries. And research is expensive.Since the dawn of the industrial revolution, alarmists have arguedthat technology and automation threaten jobs. Such claimsare still heard today. But history shows that they have never beenright in the past and suggests that they are wrong again. Timeafter time, in epoch after epoch and country after country, technologicaladvance has produced higher wages and living standards,not mass unemployment. That is exactly what we expect to happenagain in the 21st century. And the government should be helpingthis process along—facilitating growth and change, not impeding it.While the bulk of research and development (R&D) must andshould be done by private industry, support for basic and genericresearch has long been recognized as a legitimate function of governmentbecause of informational externalities. New technology isexpensive to discover but cheap to disseminate. So what one companylearns passes quickly to others, making it impossible for theinnovator to capture all the returns from its discovery. In fact, estimatesfind that innovating businesses capture less than half of thesocial returns to their R&D. Furthermore, estimated social rates ofreturn on R&D range as high as 50 to 100 percent, suggesting thatthere is systematic underinvestment.For this reason, the Administration asked the Congress to extendthe research and experimentation tax credit, which was done inOBRA93. For the same reason, the Administration is increasingfunding for research partnerships with industry, such as the AdvancedTechnology Program, and adding dozens of new manufacturingextension centers. Each of these initiatives and others aredesigned to speed the pace at which precompetitive technologiesare invented and disseminated. Once that stage is passed, the marketmechanism should and will take over. (Chapter 5 has more detailson the Administration's technology policy.)44

The development and deployment of new technology have longbeen of interest to the government. But technology policy is especiallycritical in a period of large-scale defense cutbacks, becausemore than half of total Federal support for R&D has traditionallybeen related to national defense. With less need for research onweaponry, the Federal Government must now make a choice. Willwe reduce total research support, or will we shift the research dollarsinto civilian technologies? The President believes that the latteris the wiser course, which is why the Administration isreorienting the research capabilities of the Defense Departmentand the national laboratories toward R&D partnerships with industry.Technology surely creates the wave of the future. America mustbe on the crest of that wave—with the technology, capital, andskilled work force needed to take advantage of tomorrow's economy.TRADE POLICY AND LIVING STANDARDSThis Administration's policies toward private physical capital,human capital, public infrastructure, and technology all share acommon objective: to raise the living standards of American families.Trade policy is yet another means toward that same end. ThisAdministration vigorously supported the North American FreeTrade Agreement (NAFTA), worked hard to complete the UruguayRound of the General Agreement on Tariffs and Trade (GATT),streamlined the Nation's export promotion programs and eased restrictionson exports, and is striving to open the Japanese marketthrough bilateral negotiations, all for the same reason—to openmarkets and boost American exports. (Chapter 6 contains more detailson the Administration's trade policy.) The emphasis on tradeexpansion is, in turn, driven by two simple facts.First, Americans now live in an increasingly integrated worldeconomy and must therefore become increasingly outward-lookingto stay on top. There is simply no way to close America's bordersand return to the insular days of the 1950s and 1960s. Trying todo so would be an exercise in futility, doomed not only to fail butto lower living standards in the process. International competitionthrough trade has long been a powerful engine of change andprogress—for America and for the world. We must not let that engineidle. Instead, we must use it to power America up the technologyladder—by moving our workers into the jobs of the future,not keeping them mired in the jobs of the past. In the President'swords, we must "compete, not retreat."Second, jobs in export industries pay wages that are about 22percent above the economy-wide average, according to the Council'slatest estimates. The implication is that, if the Administration succeedsin shifting the composition of GDP toward more exports, we45

will automatically shift the composition of American employmenttoward better paying jobs. No government program or central directionis needed to accomplish this. The market will do the work forus.Trade expansion is sometimes inaccurately characterized as "exportingjobs." Nothing could be further from the truth. A more accuratedescription is that international trade and investment leadlow-skill, low-paid jobs that would inevitably migrate to poorercountries to go there in exchange for high-skill, better-paying jobsin the United States. American companies that compete successfullyboth at home and in foreign markets offer the best job opportunitiesfor their workers. The history of capitalism throughout theworld shows that companies and industries sheltered from thewinds of competition tend to stagnate.This Administration's focus on exports does not signal a revivalof mercantilism. Rather, it reflects a belief that America's exportpromotion efforts have lagged behind those of other countries andthat our markets are already among the most open in the world.The Administration fully expects trade liberalization—such asthrough NAFTA and the Uruguay Round of GATT—to raise bothU.S. exports and U.S. imports. And we welcome both.The North American Free Trade AgreementIndeed, the recently ratified NAFTA illustrates the basic goals ofAdministration trade policy extremely well. NAFTA should boosttrade with Mexico in both directions. In consequence, economic resourceswill be allocated more efficiently on both sides of the border.Inevitably, some American industries will therefore contractwhile others expand. Supported by the overwhelming preponderanceof scholarly evidence, the Administration believes thatNAFTA will lead to net job creation in the United States.Equally important is the composition of those jobs, however. Thenew jobs that will arise in the United States will, on average, payhigher wages than the jobs that migrate south. It would be surprisingindeed if anything else happened when a low-wage country anda high-wage country reduced trade barriers. In addition, the lowertariffs and reduced trade barriers from NAFTA will reduce pricesfor a variety of goods that American families buy. Together, theshift in the composition of employment toward higher paid jobs andthe reduction in prices lead to a clear conclusion: NAFTA will raisethe standard of living of the average American family—and the averageMexican family as well.The Uruguay Round of GATTThe recently completed Uruguay Round of GATT was a landmarkachievement for the entire world trading system. It literallyrewrites the rules of trade for the start of the next century.46

Earlier rounds of GATT talks had focused almost exclusively ontariff reductions. The market access component of the UruguayRound continues this tradition by reducing tariffs on literally thousandsof manufactured goods—by more than one-third on average.Such tariff reductions should be a tonic for world trade and growth,just as they have been in the past, and should increase specializationand economic efficiency around the globe. As usual, producerswill gain from bigger markets and consumers will gain from lowerprices.But the most remarkable achievements of the Uruguay Roundare to be found elsewhere. For the first time, trade in agriculturalcommodities has been brought under GATT—a goal that had eludedtrade negotiators for decades. When fully effective, the agreementwill reduce agricultural export subsidies by 21 percent in volumeand 36 percent in value, saving taxpayers and consumers inmany countries billions of dollars. Trade in agricultural goods willalso be liberalized by reducing tariffs on certain commodities (likebeef and fruits and vegetables), partially opening markets thatwere previously closed (like rice in Japan and the Republic ofKorea), and prohibiting certain food "safety" measures that werereally disguised trade barriers. America's farmers, consumers, andtaxpayers all stand to gain handsomely from this agreement.In addition, for the first time GATT disciplines have been extendedto a variety of service industries. This achievement of theUruguay Round is a vitally important precedent for the UnitedStates for two reasons. One is that production patterns both hereand elsewhere have been shifting and will continue to shift towardservices. The other is that the United States seems to have astrong comparative advantage in many service industries; in fact,our trade surplus in services is already three times larger than ourtrade surplus in agriculture.The United States did not succeed in bringing all services intothe agreement, and will continue to press for trade liberalizationin sectors that were left out of the Uruguay Round. But the gainswere still significant: Trade rules in such important industries asaccounting, consulting, construction, and telecommunications willnow require that foreign countries grant the same treatment toAmerican firms operating abroad as they do to their own companies.Finally, the path-breaking agreement will provide much strongerprotection for a range of intellectual property rights including patents,copyrights, trademarks, and trade secrets. Since the UnitedStates is the home of so much commercial innovation, we will reaplarge gains from the agreement. Among the biggest industrial winnersare software, Pharmaceuticals, and biotechnology.47

In sum, the Council estimates that the various provisions of theUruguay Round, once fully phased in after a decade, will increaseU.S. GDP by at least IV2 percent by raising real wages, loweringconsumer prices, and protecting our national property rights.HEALTH CARE REFORMSuccessful health care reform will accomplish many things. Perhapsprimary among them is health security for all Americans—aprecious commodity that too many of our citizens have been deniedfor too long. In today's United States, workers who lose their jobsoften lose their health insurance, too. Other people and businesseslose their coverage because a family member or employee becomesill and incurs large medical bills. Still other people are afraid totake jobs that would lift them out of welfare because they cannotrisk losing medicaid coverage. In total, nearly 39 million Americanslack health insurance, millions more are inadequately covered, andtens of millions live in fear of losing the coverage they have. Fewpeople in other industrialized countries face such insecurity.Under the President's health care reform proposal, which is describedin detail in Chapter 4, none of this would ever happenagain. Americans would know that their health insurance wouldnever lapse, whether they changed jobs, moved, quit to start a newbusiness, or had the misfortune of serious illness in the family.When effective health care reform is enacted, one of the majorsources of economic insecurity facing Americans today will havebeen removed.Health care reform is also fundamental to long-run budget control.It is often said that the fastest growing part of the budget is"entitlements." But the fastest growing part of the entitlementbudget by far is health care spending (Chart 1-10). As the Presidenthas repeatedly emphasized, controlling the costs of medicalcare is the key to controlling entitlements, and therefore to longrundeficit reduction.But health care reform will accomplish more than just budgetcontrol and security. The Administration also sees it as a route tohigher standards of living.For years, the rising cost of health care has forced a shift in thecomposition of the typical pay packet away from wages and salariestoward fringe benefits, especially health insurance. Chart 1-11shows that the share of health benefits in total labor compensationrose from 1.8 percent in 1960 to 8.5 percent in 1992. Correspondingly,the share of cash wages fell. In absolute terms, in fact, realwages and salaries have barely increased in 20 years. Almost allthe gains in compensation have been taken as fringe benefits. Thismeans that working men and women have, for the most part, paid48

Chart 1-10 Projected Real Growth Rates of Principal Federal Budget ComponentsFrom fiscal 1994 to fiscal 1998, health care spending is projected to grow four times asrapidly as any other major component.Average annual percent change10Defense Nondefense Other Net Social HealthDiscretionary Entitlements Interest Security EntitlementsSource: Office of Management and Budget.for their escalating health costs by taking home lower wages thanthey would have otherwise.We can arrest this process only by containing medical costs. ThePresident's health care reform is designed to do precisely that bymaking the market more competitive and making both consumersand providers more cost conscious. On the assumption that the futurewill look like the past, the Administration expects most of thebenefits from effective health care cost containment to redound toworking Americans in the form of higher take-home pay.SUMMARY: PROSPERITY AND CHANGEAll of the policy initiatives described here—from deficit reduction,to public investments (both human and physical), to trade expansion,to health care—share a common goal: raising the standardof living of average American families. But all of them also requirechange, sometimes wrenching change. Deficit reduction required ahost of painful changes in government programs and some increasedtaxes. Lifelong learning requires changes in the way weview education. Freer trade and export expansion mean that somejobs will disappear so that more and better jobs can be created.49

Chart 1 -11 Shares of Wages and Benefits in CompensationMost of the decline in the wage share of total compensation has gone toincreased health benefits.Percent94Percent1492Wages (left scale)1290108886848280_L1960 1964 1968 1972 1976 1980 1984 1988 1992Source: Department of Commerce.And health care reform requires nothing less than a major overhaulof one-seventh of our economy.None of this will be quick or easy. Real change rarely is. But, intruth, we have no choice, for standing still is not an option thathistory allows. The secret to economic success is making changeour friend, not our enemy—coming to view change as the opportunityfor advancement that it is, not as the threat that it sometimesappears to be.CREATING OPPORTUNITYOur focus on raising the standard of living of middle-class Americansmust not blind us to the fact that some of our fellow citizenshave not managed to attain a middle-class living standard. Andchange is especially threatening to those at the bottom of the economicladder.When money incomes are corrected for purchasing power, Americais the richest of the world's major nations in terms of per capitaincome. But a nagging poverty problem remains in this land ofplenty. Millions of Americans have little or no earning power and50

are therefore on the public dole. Millions more work but do notearn enough to support their families. Two key policy initiativesenacted in 1993, the expansion of the earned income tax credit andthe introduction of empowerment zones, were designed to help lowincomeworkers by making work pay.The earned income tax credit (EITC) provides needy familieswith both income support and greater rewards for working (Box 1-6). In part, the credit offsets income taxes that low-income workingfamilies would otherwise have to pay. But the credit is also refundable,meaning that if a family's credit exceeds its tax liability, theInternal Revenue Service sends a check for the difference. As partof OBRA93, the EITC was increased substantially, both by makingpayments more generous and by extending the credit to more families.Box 1-6.—How Does the Earned Income Tax Credit Work?The earned income tax credit is often thought of as a typeof negative income tax, but in fact it is more complicated thanthat. The EITC has three ranges: a "credit range*" in which itfunctions like a wage subsidy, a "plateau" in which it has nomarginal effect, and a "phaseout" range in which the credit ispaid back as earnings rise (Chart 1-12).To illustrate, when the increases enacted in 1993 are fullyeffective (in 1996), the credit will work as follows for a familywith two or more children. (Less generous schedules apply toone-child and childless families.) As earnings rise from zero to$8,425 (all dollar figures are in 1994 dollars), the EITC willprovide a 40-percent wage subsidy, so that each $100 of additionalearnings will net the family $140. The maximum creditis $3,370, which is therefore reached when earnings hit $8,425.The credit will then be constant as earnings rise from $8,425to $11,000. Beyond $11,000, however, the family's tax credit isreduced 21 cents for each extra dollar earned. Benefits arethus exhausted when earnings reach $27,000.Clearly, the EITC provides a marginal work incentive in thecredit range (unlike a negative income tax), a marginal disincentivein the phaseout range, and neither in the plateau.However, to the extent that labor supply decisions involvewhether or not to work, rather than how many hours to work,the credit provides a positive work incentive to all recipients.As a first step toward welfare reform, the EITC has many virtues.It will lift many families with children out of poverty. Itprovides positive work incentives for many of the lowest-paid employeesin our society. It is better targeted on the low-income popu-51

lation than is, say, an increase in the minimum wage, because minimum-wageworkers are found in all family-income brackets. It issimple to administer, requiring no special bureaucracy. And, finally,it apparently reaches a larger fraction of the eligible recipientsthan is typical of other income-support programs, perhaps becauseit is easy to claim and carries no stigma.Chart 1-12 Earned Income Tax Credit for Families with Two or More ChildrenThe expanded earned income tax credit will substantially increase the creditfor eligible families.Tax credit in 1994 dollars4,0003,000 -2,000 -1,000 -Source: Department of the Treasury.10,000 15,000 20,000 25,000 30,000Earnings in 1994 dollarsThe goal of the innovative empowerment zone program is tostrengthen business activity in certain geographic areas that areextremely depressed, so that synergies from concentrated economicactivity can help revive these areas. The program's main tax incentiveis a 20-percent tax credit for wages up to $15,000 per year paidby a zone business to a zone resident. This should be a powerfulincentive to create jobs in the zones. In addition, a variety of regulatorywaivers may be granted to give communities greater flexibility,and several Federal agencies will direct spending toward thezones.Beginning this year, nine empowerment zones, six urban andthree rural, will be selected by a competitive process that shouldencourage both imaginative thinking and private-public partnerships.In addition, 95 other neighborhoods will be designated enter-52

prise communities and be granted smaller benefits than the zoneswhile sharing the relaxed regulatory environment. The programwill be carefully monitored and evaluated over a 10-year period,during which time we should learn a great deal about what worksand what does not.No American should think that programs like empowermentzones, the EITC, and welfare reform serve only the poor. Every citizenbenefits when the welfare rolls are reduced, when low-incomefamilies earn more, when blighted neighborhoods come to life, andwhen city streets once again become safe. We are, after all, one Nation.SUMMARYAn economic strategy based on long-run investments, as ours is,will not bear fruit overnight. It takes time to see tangible resultsand patience to wait for them. The important thing is to get starteddown the right path—and soon. The Administration believes that1993 marked a turning point in that regard. Recovery firmly tookhold in 1993, and prospects for sustained economic expansion lookfar brighter now than they did a year ago. The long-run deficitproblem, while not completely solved, looks far less threateningthan it did then. The Congress has begun to fund the President'sambitious investment agenda—including infrastructure, humancapital, technology, and environmental preservation. Two historictrade agreements whose negotiations began years ago—NAFTAand the Uruguay Round of GATT—were brought to a successfulconclusion. And the stage has been set for a much-needed nationaldebate on health care reform in 1994. All of these accomplishmentsset in place the foundation for a more prosperous America.53

CHAPTER 2The U.S. Economy in 1993 andBeyondTHE ECONOMIC EXPANSION consolidated in 1993, setting thestage for sustained growth in 1994. A sharp decline in long-terminterest rates to 25-year lows, in large part the result of the Administration'sdeficit reduction package, was the major economicstory of 1993. Momentum picked up in the second half, with interest-sensitivesectors like housing and consumers' and producers'durable goods leading the way. Continued advances in these sectorshelped to create sustained employment and income gains thatput real gross domestic product (GDP) on roughly a 3-percent-peryeargrowth path.During 1992 the economy was widely described as being in a joblessrecovery, advancing with a disconcerting seesaw quality. Thecombination of self-sustaining forces that typically appear in a recovery—stronglyrising employment, accelerating incomes, sharplyrebounding automobile sales and housing activity, markedly higherlevels of consumer confidence, and a renewed willingness on thepart of consumers to take on debt—was missing. Many of theseforces did appear over the course of 1993. The economy experienceda sustained moderate expansion with healthier job creation. Payrollemployment increased by 162,000 jobs per month in 1993, doublethe 81,000-job-per-month pace of 1992. The unemployment rate,higher at the end of 1992 than it had been at the beginning, fellby almost a full percentage point in 1993.Many interest-sensitive sectors of the economy finally exhibitedclear-cut improvements during 1993. Business spending for durableequipment increased at the fastest rate since 1972. Consumerspending for furniture and household furnishings, another leadingsector in business cycle upswings, also posted one of the biggestgains in a decade. Motor vehicle sales rebounded smartly as consumersexhibited a newfound willingness to incur debt to financea major purchase. Together these forces have put the economy ontrack for sustainable growth.With a greatly improved outlook for the Federal budget deficit,the Council of Economic Advisers expects long-term interest ratesto remain relatively low for the foreseeable future—which will helpto keep economic growth on track. Low interest rates are the key55

ingredient that should allow the economy to grow in the face of futurelarge deficit reductions, which would otherwise tend to contractthe economy. Expected growth in the 2^2- to 3-percent rangefor 4 years should create about 8 million new jobs and steadily reducethe unemployment rate from its currently unacceptable leveltoward a rate that is close to noninflationary full employment.STRUGGLING TO GROWGDP growth over the current expansion has been much slowerthan usual. In the first year after a recession trough, output typicallygrows by 6 percent in real terms; in this recovery, outputgrowth over the first year after the trough was less than 2 percent.Even though potential GDP growth is lower today than it was inthe 1960s and 1970s—mainly because of slower productivitygrowth—this factor can only explain a small part of the slower rebound.Not surprisingly, given the well-established linkage between outputgrowth and employment growth, job growth in this expansionhas also been atypically slow. The decline in employment duringthe recent contraction did not bottom out with the rest of the economy,and no rebound in job growth was evident until a year afterthe recession's trough. By late 1993 the growth path of employmentwas still well below the typical postwar recovery path (Chart 2-1).After 11 quarters, we have had the employment gains normally expectedafter just three quarters. Adjusted for the sluggish pace ofoutput growth, however, employment growth has been closer tonormal. (For further discussion, see Chapter 3.)A number of special factors have combined to induce this sluggisheconomic performance. These "headwinds" include defense cutbacks,weak foreign economies, an oversupply of commercial buildingsin the wake of the 1980s, the credit crunch, debt overhang,and a wave of corporate downsizings. None of these factors by itselfexplains why the recovery has run so far behind historical levels,but there is evidence that together they have retarded economicgrowth significantly.THE END OF THE COLD WARThe end of the cold war was a major geopolitical event for theUnited States, and the ensuing defense builddown has had profoundeconomic effects. In 1986 defense spending accounted for 6.5percent of U.S. GDP. By 1993 its share had fallen to about 4.8 percent,and by 1997 it is predicted to drop to about 3.2 percent (Chart2-2). This massive shift of national resources away from defensehas meant numerous base closings, cancellations of major weaponsprograms, scaled-back procurement plans, and attendant layoffs in56

Chart 2-1 Recovery Pattern of Nonfarm Payroll EmploymentEmployment growth in this recovery has been much weaker than in the averagepostwar recovery.Index, trough=100110108 -Average Postwar Recovery104Current Recovery10098I-4 -2 T 2 4 6 8 10Quarters from TroughNote: "Average" includes all recoveries from 1954 to 1982, except 1980. The trough quarter for thecurrent recovery is first quarter 1991.Sources: Department of Labor and National Bureau of Economic Research.the whole defense sector. For example, total defense-related jobsare projected to number 4.5 million by 1997, down from 7.2 millionjobs in 1987. In a purely arithmetical sense, reduced defensespending subtracted roughly 0.5 percentage point off the real GDPgrowth rate in 1993. Moreover, the defense cutbacks have had afurther adverse impact on aggregate demand through the expendituremultiplier. Moving resources out of the defense sector freesthem up for use in the production of consumption and investmentgoods and services, improving living standards. But this is a longerterm effect. The conversion process takes time, and although thedefense scaledown is not as large relative to the size of the economyas it was at the end of several wars, reconversion will causepainful dislocations in the short run.WEAK FOREIGN ECONOMIESWeak economic performance in the rest of the industrializedworld over the past few years has also taken a toll on the U.S.economy by slowing export growth. The period 1991-93 will godown in history as the worst for economic performance in foreignindustrial countries since at least 1960. During this 3-year period,57

Chart 2-2 National Defense Purchases as Share of GDPDefense spending as a share of nominal GDP is projected to continue to fallsteadily over the 1990s.1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999Note: Defense spending projections taken from Mid-Session Review of the 1994 Budget.Sources: Council of Economic Advisers, Department of Commerce, Department of the Treasury, andOffice of Management and Budget.output growth averaged just 0.6 percent per year in the EuropeanCommunity, 1.7 percent per year in Japan, and only 0.2 percentper year in the world's other industrial countries (Table 2-1). Eventhough U.S. growth has been sluggish over the past couple ofyears, it has been the fastest among all the Group of Seven majorindustrial market economies. The world's second- and third-largestindustrial economies, Japan and Germany, both entered deep recessionsin the latter part of 1992 and are now operating wellbelow their capacities. During 1993, all of the Group of Seven countrieshad substantial output gaps (that is, actual GDP was wellbelow potential), and growth was slowing in such developing-countrymarkets for U.S. exports as Mexico and the Middle East.In large part because of this global weakness, U.S. merchandiseexports, which had increased by about 7 percent in nominal termsin 1991 and 5 percent in 1992, rose by only 2 percent in 1993. Merchandiseexports to Japan and Western Europe, which togetheraccount for 35 percent of total U.S. merchandise experts, were especiallyhard hit, dropping by about 3 percent (Chart 2-3). Evenexports to Mexico flattened in 1993 after half a decade of rapid increases.With excellent cost competitiveness in world markets, U.S.58

TABLE 2-1.— Foreign Country Real GDP Growth[Average annual percent change]19891990199119921993European CommunityJapanOther industrial countriesDeveloping countriesNote— 1993 figures are forecasts.Source: International Monetary Fund.exporters have been able to do better than a trade-weighted averageof major industrial economies' GDP growth rates would suggest(Chart 2-4). Still, what had been a strong engine of growth fromthe mid-1980s until 1991 clearly shifted into neutral in 1993.Meanwhile, growing U.S. reliance on foreign computers has ledto a surge of imported capital goods. Office automation equipment,which now accounts for nearly 45 percent of real private investmentin producers' durable equipment, has become the fastestgrowing major demand component in the U.S. economy, and importshave been filling a growing portion of this demand. Importsalso account for about one-third of the nonautomotive, noncomputerportion of producers' durable equipment spending—up sharply overthe past decade.Together, the slowing of U.S. exports and the surge in importshave meant that net exports (the difference between them) are nowworking against U.S. growth, after making strong positive contributionsfrom the mid-1980s to 1991. For example, according toa simple calculation holding other components of demand fixed, ifnet exports had simply not deteriorated in 1993 from their 1992level, U.S. GDP growth would have been over 1 percentage pointhigher than it actually was in 1993.THE DEBT WORKOUTWorking off the heavy indebtedness built up over the 1980s mayalso have retarded growth. During the 1960s and 1970s, householdsand firms only gradually increased their levels of indebtednessrelative to their incomes. Over the 1984-90 period, thischanged abruptly as individuals and businesses increased their indebtednesssharply (Charts 2-5 and 2-6). For the corporate sector,the proximate cause of increased indebtedness was a rise in debtbasedfinancial restructurings, such as leveraged buyouts. A portionof new debt issues in the 1980s was used to purchase equityin existing companies, not to finance increases in plant and equipmentinvestment. It is unclear exactly what motivated householdsto move further into debt during this period, although rapid appre-3.54.73.24.13.04.81.13.70.84.0-1.14.51.11.30.65.8-0.2-0.11.26.159

Chart 2-3 Growth of U.S. Merchandise ExportsContinued weak economic growth in industrialized countries has depressed demandfor U.S. exports.Percent change from year earlier, 6-month moving average20 r •15Western Europe10All Countries-5-10Japan1990 1991 1992 1993Note: Data are not seasonally adjusted, f.a.s. basis.Source: Department of Commerce.Chart 2-4 U.S. Exports Implied by Industrial Country GDPU.S. export demand has been healthier than would be expected given thelackluster performance of the major foreign industrial economies.Billions of 1987 dollars (ratio scale)600-Actual500400Implied byIndustrial Country Demand,'/300200I I I ! I I I I1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993Note: The dashed line plots fitted values from a regression relating exports to industrial country GDP.Sources: Council of Economic Advisers and Department of Commerce.60

ciation in the stock market and booms in numerous housing marketsprobably played a role. Higher asset values may have givenconsumers a greater sense of financial security to borrow andspend even in the face of modest personal income growth.The debt-income ratios for both households and firms flattenedas the 1980s came to a close. Beginning in 1991, firms initiated adramatic reduction in their leverage. This balance sheet repair waspresumably triggered by a reversal of the factors that led them toaccumulate debt. Moreover, there were declines in firms' net worth,which might have caused them to reduce leverage out of fear of insolvency.For a domestic debtor to repay a domestic creditor, there neednot be any increase in national saving. Rather, such repaymentsrepresent—in the first instance—adjustments in the portfolios ofdomestic households, businesses, and financial institutions. Yet therecent balance sheet adjustments probably did stem in part froman increase in saving and therefore acted to slow growth in aggregatedemand.By what mechanism would such balance sheet adjustments affectnational saving? If the households and firms who repaid debts hadhigher marginal propensities to spend than those who got the repayments,the balance sheet restructuring would have increasedsaving. By virtue of their indebtedness, we can infer that firms andhouseholds who retired debt had in the past shown much more eagernessto spend or to undertake investment projects. Extrapolationwould suggest that they still had a high propensity to spendrelative to the creditor firms and households. Therefore, balancesheet restructuring was probably a drag on aggregate demand inrecent years.Of course, the causality could be reversed. Indebted householdsand firms might have decided for reasons other than those basedon the state of their balance sheets (e.g., reduced expectations ofincome or profitability of investment projects) to reduce expenditures,using their free cash flow to repay debt rather than to spend.OVERSUPPLY OF COMMERCIAL BUILDINGSYet another headwind has been the glut of nonresidential structuresthat was built up over the 1980s. Investment innonresidential structures soared in the early 1980s, fueled in partby high inflation and changes to the Tax Code in 1981 that madecommercial real estate investment more attractive. As this overbuildingcontinued, vacancy rates rose sharply across the country.The reversal of the 1981 tax provisions by the 1986 tax reforms,together with higher interest rates in the late 1980s, derailed theboom in commercial real estate. The decline in this sector was furtherexacerbated by the movement of the rest of the economy into151-444 0 - 9 4 - 361

Chart 2-5 Households: Credit Market Debt as Percent of Disposable IncomeAfter trending upward slowly over most of the 1960s and 1970s, the ratio of householdcredit-market debt to disposable personal income increased sharply in the 1980s.1960 1963 1966 1969 1972 1975 1978 1981 1984 1987Sources: Department of Commerce and Board of Governors of the Federal Reserve System.Chart 2-6 Nonfinancial Corporate Business: Credit Market Debt as Percent of OutputThe ratio of nonfinancial corporate business debt to nonfinancial corporateGDP rose sharply in the 1980s. It has since begun to decline.1960 1963 1966 1969 1972 1975 1978 1981 1984 1987 19901993Sources: Department of Commerce and Board of Governors of the Federal Reserve System.62

ecession in 1990. Even by late 1993—more than 2 years into therecovery—the value of investment in nonresidential structures wasmore than 25 percent below its 1990 peak in real terms. Clearlythis small but volatile sector of the economy has failed to provideits normal cyclical lift.CREDIT CRUNCHThe credit crunch and its vestiges have also slowed economic activityover this recovery period. Many banks developed balancesheet problems in the 1980s as the developing-country debt crisisand widespread lending for speculative construction projects led tomassive loan writeoffs and weak profitability. This weak profitabilityreduced the banks' ability to lend and probably aggravatedthe credit crunch. More-aggressive bank regulation, some of it a reactionto the 1980s savings and loan debacle, accentuated the problem.In 1991 and 1992 there were widespread reports that wouldbeborrowers were having difficulty obtaining funds, although thesereports tended to be concentrated in certain industries (notablyreal estate) and regions (particularly the Northeast). A NationalAssociation of Home Builders survey of its members, for example,consistently ranked "obtaining financing for construction projects"as a top business problem over this period.CORPORATE DOWNSIZINGSFinally, corporations across the industrial spectrum have beenrestructuring their businesses and paring costs. The prolonged economicsluggishness apparently induced many firms to hunker downand reduce their breakeven points as much as possible, often byshedding workers. Foreign competition and cutbacks associatedwith debt workouts might also have been factors. Technologicalchanges have played a role as well; some of the most notable layoffshave been at mainframe computer companies, for example. Inaddition, lower capital costs may have led some firms to substitutecapital for labor.Even though downsizing may well have made corporations moreefficient and better poised to earn profits in the future, the widespreadlayoffs have helped to depress wage and salary growth andprobably consumer confidence as well. In addition, although higherprofits can imply higher incomes for corporate stockholders, thisgroup's marginal propensity to consume is probably lower than itis among individuals whose primary source of income is wages.This would also have reduced consumption spending and overalleconomic growth.63

THE HEADWINDS ARE MOSTLY CALMINGAs the economy enters 1994, many of these headwinds are dissipating.The credit crunch is fading as banks show new signs ofwanting to make business loans. The decline in yields on governmentbonds, where banks had parked large amounts of assets, andthe improvement in overall business conditions are making suchloans relatively more profitable. Aided by lower interest rates andgreatly improved margins, banks have also been posting recordprofits for the past 2 years. Bank lending surveys by the FederalReserve also suggest that credit conditions have eased. For thesereasons, bank lending today is becoming less of a retardant togrowth.Meanwhile, the other industrial countries will not remain miredin recession forever. Indeed, the ones that entered recession firstin this global slowdown—the United Kingdom, Canada, Australia,and New Zealand, for example—are all showing signs of economicrebound. Even Germany, a late arrival on the global recessionscene, recorded positive GDP growth in the second and third quartersof 1993. By late 1993 there were increasing signs that the Europeanrecession was nearing bottom, and that at least modestgrowth would return in 1994. Even a small rebound in Europewould be welcome news to U.S. exporters. The odds of economic recoveryin Japan, at least by 1995, seem good as well.Commercial construction has also started to improve, although itwill not be as bullish as it was in the mid-1980s. By late 1993there were signs that vacancy rates for commercial real estate wereposting significant declines, implying that the worst might be overfor this sector.The key exception to the forecast of diminishing headwinds is defensecutbacks. These seem almost certain to continue over the restof the decade unless there is some major change in the world's geopoliticalcircumstances—which might have other, far less beneficialrepercussions. Still, with most of these headwinds blowing lessfiercely over the mid-1990s than they did earlier in the decade, theeconomy should be able to turn in a better performance.OVERVIEW OF THE ECONOMY IN 1993Although economic growth was sluggish in early 1993, substantialprogress was made despite these headwinds. Employment increasedsteadily, the unemployment rate dropped, inflation remainedsubdued, and real GDP increased by 2.8 percent from thefourth quarter of 1992 to the fourth quarter of 1993. Claims earlyin the year that only a half-speed economic expansion was underway gradually gave way to the view that more-normal growth was64

eturning. Fourth-quarter growth of 5.9 percent (annual rate)—thehighest in 6 years—reinforced this view.The 1993 economy actually exhibited more underlying strengththan was reflected in press reports or in indexes of consumer andbusiness confidence. Domestic demand and real final sales bothposted healthy increases. Real final sales to domestic purchasers(that is, excluding inventories and exports but including imports)actually increased at an annual rate of 4 percent on average frommid-1992 until the end of 1993, and only dipped below 3 percentgrowth once over that period—in the first quarter of 1993. At leasta portion of that dip was arguably caused by a policy of the previousAdministration: increased tax liabilities in early 1993 owingto a reduction in withholding that began in March 1992. In addition,an early 1993 defense spending collapse caused a growth letdownin early 1993.A look at economic performance sector by sector provides a clearerpicture of the laggards and leaders in the present expansion.CONSUMPTION EXPENDITURESBecause consumer spending represents about two-thirds of GDP,it is not surprising that the modest output growth in the expansionto date has been associated with sluggish consumption growth. Indeed,consumption as a whole has failed to show the kind of sharprebound typical of postwar recoveries: 11 quarters after the recession'strough, consumption had advanced only two-thirds as far aswould be expected from postwar experience. Consumer sentimentmanifested a typical recovery pattern for only a short time; thesharp advance usually seen when a recession ends sputtered to ahalt two quarters after the 1991 trough. Sentiment trended upwardonly slowly over 1992 and 1993, although there was a sharp accelerationlate in 1993.Weakness in consumer spending can also be seen in the behaviorof the saving rate. Typically, the saving rate falls as a recovery begins,as consumers begin to spend ahead of income. Increases inspending on consumer durables, such as automobiles and householdfurnishings, typically follow. Such a drop in the saving ratedid not occur after the 1991 trough, however; the saving rate actuallytrended upward slightly for almost 2 years into the recovery.Over 1992, real consumer spending lagged behind real incomegrowth, suggesting that households were still getting their balancesheets in order.Nineteen hundred and ninety-three saw belated reductions in thesaving rate. Between the fourth quarter of 1992 and the thirdquarter of 1993, for example, the saving rate fell by more than 2percentage points, and this provided much of the overall lift thatthe economy experienced. In fact, over the last three quarters of65

1993, real consumer spending increased at a 3.9-percent averageannual rate—not high by historical standards, but at least tendingtoward the normal range for a postwar expansion.BUSINESS FIXED INVESTMENTAfter a late start, several important components of investmentspending have rebounded in line with typical recovery patterns.While investment in structures has remained weak for the reasonsdiscussed earlier, producers' durable equipment has turned in astellar performance. For about a year after the recession trough,equipment investment remained stagnant; then it spurted to agrowth path above the postwar recovery average. Today, investmentin producers' durable equipment remains one of the strongestcomponents of the expansion. In fact, over the year ending in thefourth quarter of 1993, investment in these goods increased byabout 18 percent—a growth rate more typical of a Japanese ratherthan an American business cycle expansion. Certainly as far asequipment investment spending is concerned, the weak portion ofthe recovery was limited to the first year after the trough. More recentactivity has actually exceeded the postwar norm.INVENTORIESBusinesses kept inventories at extremely low levels relative tosales throughout 1993, and a major swing in farm inventories resultingfrom the Midwest floods and Southeast drought influencedthe quarterly GDP growth pattern over the year (Box 2-1). The inventory-to-salesratio was under 1.5 throughout the year, and theratio for manufacturing hit an all-time low during the fourth quarteras sales perked up faster than some businesses expected. Severalfactors were at work. First, the inventory-to-sales ratio inmanufacturing industries is in secular decline. Second, businessesseemed to lack confidence in the strength of the recovery. Disappointinggrowth in the first and second quarters of 1993 and pessimismabout the economy's future prospects probably made businessesextremely cautious about producing at a faster rate thanwas absolutely necessary. Third, production problems in some keysectors that did experience a sharp pickup in demand, especiallyautomobiles, probably prevented some firms from achieving thelevel of inventories that they deemed optimal.The extremely lean inventories of late 1993 are good news for1994. As 1994 opens, manufacturers are in a position where theyrisk losing business because of inadequate inventories, and theyare therefore under pressure to increase output. There seems to berelatively little risk that overaccumulation of inventories will leadto production cutbacks in 1994.66

Box 2-1,—The Economic Effects of the Midwest Floods of 1993Last summer's floods in the Midwest were a human tragedywhose immense scope was obvious to all. Measuring their economiceffects is more difficult, however. The floods disruptedthe day-to-day operations of businesses, destroyed inventoriesand crops, and wrecked a significant portion of the region's infrastructureand housing stock But because the level of economicactivity that would have occurred without the floods isunknowable, the effects of the flooding on third- and fourthquartereconomic performance cannot be definitively assessed.The clearest effect of the floods on national economic performancewas a decline in farm output The Bureau of EconomicAnalysis (BEA) of the Department of Commerce judgedthat $2.5 billion worth of farm output was destroyed by thefloods and the simultaneous drought in the Southeast TheBEA accounted for this crop loss by lowering its estimates offarm output by $7*5 billion (ammalized) in the third quarter of1993 and by a further $2.5 billion in the fourth quarter, Theadjustments were reflected in the change in farm inventories,The result of these acljustments was that measured real GDPgrowth was lowered by about 0,6 percentage point in the thirdquarter of 1993 and increased by about 0*4 percentage point inthe fourth quarter* The BEA also;• reduced estimated farm proprietors' income to accountfor crop damage and uninsured losses to farm property• lowered estimates of the rental income of persons andnonfarm proprietors* income to account for uninsuredproperty losses*Other flood effects are too embedded in the source data to beexplicitly measured. These include:* effects of reduced farm output on inflation• the negative effect of the floods on nonfarm businessoutput in affected areas• potential stimulative effects from the rebuilding of flooddamagedroads, bridges, railways, and houses**~espe~ciaHy if the rebuilding was funded from savings and notinsurance company payouts (whose effects are more likea transfer from owners of insurance companies to policy*Holders)/ - ' - "• • '-' •/"'.•'.# the effect of Federal disaster assistance^ insurance payments,and emergency grants.67

RESIDENTIAL INVESTMENTResidential investment was an enigma over the first part of1993. Mortgage rates fell to 20-year lows, affordability was at 20-year highs, yet housing starts were flat for the first half of theyear. Finally, starting in August, housing activity began to respondto these favorable economic conditions and posted sharp additionalgains. Housing starts rose a stunning 25 percent between July andDecember.A healthy fraction of new homes being sold today are sold beforeconstruction has started. This suggests that the gains in residentialconstruction are solid and that the upward trend in housing shouldcontinue without any likely inventory cycle. As 1993 ended, the inventory-to-salesratio of new homes, as measured by the stock ofhomes for sale divided by the number actually sold in a month, wasat its lowest level since 1986. Given the unfavorable underlying demographicfactors for housing, especially the relatively low rate ofhousehold formation, housing turned in a very good performancelate in the year and was a solid contributor to the economy's advance.NET EXPORTSAs mentioned earlier, net exports shifted from being a major contributorto economic growth over the 1987-90 period to being a retardantin 1992 and 1993. Weak foreign economies severelycrimped export growth, while imports surged with the capitalequipment spending boom. Even the growth rate of service-sectorexports, the brightest component of U.S. trade, was hit by slow foreigngrowth. In current dollar terms U.S. trade in services stillposted a $68 billion surplus in 1993, however, illustrating thestrong comparative advantage of U.S. firms in this sector. And exportsof services represented about 25 percent of total U.S. real exportsin 1993. By comparison, agricultural exports in 1993 representedonly about 6 percent of the total.EMPLOYMENT AND PRODUCTIVITYThe increases in consumer spending and investment and the generalpickup in the economy over the past year and a half have finallyled to a more acceptable pace of job creation—something thatwas completely missing over the first year of recovery. On average,the economy generated 162,000 jobs per month over 1993, comparedwith only 81,000 jobs per month over 1992, and the loss of73,000 jobs per month over 1991.One important development in 1993 was the lengthening of thefactory workweek and the increase in manufacturing overtime. InNovember the workweek reached a postwar record high, and overtimereached its highest level since the data series was begun in68

the 1950s. Employers have apparently been concerned about thefixed costs of adding new workers and about the unsteady natureof the expansion. Many have apparently been concerned that anotherdecline in orders might force new rounds of layoffs, and sothey have been trying to squeeze the most output possible out oftheir existing work forces. The good news is that, with the workweekand overtime so high, there should be building pressure onbusinesses to add new workers as demand continues to increase.Productivity growth was weak over the first half of 1993 but reboundedin the third quarter as the economy picked up speed. Employerskept a tight rein on labor costs as output increased. Giventhe moderate rates of wage increase, nonfarm unit labor costs (thecost of labor needed to produce one unit of output) increased byabout 2 percent, about the same as the 1992 increase. These modestgains in unit labor costs helped to give a healthy boost to corporateprofits and maintained the prospects for low inflation.INCOMESReal disposable income increased by a modest 1 percent in 1993.Pretax profits posted strong increases, and proprietors' income wasup by over 7 percent. But wages and salaries increased by a moremodest percentage, and interest income was stagnant as interestrates fell. Average weekly earnings of production workers barelykept up with inflation.INFLATIONNineteen hundred and ninety-three saw the best inflation performancein a generation. The implicit price deflator increased bythe smallest percentage since 1964. During 1993 the consumerprice index (CPI) registered its smallest increase since 1986, andthe core CPI (excluding food and energy) increased by the smallestpercentage since 1972. Meanwhile the producer price index (PPI)for finished goods showed virtually no increase over the course ofthe year. The producer price index for finished goods excluding foodand energy, the so-called core PPI, showed its smallest annual increasesince the government began compiling this series in 1973.Measured inflation increased as 1993 began, as prices of apparel,public transportation, tobacco products, and motor fuels postedlarge increases. The GDP price deflator, the CPI, and the PPI forfinished goods all accelerated from their previous quarter's rate ofchange. The increase in inflation was temporary, however; manyanalysts believe it was due to problems with seasonal adjustment.Lower measured inflation returned after the spring.Wage gains remained modest, as mentioned, and showed notendency to accelerate over the course of the year. Medical costsshowed some signs of moderating over 1993 and recorded their69

smallest annual increase in 20 years. They still increased at roughlytwice the pace of the nonmedical CPI, however. External pricefactors, such as commodity prices, remained generally tamethroughout the year, and oil prices fell sharply, suggesting a flatcommodity price trajectory as 1994 began. (Box 2-2 discusses thepossible economic effects of lower oil prices.) Given that the economyremains below its potential output level, there appear to befew inflationary seeds from 1993 blowing into 1994.MONETARY POLICYShort-term interest rates were essentially constant over thecourse of 1993, and the Federal Reserve continued its vigilance oninflation. After indications of an acceleration of prices in the firstseveral months of the year, the Fed adopted an asymmetrical policytilt, poised to tighten monetary policy if inflation gained momentum.Over the summer, however, low inflation returned, and theFed reverted to its neutral policy stance.The tendency in recent years for the broad monetary aggregatesto behave in atypical ways, given changes in interest rates and economicactivity, led the Federal Reserve to place less emphasis onthese money supply measures in 1993. Some of the change in thebehavior of the monetary aggregates stems from massive portfolioshifts by American households. For example, the sharp decline ininterest rates on bank certificates of deposit led many householdsto shift money into stock and bond mutual funds. The downwardshift of M2 (the broad monetary aggregate) relative to income thatresulted from this and other developments clearly reduced that aggregate'susefulness as a short-term policy indicator. The sluggishgrowth of M2 did not signal that the Fed was running a tight monetarypolicy: In 1993, growth rates of Ml (the narrow monetary aggregate)and the monetary base were up to 10 percentage pointshigher than M2 growth.Another policy indicator in which the Federal Reserve has expressedsome interest is the concept of a real short-term interestrate—the nominal rate less expected inflation. It is generally assumedthat real short-term rates will gradually rise as the economystrengthens and the output gap shrinks. The Federal Reserve'sshift toward reliance on a broader set of guidelines for setting monetarypolicy, including short-term interest rates, appears to be anappropriate adaptation to changing events. It should allow theoverall condition of the economy to be carefully monitored, and anappropriate policy response to be crafted.FISCAL POLICIES AND THE TIMING OF OUTPUTThe uneven pattern of strong growth in late 1992 and slowdownin early 1993 was attributable in part to tax and spending changes70

Box 2-2.—The Economic Effects of Lower Oil PricesOil prices tumbled during 1993. Over the first half of theyear, West Texas Intermediate crude oil averaged about $20per barreL By the middle of October the price was down toabout $18,25 per barrel, and by late December the price hadfallen to about $14.25—more than 25 percent lower than earlierin the year. Weak global economic conditions, including therecessions in Europe and Japan, the seeming inability of theOrganization of Petroleum Exporting Countries (OPEC) to restrictits members' production levels, and the possibility thatIraq would soon be exporting substantial quantities of oil againwere likely contributors to the price declines.A drop in the price of oil, like any relative price change, hasmicroeconomic consequences; Some sectors benefit and othersare hurt. Lower oil prices will likely bring painful dislocationsin the ILS. oil industry and the regions where it is concentrated.If oil prices remain low, domestic oil output is likelyto decline faster than it already has been. U.S. dependence onforeign oil would also be likely to increase. Lower oil priceswould also cause more energy to be used and might lead tohigher levels of pollution*Because oil is such an important input into the VS. economy,however, lower oil prices will also have favorable effectson the U*S* macroeconomy in 1994—if prices stay in the $15-per~barrel range. There are several transmission channels. Themain beneficial effect is that lower oil prices translate intolower inflation, which boosts real disposable income for consumers,giving them the wherewithal to make more nonoil purchases.Lower oil prices also mean that businesses have lowercosts, which translate into higher cash flow and profit margins,leading in turn to more investment spending. Foreign industrialeconomies also get an upward boost from lower oil pricesand in turn demand more US. exports.Some economic models suggest that if the 25-percent drop inoil prices in 1993 were sustained over 1994, real GDP growthwould be between 0,3 and 0.4 percentage point higher in 1994.The same models predict that CPI inflation would be noticeablylower.in 1992 that served to raise aggregate demand in 1992 and depressit in the first half of 1993. First, there was a temporary burst indefense spending in the second half of 1992. Second, a decrease inindividual income tax withholding raised consumer spending in1992 but reduced it in 1993 as households made their final settle-71

ments with the Internal Revenue Service (IRS). The Council estimatesthat these two factors added 0.2 percent to the level of GDPin the second quarter of 1992 and 0.4 percent in the third andfourth quarters. These gains were temporary, however. GDPgrowth was 0.3 percent lower in the first quarter of 1993 and 0.4percent lower in the second quarter than it would have been withoutthese fiscal factors. There were also effects on the timing ofconsumer spending arising from the expectation and misperceptionof 1993 tax changes.Defense SpendingDuring the second half of 1992, defense spending temporarily increasedwell above its trend. Part of the change was in purchasesof durables. The other portion was in "other services," whose increasewas in part due to expenditures to close military bases.Chart 2-7 shows the temporary burst of spending relative to abaseline which is estimated as the trend in defense spending fromthe third quarter of 1989 to the third quarter of 1993, excludingthe quarters of the Persian Gulf crisis and the last two quartersof 1992.Chart 2-7 Defense Spending: Actual Versus BaselineAlthough defense spending is falling in the post-Cold War era, two recent periods ofrelatively high defense spending stand out.Billions of 1987 dollarsouu290Persian Gulf War280270Actual>Baseline\\^x ^ ^ \ Temporary Defense Spending260-* \ / A250-240-1 111 1 11989 1990 1991 1992 1993Note: Baseline is trend in spending from 1989:111 to 1993:1V, excluding 1990.IV-1991:111 and 1992:III-IV.Sources: Council of Economic Advisers and Department of Commerce.72

Change in Tax WithholdingThe change in the withholding tables reduced income tax withholdingfor most taxpayers by an average of $25 a month beginningin March 1992. Taxpayers therefore owed the IRS an additional$250 (or received a smaller refund) in 1993. Households basicallyfaced two choices: They could let the cash accumulate in their bankaccounts and use it to make the extra $250 payment in April, orthey could spend it. From both time-series and cross-sectional estimatesof consumer behavior, the Council estimates that roughly 40percent of households spent the extra cash because of either liquidityconstraints, myopia, or inertia. Given their incomes, thosehouseholds then had to reduce spending when they settled with theIRS in 1993. This shift in take-home pay led to the estimated shiftingof consumption from 1993 to 1992 shown in Chart 2-8. Thepresumption is that households readjusted withholding and spendingafter their 1993 final settlements, so that this pattern will notrepeat itself.Chart 2-8 Effects of 1992 Tax Withholding Change on Personal ConsumptionThe reduction in personal income tax withholding in 1992 induced some householdsto shift consumption from 1993 to 1992.Billions of 1987 dollars3500Reduced Consumption asHouseholds Repay IRS3450 -3400 -(Actual)33503300Extra Consumption fromReduced Withholding(Estimated)3250J_ I I I1991 :IV 1992:1 II III IVNote: See text for calculation details.Sources: Council of Economic Advisers and Department of Commerce.1993:1There have been other changes in tax rules that worked in anoffsetting direction regarding tax payments, but not in an offsettingdirection regarding consumption. Specifically, the change in the73

safe-harbor rules for underpayment of estimated tax probablycaused some high-income taxpayers to move payments that theywould have normally made in their April 1993 final settlementswith the IRS to 1992 estimated tax payments. A household payingestimated tax is probably less likely to let changes in the timingof tax payments affect its consumption than is the typical household.Expectations of 1993 Tax ChangesAnticipation and misperception of proposed 1993 changes in thetax law could have had further effects on the timing of demand.During his campaign for the Presidency, then-Governor Clintonproposed an investment tax credit. In December 1992, then-SenateFinance Committee Chairman Bentsen and House Ways andMeans Committee Chairman Rostenkowski announced that anycredit would be retroactive to December 3, 1992. Earlier in thequarter some firms may have delayed making investments in anticipationof receiving such a credit. Except for information-processingequipment, however, there was no discernable shift in investmentspending during the fourth quarter of 1992. Given the lagsin making investment decisions, it is not surprising that the anticipationof a possible credit appears to have had little effect on mostcomponents of investment. There was, however, a substantial decelerationin investment in computer and other information-processingequipment during the final quarter of 1992. It is probablyrelatively easy to change the scheduling of purchases of such equipment.Hence, this deceleration could well be explained in part byfirms delaying purchases in anticipation of the credit.Apparently there were also widespread misperceptions about thescope of the income tax increases in the Administration's economicplan. As late as the end of July 1993, over 70 percent of respondentsto a Wall Street Journal/NBC News poll thought that middleclasstaxpayers would bear most of the tax increases. In fact, theincome tax increases apply only to families with taxable incomesover $140,000—the top 1.2 percent of households. Hence, it appearedfor much of 1993 that many consumers incorrectly expectedan income tax increase. This misperception may have accounted forsome of the weakness of consumption in early 1993.Do the 1993 Fiscal Measures Threaten 1994 Growth'?High-income households will have to make increased tax paymentsin April 1994 because of the increase in income tax rates enactedin 1993. There is reason to expect, however, that these extrapayments by high-income individuals in 1994 will have a smallereffect on GDP than the extra payments made in 1993 by taxpayersaffected by the 1992 change in withholding. One reason is thathigh-income taxpayers are presumably more likely to make the74

payments out of savings. Another is that many high-income taxpayersreduced their 1993 tax liability by shifting income from1993 to December 1992. Moreover, under provisions of the OmnibusBudget Reconciliation Act of 1993 (OBRA93), these taxpayerscan spread their increased 1993 payments over 3 years.Nineteen hundred and ninety-four will also see an increase inthe earned income tax credit (EITC). Payment of the EITC willtend to stimulate demand. Although households are entitled to collectthe EITC during the tax year, most only claim it when theyfill out their returns the following year, and they are likely tospend most of it.THE FEDERAL GOVERNMENT'S FISCAL STANCEThe size of the budget deficit is an incomplete measure of thestance of fiscal policy. One important function of the budget is toact as an automatic stabilizer against economic fluctuations. Whenthe economy enters a recession, tax collections fall as incomes decline,and there is an increase in government spending on suchitems as unemployment insurance and income maintenance programs.As a result, the budget deficit tends to increase in recessionsand fall in recoveries, without any change to the tax systemor in legislated expenditures. Chart 2-9 plots historical and predictedlevels of the actual Federal budget deficit, which is expectedto fall from 4 percent of GDP in fiscal 1993 to about 2.3 percentof GDP by the late 1990s.The effects of the business cycle and inflation mask the true fiscalstance of the government. Declines in output from its full-employmentlevel reduce revenue and increase expenditures. Inflationreduces the real interest cost to the government for a given levelof nominal interest payments, which are included in the deficit.Chart 2-9 shows the actual deficit and the inflation-adjusted structuraldeficit. (The structural deficit is the one that would prevailat a high level of employment.) The estimates use the CongressionalBudget Office's estimate of the cyclical adjustment. For theinflation adjustment, the outstanding Federal debt (bonds held bythe private sector plus the monetary base) is multiplied by the inflationrate. As a result of the Administration's budget plan, the inflation-adjustedstructural deficit falls to less than 1 percent ofGDP after fiscal 1994—its lowest level since 1982. This share,moreover, remains constant for the remainder of the forecast period.The conclusion is that current fiscal policy—primarily as a resultof the Administration's recently adopted deficit reductionplan—is following a more balanced and stable course than did thepolicies of the previous decade.75

Chart 2-9 Alternative Measures of the Stance of Fiscal PolicyFiscal policy as measured by the adjusted structural budget deficit is forecastto move to a more stable trajectory with the current deficit reduction plan.Percent of GDP1959 1962 1965 1968 1971 1974 1977 1980 1983 1986 1989 1992 1995 1998Fiscal YearsNote: See text for details.Sources: Council of Economic Advisers, Congressional Budget Office, Office of Management and Budget, andBoard of Governors of the Federal Reserve System.INDUSTRIAL AND REGIONAL DISPARITIESDisparities in growth across industries became more pronouncedover 1993. Information-processing equipment benefited from heavyinvestment demand and experienced double-digit output gains.Certain interest-sensitive sectors of the economy, especially furniture,motor vehicles, and major appliances, were clearly helpedby the sharply lower long-term interest rates and also posted largeoutput gains. At the opposite end of the spectrum, the defenserelatedindustries—aerospace, instruments, and ordnance—sawcontinued sharp production cutbacks.These industrial disparities contributed to regional differences ineconomic activities. The State of California has been particularlyhard hit by the defense builddown and has yet to start postinggains in nonagricultural employment, even though the rebound inthe Nation as a whole began in March 1992. Aerospace jobs are aparticularly acute problem: Of the 125,000 defense-related jobs thatare projected to be lost in California from 1993 to 1997, 90,000 willbe in the aerospace sector. California's 8.7-percent unemploymentrate at year-end contrasted with a rate of just 6.4 percent for theNation as a whole (Chart 2-10).76

Chart 2-10 Unemployment Rates by State, December 1993The national unemployment rate masks substantial regional differences. California is theonly large state with an unemployment rate above 8 1/2 percent.8.5% and over7.3% - 8.4%ED 6.2% - 7.2%3 5.0% - 6.1%• 4.9% or belowSource: Department of Labor.Chart 2-11 Nonfarm Employment Growth by State, November 1992 to November 1993Employment gains are now widespread across the country. California remains akey exception.I j 2.0% and overE3 1.0% - 1.9%0% - .9%-.1% or belowNote: Chart shows percent change in nonfarm payroll employment.Source: Department of Labor.77

Meanwhile, the Mountain States were 1993's growth leaders.Strong income and employment gains were seen in Utah, Colorado,New Mexico, and Arizona (Chart 2-11).DEFICIT REDUCTION ANDTHE REAL INTEREST RATEAs the new Administration took office, it appeared that the ratioof Federal Government debt to GDP was on an unsustainable upwardpath. The explosion of debt in the 1980s had kept real interestrates high throughout the decade. Hence, nominal rates did notfall by as much as the 1980s' victory against inflation warranted.Much of the recent reduction in long-term interest rates, it will beargued below, should be attributed to the change in budget policyin early 1993. The close linkage of the decline in long-term interestrates to the political and legislative events of the last 15 monthsgives strong support to the view that high Federal debt in the1980s was responsible for the high real returns on long-term bonds,and that the change in Federal fiscal policy is responsible in largepart for the declines in real interest rates.The President's economic plan reoriented fiscal policy from consumptiontoward investment, both by reducing the size of projectedbudget deficits and by changing the composition of Federal spendingfrom current expenditures to investment. The reduction in futureFederal borrowing was well received by the financial markets.In the words of the Federal Reserve Board Chairman in his July1993 Humphrey-Hawkins testimony, the financial markets"brought forward" the effects of future deficit reduction. The eventanalysis shown in Chart 2-12, linking the announcement and enactmentof credible budget reduction to changes in the long-terminterest rate, provides support for the view that the interest ratedeclines were largely due to budget policy.Long-term interest rates are near the lowest they have beensince the 1960s. On election day 1992, the 10-year Treasury yieldwas 6.87 percent. It has ratcheted down several times since then,with the declines closely tied to political and legislative events. Theyield fell to 6.02 percent at the end of February, following TreasurySecretary Bentsen's announcement of the proposed energy tax andthe President's speech announcing his economic plan. The declinestalled in April when the stimulus component of the President'splan was filibustered in the Senate. It resumed its downwardmovement when the House passed the President's budget in lateMay. It then fell to 5.51 percent at the end of August after the planwas finally enacted by the Congress.Long-term rates did increase in late 1993, reversing some of thedecline that followed the passage of OBRA93. Reports in the finan-78

Chart 2-12 Yields on 10-Year Treasury SecuritiesAdministration policy actions have had a noticeable effect in reducinginterest rates.Percent7.06.5 \-* '6.0Secretary BentsenDetails FiscalMeasures (1/24/93)President's PlanIntroduced (2/17/93)House ApprovesPresident's Plan (5/27/93)5.5Final Approvalof Budget (8/6/93)5.0_L1992 1993Source: Department of the Treasury.cial press attributed the increase in yields to the release of favorableeconomic data and to speculation by some financial observersthat the Federal Reserve would tighten monetary policy. But thesedata and statements did not actually signal much that was newabout the state of the economy nor any change of monetary policy.Unobserved factors, psychological or otherwise, are important determinantsof market prices. Still, despite large, unexplained fluctuations,the three major moves in yields shown in the chart haveresulted in a cumulative reduction in yields on 10-year Treasuriesof 104 basis points from the election to December 31, 1993.The sharp decline in long-term interest rates in 1993 continuedthe downward trend that began in the early 1980s. Interest rates,both short- and long-term, had reached historic highs in the late1970s and early 1980s, during the period of very high inflation andthe subsequent period of very tight money. The latter period wascharacterized by a negative or slightly positive slope to the yieldcurve (which relates interest rates to lengthening maturities).Long-term real rates remained high throughout the 1980s. Chart2-13 decomposes the nominal yield on 10-year Treasuries into expectedinflation and the implied ex ante real interest rate. Expected79

inflation is measured by the Blue Chip consensus forecast (a privatesector survey of forecasts) for 10-year inflation, which hasbeen compiled semiannually since 1980.Chart 2-13 Real Interest RatesRecent declines in the nominal long-term interest rate reflect declines in theex ante real rate from its unusually high level over most of the 1980s.Percent16Nominal 10-Year Treasury YieldEx Ante Real 10-Year Treasury Yield1980 1983 1986 1989 1992Note: Real rate is nominal rate minus a consensus forecast of 10-year inflation.Sources: Council of Economic Advisers, Department of the Treasury, and Eggert's Blue ChipEconomic Indicators.Over the period shown in the chart, the ex ante real rate averagedalmost 5 percent. Unfortunately, comparable data on longtermexpected inflation are not available prior to 1980. Ex post realrates provide only an imperfect guide to ex ante rates, especially forlong-term rates, because there are so few time periods over whichto average the expectational errors. Over the second half of the1950s, the average ex post real 10-year rate was about 1 percentagepoint, over the 1960s it was -0.4 percentage point, and over the1970s it was about +0.7 percentage point. The low ex post realrates of the 1960s and 1970s were surely partly explained by theunexpected rise in inflation of the 1970s. For the 1960s and 1970s,the ex post 10-year real interest rate understates the ex ante realrate because of the unexpected inflation in the late 1960s andthroughout the 1970s. Based on forecasts of 10-year inflation, theCouncil estimates that ex ante real 10-year interest rates averagedslightly above 0.5 percent in the 1960s and about 2.4 percent in the80

1970s. Although higher than the ex post rates for the same periods,these rates are well below the ex ante rates of the 1980s.Therefore, it appears that real rates were unusually highthroughout the 1980s. Only with the declines in nominal rates overthe last few years has the real rate begun to decline. With the mostrecent set of observations, those of October 1993, the 10-yearTreasury yield was 5.33 percent and the Blue Chip consensus forecastfor long-term inflation was 3.3 percent, so the real rate wasclose to 2 percent. This level of real rates is somewhat above historicalnorms (Box 2-3).Box 2-3.—Are Current Long-Term Interest Rates Sustainable?Long-term Treasury bonds now yield about 6 percent. Thesenominal interest rates are very low by the standards of the lastdecade. But given the expected rate of inflation and historicalstandards for real interest rates, they appear to be sustainable.Long-term expected inflation is probably between 3 and 3%percent, implying a 2V2- to 3-percent real yield on long-termTreasuries. A real interest rate in this range, although low relativeto recent experience, is not low relative to historical experience.From 1953 to 1982 the ex post real yield on 10-year Treasuriesaveraged about 1 percent. Over the period 1900-50, the expost real yield on government bonds was under 1 percent, butthese bonds are not wholly comparable to current Treasurynotes because they were callable and had tax benefits.Clearly, if inflation remains under control, bond yields havesome way to fall to come into line with their historical realaverages.HOW DEFICIT REDUCTION REDUCES LONG-TERMINTEREST RATESThe previous section discussed the circumstantial evidence linkingFederal deficit reduction to the decline in real long-term interestrates. Over the 1980s, which saw a growing and potentially explosiveFederal debt, real long-term rates were unprecedentedlyhigh. Over the last 15 months there have been sharp declines inreal rates associated with policy changes that provide for credibledeficit reduction. This section explores the four economic mechanismsthat link Federal deficit reduction policy with the real rate:national saving, investment, and capital accumulation; the policymix; short-run real activity; and inflation risk.81

Saving, Investment, and Capital AccumulationThe Federal debt-GDP ratio doubled in the 1980s, jumping from22 percent of GDP in 1980 to 46 percent currently (Chart 2-14).To the extent that Federal debt substitutes for productive capitalin an individual's portfolio, the increase in debt reduces income andproductivity and raises the marginal product of capital and thereforethe real interest rate. The Administration's economic plan ismeant to increase national saving and national investment. The cumulatedadditional investment will have a significant effect on thecapital stock and therefore on future real interest rates. (See thesection on "Long-Term Effects of Deficit Reduction" below for estimatesof the impact of the plan on wages and the capital stock.)Chart 2-14 Net Federal Debt as Percent of Nominal GDPFrom the end of World War II until 1980, the debt-GDP ratio fell to about 20 percent.Since 1980 it has increased to over 45 percent.1945 1949 1953 1957 1961 1965 1969 1973 1977 1981 1985 1989 1993Fiscal YearNote: Net Federal debt is defined as debt held by the public less debt held by the Federal Reserve.Sources: Department of Commerce and Office of Management and Budget.The policy changes in OBRA93 reduce the projected deficit forfiscal 1998 by 1% percent of GDP. Not all of this projected reductionin the deficit will go to national investment, however. Changesin either the current account or private saving could offset the decreasein Federal dissaving.During the 1980s much of the Federal deficit was offset by increasesin the current account deficit. As the budget deficit is reduced,there should be similar decreases in the current account82

deficit. The mechanism is simple. Deficit reduction is generally associatedwith an improvement in the price competitiveness of U.S.goods and services abroad, and therefore an increase in net exports.This expansion in net exports provides a stimulus that partiallyoffsets the contractionary impact of spending cuts and tax increaseson domestic demand. While it is difficult to determine themagnitude of this offset precisely, studies suggest that net exportswill rise by approximately 40 percent of the initial deficit reduction.Declines in private saving could also offset decreased Federal dissaving.However, the experience of the 1980s provides strong evidenceon the reaction of private savers to government deficits. Personalsaving did not act to offset ballooning Federal deficits in the1980s, contrary to the predictions of neo-Ricardian theory. Therefore,we expect no decrease in private saving as deficits are reducedunder the President's economic plan. After taking into account thereduction in the current account deficit, we estimate that the deficitreduction plan enacted in OBRA93 should increase the share ofnational investment in GDP by about 1 percentage point.The deficit reduction package should increase the capital stock,as productive capital substitutes for government debt in privateportfolios. An increase in the share of investment in GDP of 1 percentagepoint would have a substantial effect on the capital-laborratio—raising it in steady state by about 10 percent (see below fordetails of the assumptions underlying this calculation). With conservativeassumptions about the curvature of the production function(which governs how much output per worker will increase fora given increase in capital per worker), such a change in the capital-laborratio would be expected to reduce the return on capitalby about 2 percentage points—which is slightly higher than the declinein real long-term rates that we have seen to date.It takes many years, however, to adjust to a new steady state.Along the transition path, the return on capital would fall onlygradually. So, even if we accept the implied reduction in thesteady-state return on capital, capital deepening alone cannot accountfor the sharp reduction of interest rates on long-term bondsthat has already occurred.Policy MixCredible deficit reduction also might affect long-term interestrates through the expectation of a changed mix of fiscal and monetarypolicy. In the 1980s, the Federal Reserve pursued a relativelyrestrictive policy to counter the stimulus engendered by loose fiscalpolicy. This mix resulted in high real interest rates. With credibledeficit reduction, the Federal Reserve will be able to achieve agiven level of nominal demand with a less restrictive monetary policy.This shift in the policy mix should reduce future real shortterminterest rates. Expectations that short rates will be lower in83

the future should be reflected in lower real long-term rates. As aconsequence, the composition of output will shift toward investmentat the expense of consumption.The Short-Run Level of Real ActivityLong-term rates might also fall because of bad news about expectedfuture real economic activity. Real growth in the first halfof 1993 was indeed disappointing. But both Administration and privateforecasters believed, correctly as it turned out, that growthwould be better in the second half of the year. Moreover, if thereare fears of a future slump, why is the stock market at recordhighs? Presumably, market participants expect good earnings anddividends. The low bond yields and high stock values are consistentwith the path of stable growth, low inflation, and decreasing unemploymentthat the Administration forecasts. Finally, the news of increasinggrowth that began to emerge in the fall was greeted byonly modest increases in long-term rates.Inflation RiskA decline in expected inflation could also account for the declinein long-term bond rates associated with the deficit reduction plan.Chart 2-13 shows, however, that there is no break in inflation expectationsassociated with this decline in long-term bond rates. Thedifference between the nominal and real interest rates in Chart 2-13 gives a time-series of expected long-term inflation. In October1992 the Blue Chip consensus expected an average annual GDP inflationof 3.3 percent for 1994-98 and 3.4 percent for 1999-2003.In October 1993, the consensus was again for 3.3-percent inflationfor 1995-99, and 3.3 percent for 2000-2004. Hence, the consensusforecast implies that virtually all the recent reductions in nominallong-term rates were also reductions in real rates.SHORT-RUN EFFECTS OF INTEREST RATESThe reduction in real long-term interest rates has been an importantelement powering the economic recovery. As discussed elsewherein this chapter, reductions in Federal purchases—especiallyfor defense—have been an important factor holding back the recovery.As the reductions in expenditures and increases in taxes builtinto the Administration's plan take effect, they—taken in isolation—wouldplace a continued drag on the economy. But theyshould not be taken in isolation. Because long-term interest ratesanticipate credible future fiscal consolidation, the effects of deficitreduction in long-term rates show up in advance of the actual deficitreduction. The resulting increases in interest-sensitive expendituresprovide a boost to economic growth that works in the oppositedirection of the direct fiscal effect. This increase in interest-sensitivespending is closely linked with the sustained reduction in84

long rates. In 1993, real GDP in the interest-sensitive sectors (businessfixed investment, housing, and consumer durables) rose 11percent, while the non-interest-sensitive sectors showed virtuallyno growth.The interest-sensitive components of spending did not, however,increase uniformly throughout 1993. Producers' durable equipmentwas strong throughout the year, growing 18 percent from fourthquarter to fourth quarter. Expenditure on consumer durables wasalso strong throughout the year (with an 8-percent growth rate),but production of automobiles was irregular. Investment innonresidential structures was weak for most of the year, most likelyas a result of high vacancy rates in existing buildings, due inturn partly to overbuilding in the 1980s. The lags in the responseof residential construction to the low interest rates were unusuallylong. Residential investment fell at a 4-percent annual rate in thefirst two quarters of 1993, but rose at a 21-percent rate in the lasttwo quarters.Net exports would appear on many economists' lists of interestsensitiveexpenditures. Normally, low interest rates should lead todepreciation of the dollar and therefore to increased exports. Thischannel for interest rates was offset by other factors, however.Short-term rates fell around the world, not just in the UnitedStates, and the dollar has actually appreciated slightly on a multilateralbasis. (A further discussion of the exchange rate is presentedin Chapter 6.)LONG-TERM EFFECTS OF DEFICIT REDUCTIONThe key macroeconomic rationale for reducing the Federal deficitis to increase investment and therefore productivity and real incomesin the future. Changes in fiscal policy should exert sustainedeffects on national investment and saving. As discussed above, thePresident's economic plan should increase the share of domestic investmentin GDP by about 1 percent once it is fully phased in.Chart 2-15 shows the projected impact of such an increase in thenational investment rate on the marginal product of capital, thereal wage rate, and the capital stock. (Box 2-4 contains details ofthe computation.) The data are expressed relative to the initialsteady-state position.All of the variables require several decades to adjust to theirsteady-state values. The ultimate reduction in the return to capitalis about 2 percentage points. The reduction in long-term rates wehave already seen is closer to IV2 percentage points. The reductionin the marginal product of capital takes place, however, over a verylong period of time. Indeed, as presented in the chart, the marginalproduct of capital is down only 1 percentage point after 8 years.Moreover, since capital and bonds are not perfect substitutes, their85

Chart 2-15 Dynamic Effects of Deficit ReductionThe real effects of raising the saving rate through deficit reduction includehigher wages and investment and lower real interest rates.Percent12Percentage points10Wage(left scale)Marginal Product of Capital(right scale)0 5 10 15 20 25 30 35 40 45 50YearsSource: Council of Economic Advisers.rates will move by less than one for one. Other factors, such as expectationsabout the policy mix, therefore must explain the bulk ofthe rate reduction.A small increase in the investment rate buys a substantial increasein the capital stock, again over a long period. This increasein the capital stock should ultimately raise real wages and productivityby about 3 3 A percent.Initially, consumption falls because of the direct effect of the Federalbudget package. As output and productivity increase, however,so does consumption. It takes about 5 years for the change in fiscalpolicy to have a net positive effect on consumption. Thereafter, theeffect of the economic plan is to raise consumption permanently,eventually by more than 2V2 percent per year.These calculations are quite conservative. They do not assumeany externality from capital accumulation or any extra boost toproductivity from embodied technological progress. If these factorsare present, the gains from the increase in investment could besubstantially higher.86

Box 2-4.—-Estimating the Long-Run Effects of DeficitReductionChart 2-15 shows the results of applying a model of economicgrowth developed by Robert M, Solow to the change inthe investment rate engendered by OBRA93. To carry outthese calculations, we make several assumptions:• The production function is Cobb-Douglas with a capitalshare of one-third. (The Cobb-Douglas function presumesa fairly large degree of substitutability between capitaland labor and will thus show a substantial output effectof increasing capital).• The rate of growth of the economy's potential output (alittle below 2,5 percent) plus the rate of depreciation (alittle above 9 percent) is 1L5 percent.• The initial investment rate is 13 percent, about the ratioof fixed investment to GDP in 1993. It is assumed to riseto 13.4 percent the first year, 13*7 percent in the second,13.8 percent in the third, and is 14.0 percent thereafter.The magnitude and timing of the increases in investment re*fleet the increase in Federal saving from the deficit reductionpackage and the assumption (see text) that 40 percent of theincreased Federal saving will be offset by a reduced current accountdeficit.These calculations are subject to a considerable degree of tincertainty.They are sensitive to the form of the productionfunction and the assumed rates of depreciation and growth inpotential.THE ECONOMY'S RESPONSE TO HIGHERINCOME TAXESCritics of the increase in income tax rates enacted in August1993 make two related claims: first, that higher tax rates will havean adverse effect on the level of saving, investment, and employmentin the economy, and second, that the higher tax rates onhigh-income taxpayers will not result in much (or any) increase intax revenues. The arguments offered to bolster these claims havea common foundation, namely, that the disincentive effects of highermarginal tax rates have a profound influence on individuals' behavior.We note first that economies can thrive under a wide range oftop marginal tax rates—which already weakens the arguments ofthese critics. In fact, the U.S. economy has performed extremelywell during periods of relatively high top marginal rates: We en-87

joyed healthy average real GDP growth of 4 percent per year overthe decade of the 1960s, when the top marginal income tax rate onwage and salary income averaged 80.3 percent, but less impressive2V2-percent average annual growth in the decade of the 1980s,when the top rate on wages and salaries averaged 48.4 percent.Also, many people in the United States admired the investment-ledeconomic boom that Japan enjoyed in the 1980s, when that countryhad much higher marginal income tax rates than did the UnitedStates. Obviously, many other important factors besides marginaltax rates determine saving and investment patterns and economicgrowth.DO TAXES CHANGE BEHAVIOR?A central tenet of economics is that relative prices matter. Taxeson capital and wage income change the relationships among thevarious prices that people face when deciding how much to save,invest, and work, and thus have an effect on the way people chooseto allocate their time (between supplying labor and taking leisure)and their income (between current consumption and saving). Thisobservation serves as the basis of the supply-side dictum that a reductionin taxes, by inducing people to work harder and save more,can induce higher rates of investment and economic growth.The extent to which changes in the marginal tax rate on incomeaffect labor supply and saving has been a subject of extensive researchfor many years. The preponderance of evidence seems to indicatethat the changes are small. Saving rates seem to be little affectedby movements in after-tax interest rates, and hours workedand labor force participation rates for most demographic groupsshow only limited sensitivity to changes in after-tax wages.It is undeniable that the sharp reduction in taxes in the early1980s was a strong impetus to economic growth. But it is unlikelythat the principal source of this growth was people reacting to reductionsin marginal tax rates by working and saving more. Theexpansion that took place over the 1980s was tax-induced mainlyinsofar as lower taxes raised disposable income, which led to increasedconsumption. For example, between 1981 and 1986, theconsumption share of GDP increased from 64.5 percent to 67.4 percent.In other words, the 1980s' saw a classical Keynesian, demand-drivenexpansion—not the kind of expansion that supply-sidetheory predicted. Those who would point to the effects of the 1980'stax cuts as evidence of strong supply-side effects of taxation aregrossly overstating the case.The increases in the top marginal income tax rates enacted bythe Congress in 1993 will affect directly only the top 1.2 percentof American families. Moreover, top marginal tax rates remain lowby historical standards. While some individuals may alter their be-88

havior because of the higher tax rates and, for example, cut backtheir hours worked, others may actually increase their work effortin order to meet saving or consumption objectives. Overall, it is unlikelythat the Administration's plan will induce large responses inlabor force participation, hours worked, or savings in the overalleconomy.DO HIGHER TAX RATES INCREASE TAX REVENUES?Some also argue that income tax collections do not vary muchwhen top marginal tax rates increase or decrease. In this view, anincrease in income tax rates provides such a strong incentive forpeople to reduce their taxable income that the tax base shrinks andno additional revenue is generated. For example, a worker facinghigher taxes on wages might choose to take some compensation inthe form of nonwage benefits, such as more vacation time or largerfuture pensions. Similarly, individuals facing higher tax rates onunearned income might change the composition of their savings(while keeping the level constant) by investing in tax-exempt bondsrather than stocks or corporate debt.History can serve as a guide to determining whether these offsettingeffects of a change in tax rates are strong enough to have asignificant impact on revenues. For the United States, contrary tothe supply-siders' claims, income tax cuts have generally reducedincome tax revenues and tax increases have generally raised them.Chart 2-16 illustrates the effect that a number of changes in taxpolicy have had on personal income tax receipts. Several episodesstand out:• The 1964 tax cut reduced the top marginal rate from 91 percentin 1963 to 77 percent in 1964 and then to 70 percent in1965. Income tax revenue as a share of GDP dropped sharply.• The special Vietnam war surtax imposed additional chargesequal to 7.5 percent of tax in 1968, 10 percent in 1969, and 2.5percent in 1970. The result was a sharp increase in revenuesin 1968 and 1969, followed by a decline as the surtax wasphased out.• The 1981 tax cut reduced the top marginal rate from 70 percentto 50 percent in 1982 and cut tax rates for lower incomeindividuals over the 1982-84 period. Since then, personal incometax revenues as a share of GDP have never regained their1981-82 levels. Similarly, the 1986 tax reform reduced marginalrates in stages over 1987 and 1988, and revenues as ashare of GDP in 1988 fell slightly below their 1986 level.In short, evidence from postwar experience strongly suggeststhat personal income tax revenues rise when marginal rates are increased,and fall when marginal rates are reduced.89

Chart 2-16 Personal Income Taxes as Percent of GDPA number of historical changes in tax rates demonstrate the effect that ratechanges have on revenues.Percent10 |TaxReductionAct of 19751981 ReaganTax Cut(phased inover 1981-84)I I I I III M I I M MI I I l 111I I I I1955 1960 1965 1970 1975 1980 1985 1990Note: Shaded bars denote recessions.Sources: Department of Commerce and National Bureau of Economic Research.THE ECONOMIC OUTLOOKA credible deficit reduction plan and low long-term interest rateshave set the stage for moderate but sustainable economic growthover the mid-1990s. As the ratio of the Federal budget deficit toGDP declines, financial markets should be reassured that inflationand interest rates can be sustained at the levels of the 1950s and1960s. Interest-sensitive sectors of the economy, particularly businessfixed investment, should thrive and provide a steady demandbase. Housing and demand for household durable goods and automobilesshould also do well and underpin a steady economic expansion.The lean inventories that the economy was carrying as it entered1994 suggest that manufacturers should face gradually increasingorder levels. With the factory workweek and manufacturing overtimeat postwar highs, there will be growing pressure on firms toadd new workers to meet production demands. Higher employmentshould contribute to a steady increase in income and provide lift forall sectors of the economy. Income growth, which was outstrippedby increases in consumer spending over the course of 1993, should90

gradually overtake spending growth over the next couple of years,leading to a slowly increasing saving rate.Finally, foreign economies should recover over the next couple ofyears and provide an export lift for U.S. firms. By early 1995, netexports should once again be contributing to U.S. growth ratherthan subtracting from it. Strength in these sectors is expected tomore than offset the continued declines in real Federal spendingthat are expected over the next 5 years.The projected decline in the Federal budget deficit, from 4.0 percentof GDP in fiscal 1993 to about 2.3 percent of GDP by fiscal1996, should have benefits for the economy that go beyond interestrates. First, with less government "crowding out," more funds willbe available for private business investment. This higher investmentlevel will increase the Nation's capital stock and hence increaseits long-run potential output. Second, there is a linkage betweenthe Federal budget deficit and the current account deficit.Because foreign savings have been steadily flowing into the UnitedStates to cover the imbalance between domestic saving and domesticinvestment, we have been running large capital account surpluses.These in turn have required large current account deficits,because the two accounts are mirror images. A steady reduction ofthe Federal budget deficit, therefore, should also translate intosmaller current account deficits.With these developments, GDP growth of 2V2 percent to 3 percentper year—in line with 1993 growth—seems likely to continueover the rest of the 1990s (Table 2-2). This growth should be sufficientto reduce the unemployment rate steadily from the roughly6V2-percent level of late 1993 to about 5V2 percent (under the oldunemployment definition) by the end of 1998. (Box 3-1 in Chapter3 contains a discussion of the relationship between the old unemploymentrate, based on the historical Current Population Survey,and the new unemployment rate, based on the revised version ofthe survey.) These gains will be paired with healthy increases inreal disposable income, which are as important as job growth to theAmerican worker. After two decades of relative stagnation, realwages should post solid gains and allow American families onceagain to enjoy steadily improving living standards.Within this macroeconomic environment, short-term interestrates are likely to drift slowly upward over the coming years as theeconomy strengthens. Long-term interest rates are not expected toincrease appreciably, however, because inflation should remainsubdued and budget deficits will continue to shrink. Healthy gainsin productivity, the mainspring of rising living standards, will bethe key to keeping inflation tame. The higher rate of business investmentin the 1990s than in the 1970s and 1980s should keepproductivity on a relatively fast track and prevent unit labor costs91

TABLE 2-2.— Administration ForecastsItem 1993 1994 1995 1996 1997 1998 1999Percent change, fourth quarter to fourth quarterReal GDPGDP implicit deflator .Consumer price index(CPI-U)2.82.22.73.02.73.02.72.83.22.72.93.32.63.03.42.63.03.42.53.03.4Calendar year averageUnemployment rate(percent)Old basisNew basisInterest rate, 91-dayTreasury bills(percent)Interest rate, 10-yearTreasury note(percent)Nonfarm payroll employment(millions)6.83.05.9110.26.3(6.6-7.2)3.45.7112.35.9(6.2-6.8)3.85.7114.35.7(6.0-6.6)4.15.7116.25.6(5.9-6.5)4.45.7118.25.5(5.8-6.4)Sources: Council of Economic Advisers, Department of the Treasury, and Office of Management and Budget.4.45.7120.05.5(5.8-6.4)from accelerating. Health care reform should help rein in the spiralingcosts that have plagued that huge sector of the economy andthus help control overall inflation.The Administration's forecast is in line with private sector forecastsfor 1994 and the mid-1990s. It assumes no dramatic shift inaggregate economic performance beyond the trends clearly establishedover 1993—low inflation, low long-term interest rates, andhealthy investment spending. It also assumes that the historical(Okun's law) relationship between output and unemployment continuesto hold.RISKS TO THE FORECASTAs always, there are risks to this forecast. First, foreign economicactivity may not pick up as expected, especially if other governmentsremain reluctant to stimulate their economies by easing interestrates or pursuing countercyclical fiscal policies. It is also possiblethat the kind of industrial restructuring that the UnitedStates has endured over the past decade may prove to be a biggerhurdle than realized for key European trading partners and Japan.Also, the timetable for the correction of the Japanese speculativebubble of the late 1980s is unclear and could take longer than expected.The better the Group of Seven countries coordinate theirmacroeconomic policies over the next couple of years, the lower therisk of a prolonged pause in industrial-country growth.4.45.7121.992

A second risk is that long-term interest rates could take backmore of their declines of 1993. Such a move could crimp the interest-sensitivesectors that provided the economy with most of itsgrowth in 1993. Housing and business fixed investment would likelybe the most vulnerable sectors.A stalling out of consumer demand cannot be ruled out either.Consumers have been increasing their spending by a larger percentagethan their incomes have been rising over the past year,and they could turn pessimistic about the future again. Indeed,they have already done so several times in this business cycle expansion.An unexpected cutback in consumer spending would leadto higher than desired inventory levels, which would in turn reverberateback through the economy in the form of lower orders andperhaps lower employment in manufacturing.But economic growth could also exceed this forecast in the shortrun. The U.S. output gap widened sharply over the 1990-91 recession,and the economy could grow faster than its noninflationarypotential for a couple of years as part of a catchup process. Certainlygrowth of 4 percent would not be unprecedented during sucha phase. Among the factors that might contribute to faster than expectedgrowth are a faster than expected rebound of economicgrowth in Europe, Japan, and the rest of the industrial world,which would sharply boost U.S. exports; oil prices remaining relativelylow and giving a healthy boost to real disposable incomes;and the possibility that Americans have more pent-up demandthan realized for houses, automobiles, and other durable goods.SOURCES OF LONG-RUN GROWTHThe long-run rate of real GDP growth can be expressed as thesum of the individual growth rates of four components: (1) thenumber of available workers in the economy (the labor force); (2)the rate at which these workers are employed (the employmentrate); (3) the number of hours worked per year (which is proportionalto the average workweek); and (4) the quantity of goods andservices produced by an hour of labor (labor productivity). Table 2-3 details the contribution of each of these components to real GDPgrowth over several historical time periods and as projected for therest of the decade. Because many of these components vary withthe business cycle, their growth rates are measured from cyclicalpeak to cyclical peak. Estimates in the fourth column are based onactual data through the fourth quarter of 1993 and forecasts by theAdministration through 1999.The projected growth of nonfarm business product from the businesscycle peak in the third quarter of 1990 to the end of 1999 is2.7 percent per year. Underlying this projection is a growth in outputper hour of 1.5 percent per year and growth in hours of 1.2 per-151-444 0 - 9 4 - 493

TABLE 2-3.— Accounting for Growth in Real GDP, 1960-99[Average annual percent change!1960 Ito1981 I1973 IVto1981 III1981 IIIto1990 III1990 IIIto1999 IV1) Civilian2) PLUS.3) EQUALS4) PLUS.5) EQUALS:6) PLUS:ployment7) EQUALS:8) PLUS:9) EQUALS:10) PLUS:11) EQUALS.12) LESS:13) EQUALS: Real GOPnoninstitutional population aged 16 and overCivilian labor force participation rateCivilian labor forceCivilian employment rateCivilian employmentNonfarm business employment as a share of civilian em-Nonfarm business employmentAverage weekly hours (nonfarm business sector) ...Hours of all persons (nonfarm business)Output per hour (productivity, nonfarm business) ..Nonfarm business outputNonfarm business output as a share of real GDP 21 Line six translates the civilian employment growth rate into the nonfarm business employment growth rate.2 Line 12 translates nonfarm business output back into output for all sectors (GDP), which includes the output of farmsand general government.Note.—Data may not sum to totals due to rounding.Time periods are from business cycle peak to business cycle peak to avoid cyclical variation.Source: Council of Economic Advisers, Department of Commerce, Department of Labor, Department of the Treasury, andOffice of Management and Budget.cent per year. The share of nonfarm business in GDP is projectedto grow at 0.4 percent per year, so the growth rate of GDP overthis period is projected to be roughly 2.4 percent per year.The forecast for nonfarm hours assumes a civilian labor forcegrowth rate of 1.2 percent per year, which is about a percentagepoint lower than labor force growth during the 1960s and 1970s.Virtually all of this difference reflects the slower growth of thelabor force. It also assumes no change in the average workweek.The return of the economy to full employment by 1998 implies zeropeak-to-peak growth in the civilian employment rate over the forecastperiod.More than half of the predicted growth in real GDP results froman assumed rate of nonfarm labor productivity growth of 1.5 percentper year. This rate is somewhat higher than the actual rateover the past two decades. While the sources of productivity growthare complex, and the causes of the well-documented "productivityslowdown" of the 1970s remain under debate, we believe there isjustification for assuming an increase in labor productivity growthover the near term.First, the baby-boom generation, which entered the labor marketen masse during the 1970s, has now been fully assimilated. Theworkforce of today is thus older, more educated, and more experiencedthan in previous years. Second, capital deepening (see above)is likely to occur. As business continues to respond to low real interestrates, the level of investment in the economy should rise,1.80.32.1-0.12.00.12.1-0.61.51.73.30.13.21.80.52.4-0.42.00.12.1-0.71.30.61.9-0.22.11.10.41.60.21.80.22.00.02.00.92.90.22.71.00.21.20.01.20.01.20.01.21.52.70.42.494

leading to an increase in capital intensity. Third, the Administration'sprograms of promoting public investment—including bettertransportation and communications infrastructure—and humancapital formation should enhance private sector productivity. Theimplication of all these factors is that some improvement in therate of productivity growth over the next several years is likely.CONCLUSIONThe performance of the U.S. economy was unsatisfactory fromearly 1990 until the second half of 1992. Job creation was lackluster,unemployment was higher than it should have been, andreal output failed to manifest the gains that are usual for an economicrecovery. Even today the economy is operating below its potentiallevel of output. Some of the sluggishness over this periodwas payback for a decade of debt-financed growth. Over the 1980sand early 1990s, the Federal Government ran massive budget deficitseven in years of strong economic growth, and the level of netFederal debt jumped from about $800 billion in 1982 to about $2.7trillion in 1992. A key result was historically high real interestrates.Corporations followed suit, heavily leveraging their operations.Even individuals got into the act and allowed debt levels to risemarkedly. Meanwhile, large budget deficits contributed to the remarkabletransformation of the United States, from a country thatlent more to foreigners than it borrowed, into the world's largestdebtor.Many necessary corrections have now taken place, including new,more responsible fiscal policy. The Federal budget deficit shouldfall roughly in half as a share of GDP over the next 4 years. Thisanticipated deficit reduction has already caused long-term real interestrates to tumble. With inflation likely to remain subdued,these lower interest rates poise the economy for a period of sustainedgrowth in the mid-1990s. This growth should be sufficientto generate 8 million new jobs within 4 years.Lower interest rates should also boost the share of the economygoing to investment. More investment should lead to capital deepening,higher labor productivity, and higher real American wages.As the government share of the economy falls, the net export shareshould increase. A higher level of exports should give a boost toreal wages, too, partly because export jobs on average pay betterwages than average U.S. jobs, and partly because of increasing specializationby American industry. Real income gains, in the finalanalysis, are the ultimate payoff from economic growth.95

CHAPTER 3Trends and Recent Developments inthe U.S. Labor MarketTHE CLINTON ADMINISTRATION has made increasing boththe quantity and the quality of jobs its highest priority. Providinga stable macroeconomic foundation for private sector activity is essentialto achieving this goal, but it is not enough. Sound macroeconomicpolicies are necessary but not sufficient for the task athand. They must be complemented by labor market policies to remedya number of deep and longstanding impediments to the maintenanceof high employment and to improvements in the quality ofjobs. This chapter discusses these impediments and the Administration'sproposals for addressing them.The 1990-91 recession and the first year of the recovery witnessedrising unemployment. Even though output and employmenthave since been increasing, the news has been filled with storiesof corporate downsizings and the increasing use of "contingentworkers." These reports have sharpened fundamental fears aboutthe security of employment. Popular accounts of recent events alsoallege that technical change is reducing employment throughoutthe economy.After rising steadily for several decades, U.S. real wages havehardly grown since the early 1970s, while the growth of total realcompensation (wages plus benefits) has slowed considerably. At thesame time, the income gap between rich and poor has been growing,so that the poor are worse off in real terms now than theywere two decades ago. Incomes of those in the middle have stagnated.The unemployment rate, both at peaks and troughs of thebusiness cycle, has tended to be higher in the last two decades thanin the first half of the postwar period. Employment-to-populationratios have risen for women, but fallen for men—especially forblack men, whose employment prospects are particularly bleak.Further, although there is little evidence of any large increase injob instability, turnover rates in the U.S. labor market have longbeen very high, and job displacement is often very costly for thoseunlucky enough to lose a job they have held for many years. Highturnover rates combined with rising inequality imply increasinguncertainty about future income for many Americans.97

In response to these problems in the Nation's labor market,many of which have been with us for several years, this Administrationhas set out a long-term work force strategy to help theeconomy create more jobs—at least 8 million over 4 years. To reducejob insecurity, the Administration aims to ease labor markettransitions in a number of ways. By making sure that people havehealth insurance whether or not they are employed, the Administrationseeks to reduce the trauma of job loss. The strategy also includesplans to help young workers enter the labor market moresmoothly by providing a bridge between school and work. The WorkForce Security Act will help experienced workers who have lost jobsfind new employment more quickly, and will provide support fortraining for those who cannot.Finally, and importantly, the Administration's strategy seeks toimprove worker productivity and increase earnings. To this end,the Administration is pursuing policies to increase investment inresearch and development, to spur private investment in plant andequipment, and to facilitate the spread of modern cooperative employmentpractices (such as total quality management and qualitycircles). These initiatives address the general problem of slow wagegrowth, but growing inequality and real wage declines for the leastadvantaged are problems that require specific attention. Sincegrowing inequality is due in large part to the growing mismatchbetween the demand for trained labor and its supply, the Administrationaims to provide more and higher quality training so thatwages may rise—particularly for the middle-class and the least advantaged.Income inequality has also been directly addressed by anincrease in the earned income tax credit.EMPLOYMENT GROWTHU.S. employment grew rapidly from 1950 to 1990, with the numberof nonfarm jobs increasing on average by over 2.2 percent ayear. In contrast, from the end of 1990 to the end of 1992, jobgrowth was virtually nonexistent. During 1993, employmentgrowth improved considerably to an annual rate of 1.8 percent, butjob creation remains low compared with past recoveries. As of thefourth quarter of 1993, the U.S. economy had been in recovery for11 quarters. The unemployment rate fell from its postrecessionhigh of 7.7 percent in June 1992 to 6.4 percent in December 1993.Yet despite these signs of recovery there has been widespread concernabout the pace of job growth.A SLOW RECOVERYWithout question, job growth has been relatively weak since thetrough of the recent recession. During the 11 quarters after the98

first quarter of 1991, nonfarm payroll employment grew by 2.3 million,an increase of only 2.1 percent. In fact, employment did notbegin to rebound until the first quarter of 1992. In previous recoveriesemployment growth was much stronger. For example, duringthe first 11 quarters after the recession of 1981-82, nonfarm employmentgrew by 10.1 percent. In seven previous postwar recoveries,employment increased, on average, by 8.8 percent over the first11 quarters of recovery and expansion.A key difference between the current and past recoveries, however,is the extraordinarily slow pace of output growth. Real grossdomestic product (GDP) grew only 7.7 percent during the first 11quarters of this recovery, compared with an average increase of14.3 percent during the previous postwar recoveries. Possible reasonsfor the slow growth of output are discussed in Chapter 2. Theyinclude balance sheet adjustments by firms and consumers, cutbacksin defense purchases, slow growth of construction spending,the credit crunch, and slower export growth due to weak economiesabroad. Given the slow rate of output growth, it should not be surprisingthat employment growth has also been slow.Nevertheless, the current recovery still stands out relative toother recoveries when one compares the ratio of total employmentgrowth to output growth. By the 11th quarter of previous recoveries,that ratio was about 0.62, compared with 0.27 in the currentrecovery (Chart 3-1). It is comparisons such as this that have ledobservers to claim that corporate restructuring and rapidly risingproductivity have allowed output to grow without commensurateincreases in employment. Some critics see deeper forces at work.For example, it has been argued that productivity growth—strongestin the manufacturing sector—is now proceeding at a rapid pacein the service sector as well. Historically, job losses in manufacturingwere offset by rapid growth in the service sector, but withstrong productivity growth in the service sector this is alleged tobe no longer possible.However, simple comparisons of total labor force growth to totaloutput growth miss an essential point. As output rises during theearly stages of a recovery, the ratio of employment growth to outputgrowth is usually low. This is because employers keep moreworkers on their payrolls than are needed during downturns, andtherefore do not hire more workers until their existing work forceis fully employed and they are confident of continued growth. Consequently,employment grows slowly, and may even continue to decline,for the first few quarters after GDP begins to recover.Chart 3-2 compares the cumulative growth of employment andoutput during the most recent recovery with that in previous recoveries.The boxes show how output and employment have grown togetherhistorically. The circles show how output and employment99

Chart 3-1 Changes in Output and Payroll Employment in First Eleven Quarters of RecoveryThe ratio of employment to output growth is much lower in the current recoverythan in the past. Output growth is much slower, too.Percent30- 0.21952 1956 1960 1963 1973 1977Year of 11 th Quarter of Recovery1985 19930.01HOutput Growth I I Employment-Output Growth Ratio(left scale)(right scale)Sources: Department of Commerce and Department of Labor.have grown together in the most recent recovery. Although the cumulativegrowth of output and that of employment have both beenextraordinarily slow in this recovery, the relationship between themis consistent with historical experience. Using the historical relationshipbetween output and employment growth, one can estimatewhat employment growth should have been during the most recentrecovery given output growth. This exercise yields estimates of cumulativeemployment growth that are larger than actual employmentgrowth during this recovery by as much as 1 percent of totalemployment. This is a large difference, but not a statistically significantone. In other words, employment growth in the most recentrecovery appears to have been at the low end of the range of historicalexperience, but is nonetheless consistent with it.A similar conclusion applies to the behavior of manufacturingemployment. Analysis of past experience shows that the actualgrowth of manufacturing employment during the most recent recoveryis not statistically different from what would have been predictedbased on GDP growth and long-term trends. (Manufacturingemployment has been declining as a fraction of the labor force since1953 and reached its postwar peak in 1979.) This is surprising be-100

cause defense cutbacks have caused large job losses in manufacturingin the most recent recovery. Evidently, growth in demand formanufactured goods in other parts of the economy was strongenough to offset the depressing effects of these cutbacks on manufacturingemployment.Chart 3-2 Employment and Output in RecoveriesEmployment growth in the recent recovery is in line with past experience giventhe slow growth of output.Cumulative employment growth (percent)10-8 -Q10Q11m6 -® ^ s ^ Average Postwar Recovery-2 -912913 914Q2Q1*"" 922I923I924I04,-•934- # 933931 93: I \ v Current RecoveryII I I0 2 4 6 8 10 12 14 16Cumulative Output Growth (percent)Note: Recoveries are dated from the quarter of minimum real GDP.Sources: Department of Commerce and Department of Labor.SOURCES OF JOB GROWTHAlthough much has been written about the sources of job growth,it is hard to get an accurate picture from the pastiche of popularaccounts. Are new jobs good jobs or bad jobs? What does the futurehold?Industry and OccupationThe service sector—defined to include personal and businessservices but exclude trade and finance—was the economy's job enginein 1993. Although these industries account for less than 30percent of total employment, they were responsible for more than60 percent of total job growth in that year. Many of these jobs—about 350,000—were created in the personnel supply industry(mainly temporary agencies), which represented almost 20 percentof total payroll job growth. Other sectors registering strong job cre-101

ation over 1993 included retail trade (more than 400,000 jobs) andconstruction (about 200,000 jobs). In contast, manufacturing employmentdeclined by about 180,000 during the year.These sectoral patterns are not new, however. Since January1983, service sector employment has grown by 11.5 million and hasaccounted for 52 percent of total nonfarm job growth. And, jobs inretail trade have accounted for an additional 21 percent of all jobscreated over this period. Since January 1983, construction employmenthas risen by 785,000, but manufacturing payrolls haveshrunk by 325,000.A common misconception identifies manufacturing jobs as "goodjobs" and service jobs as "bad jobs." However, growth in high-endservices such as various kinds of business services have led to increaseddemand for high-level white-collar workers. During 1993,48 percent of the increase in employment occurred in the managerialand professional occupations. The large increases in these relativelywell-paying occupations belie the criticism that most employmentgrowth has been in "bad jobs."The recent occupational pattern of employment growth is largelyin line with the experience of the last 10 years, during which managerialand professional jobs accounted for 49 percent of new employment.Both over the last year and over the last decade, newemployment has shifted toward better paying jobs requiring moreskills and education, not toward low-paid, low-skilled jobs.Outlook for the FutureOne of the major goals of this Administration is to increase employmentby at least 8 million jobs in 4 years. Progress toward thisgoal has been moderate but steady. Between January and December1993, nonfarm payroll employment grew by 1.8 million jobs,and the number of unemployed fell by 809,000, lowering the unemploymentrate from 7.1 percent to 6.4 percent. With a highergrowth rate of output expected next year, the pace of job creationshould accelerate.The Bureau of Labor Statistics (BLS) projects employment togrow between 1.1 and 1.9 percent per year through 2005. Most ofthis growth is expected in service-producing industries, which theBLS expects will add between 1.4 million and 2.1 million jobs peryear. Employment in manufacturing is expected to fall or to riseonly modestly, with losses or gains of fewer than 160,000 workersper year. Many new jobs (about 500,000 a year) will be in serviceoccupations such as food service workers and home health aides,but even more will be in the comparatively higher-paying managerial,professional, and technical occupations (about 825,000 a year).102

UNEMPLOYMENT AND NONEMPLOYMENTThe United States has a history of strong job growth, and theoutlook for job creation over the next decade is good. But how manynew jobs are enough? The best indicator of how well we are doingis how many of the people who want jobs are able to get them. Theunemployment rate is one measure of this. The unemployed are definedas people who are not working but are either waiting to returnto a job or looking for a new one. If jobs are sufficiently difficultto find, however, some people may give up looking. Then theyare counted not as unemployed but as "discouraged workers." Thus,both unemployment rates and the employment-to-population rationeed to be examined to determine if the economy is providingenough jobs.TRENDSThe National Bureau of Economic Research, the private organizationthat dates the beginning and endpoints of U.S. business cycles,fixed the trough of the 1990-91 recession at March 1991. Yetunemployment did not reach its peak of 7.7 percent until June1992. Since then the unemployment rate has fallen steadily to 6.4percent in December 1993. (In January 1994 the BLS began measuringunemployment in a new way: Box 3-1 describes the changes).This represents a considerable improvement, but the economy hasa way to go before unemployment reaches normal levels. Unemploymentwas below 6.4 percent from April 1987 to January 1991,and from February 1978 to March 1980. After World War II andprior to 1974, unemployment topped 6.4 percent for only three briefperiods, each of less than a year.Chart 3—3 shows the time path for unemployment since 1948.Besides the ups and downs that correspond to business cycles, theoutstanding feature is the apparent ratcheting up in the level ofunemployment in the 1970s. Since the early 1970s, unemploymenthas never returned to the levels typical of recoveries in the 1950sand 1960s, and has peaked at much higher rates. It is widely believedthat this long-term increase in unemployment is at least inpart due to an increase in the minimum level to which unemploymentcan be reduced without causing increasing inflation—the socallednatural rate of unemployment. The natural rate in turn isthought to depend on labor market frictions, and skill and geographicmismatches, between labor supply and labor demand.There have also been changes in the incidence of long-term unemployment.As of December 1993, 1.7 million workers, comprising21.0 percent of the unemployed, had been unemployed for 27 weeksor longer. This is a reduction from September 1992, when the numberof long-term unemployed reached 2.1 million and comprised103

Box 3-1.—The New Current Population SurveyThe Current Population Survey (CPS), a national survey of60,000 U.S. households, provides a monthly picture of the Nation'slabor force, employment, and the unemployment rate.Beginning in January 1994, that picture is being takenthrough a new lens. For the first time since 1967, the CPS hasundergone a major redesign. Changes in the patterns of employmentby industry, the increased labor force participation ofwomen, and several other factors have made the pre-1994 surveyless accurate as a guide to the Nation's work force. Thenew survey includes new and revised questions that reflectthese changes and incorporates new procedures (including theuse of portable computers to conduct the survey rather thanpencil and paper) designed to lead to more-accurate and consistentresponses.Between July 1992 and December 1993, a pilot version of thenew survey was conducted in parallel with the old CPS to determinethe effects of the new questions and data collectionprocedures. Results of the parallel survey indicate significantlydifferent estimates for key statistics, including the unemploymentrate. Specifically, the unemployment rate as measured bythe parallel survey averaged a half a percentage point higherthan the estimates from the old CPS. In addition, the use ofnew population weights increased the measured unemploymentrate another 0.1 percentage point. The unemployment rate isexpected to rise for all demographic groups, but particularly forwomen, since the old CPS questionnaire may have tended toclassify women who were unemployed as out of the labor force.The new survey is expected to produce several other changesas well. For example, measured labor force participation ratesand employment-to-population ratios are expected to rise forwomen and fall for men. Changes in the questions defining discouragedworkers and people working part-time for economicreasons are expected to lead to a decline in numbers of discouragedworkers of 60 percent and part-time workers for economicreasons of 20 to 25 percent.21.7 percent of all unemployed workers. There is still a sense, however,that long-term unemployment is unusually high today. Thepeak share of long-term unemployed workers during the current recoverywas higher than during most previous postwar recoveries(Chart 3-4). In addition, the share of long-term unemployment ishigh given the overall unemployment rate (Chart 3-5).104

Chart 3-3 Civilian Unemployment RateUnemployment rate peaks and troughs have been higher since 1973.1948 1951 1954 1957 1960 1963 1966 1969 1972 1975 1978 1981 1984 1987 1990 1993Note: Quarterly data.Source: Department of Labor.While average unemployment rates have risen, they have risenmore for some groups than for others. The unemployment rate forwomen, which used to be consistently above the unemploymentrate for men, is somewhat lower (6.2 percent for women, 6.5 percentfor men in December 1993). In contrast, the black unemploymentrate has risen more than the white unemployment rate (1.5percentage points for whites between 1970 and 1993, and 3.5 percentagepoints for blacks and others).Employment-to-population ratios show some of the same patternsof relative distress for different groups. While black women had ahigher employment ratio than white women in the 1970s, the reverseis now true (Chart 3-6). Both black and white men have hadfalling employment-to-population ratios since the early 1970s; butthe decline for black men has been larger than for white men (10percentage points for black men from 1972 to 1993; 6 percentagepoints for white men).The unemployment rate for teenage workers (aged 16 to 19years) has always been higher than the rate for all workers, andthe current situation is no exception. While the unemployment ratefor all workers during 1993 averaged 6.8 percent, the rate for teen-105

Chart 3-4 Long-Term Unemployment as Share of TotaS UnemploymentThe share of the unemployed who have been out of work 27 weeks or more approachedhistorical highs in the last downturn.1948 1951 1954 1957 1960 1963 1966 1969 1972 1975 1978 1981 1984 1987 1990 1993Note: Quarterly data.Source: Department of Labor.Chart 3-5 Long-Term Unemployment and the Unemployment RateThe share of long-term unemployment in total unemployment has been high recently,given the unemployment rate.Long-term unemployed (percent)25• 1983s^15 -10 -5 -^D• 1970•••1993 ^1992D1984• s^• 1961 s^59 ry' meDiP^P ••••rjn• 1949D1980• 1982ISource: Department of Labor.I6 8Unemployment Rate (percent)II10 12106

Chart 3-6 Employment-to-Population Ratios of WomenThe employment rate of black women fell below that of white women in thelast recession.Percent6050Black Women4540 rWhite Women35 J L1972 1975 1978 1981 1984 1987Note: Quarterly data.Source: Department of Labor.agers was nearly three times as high at 19 percent. Teenage unemploymentrates were 17.6 percent and 14.6 percent for white malesand females, respectively. The unemployment rates for black teenageworkers were more than twice as high at 40.1 percent formales and 37.5 percent for females. Over the last 20 years, theteenage unemployment rate rose along with the overall unemploymentrate. Unemployment rates also differ by education. Chart 3-7 compares the unemployment rates of those without a high schooldiploma, high school graduates, those with some college, collegegraduates, and those with advanced degrees.According to popular accounts, another distinguishing feature ofrecent labor market developments is the "white-collar recession."That expression implies that the recent unemployment experienceof white-collar workers relative to that of blue-collar workers hasbeen significantly worse than in past recessions.In fact, as in the past, the unemployment rate among white-collarworkers has been significantly below that of blue-collar workersin the most recent recession and recovery (3.2 percent versus 9.9percent in 1992). However, the white-collar unemployment rate relativeto the blue-collar rate has been rising (Chart 3-8). The ratio107

Chart 3-7 Unemployment Rates by Educational Attainment, March 1993Unemployment is generally lower for more-educated workers.No Diploma Some College Master's Degree Professional DegreeHigh School Diploma Bachelor's Degree Doctoral DegreeNote: Data relate to workers age 25-64.Source: Department of Labor.of the two rates in 1992 was 0.33, the highest since 1979. The ratioof the number of unemployed white-collar workers to the numberof unemployed blue-collar workers has been rising since 1982, thefirst year for which we have consistent occupational estimates. By1992, the ratio of the number of white-collar unemployed to thatof blue-collar unemployed was about one-third, compared with onlyone-fifth in 1983. This happened both because the ratio of thewhite-collar to the blue-collar unemployment rate has increased, asalready noted, and because white-collar workers now make up alarger fraction of the work force than they did before.Just as the rate of overall employment growth is not out of linewith past experience given output growth, the level of unemploymentin the most recent recession is within the bounds of what wewould expect given GDP growth. Further, as already noted, unemploymenthas fallen by 1.3 percentage points from its June 1992peak, with nearly a percentage point of the drop coming in 1993.However, three concerns are raised by trends and recent experience.The first problem is increasing disparities between black andwhite rates of both employment and unemployment. These changes108

Chart 3-8 Ratio of White-Collar to Blue-Collar Unemployment RatesThe ratio of white-collar to blue-collar unemployment rates has been risingbut is still below historical highs.0.32 -0.30 -0.28 -0.26 -0.241968 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992Note: Data after 1981 are not strictly comparable with earlier years because of changes in occupational definitions.Source: Department of Labor.are linked to equally disturbing changes in the distribution of incomeand job security, discussed later in this chapter. The secondconcern is the long-term increase in the average level of unemployment.The third concern is that recent high levels of long-term unemploymentsuggest that we may be seeing an increase in theshare of unemployment caused by mismatches between workers'skills and job demands. If this is the case, it is argued, it may bedifficult to lower the unemployment rate much further withoutcausing labor market bottlenecks. As we will see below, little evidencecan be found that skill mismatches have contributed muchto recent increases in unemployment, but they do seem to havebeen a major cause of growing income inequality.IS THE NATURAL RATE OF UNEMPLOYMENTINCREASING?How would we know if there had been an increase in what economistscall the natural rate of unemployment? A sustained increasein long-term unemployment might be one indication, an increase inthe number of people who have given up looking for work mightbe another, and an increase in the fraction of job losers among the109

unemployed yet another. These are all indirect indicators of an increasein the natural rate of unemployment. The problem is thatthese indicators also respond to cyclical conditions—they increasewhen the economy is in recession, and they can be slow to decline,or may even increase, in periods of slow recovery.Not surprisingly, therefore, concerns that mismatch unemploymentis increasing are likely to develop in recessionary times. Lessskilled workers are more likely to find themselves unemployedthan better skilled workers. During recessions, labor market slackmakes it easier for employers to find better qualified employees, allowingthem to raise job qualifications without raising compensation.Thus recessions may create the appearance of increasing mismatchunemployment. Once a recovery is under way, however,more jobs of all types are created, and the unemployment rate forthe less skilled usually declines. Thus indirect indicators of increasingskill mismatch are not enough to determine whether the naturalrate is increasing. We must consider additional evidence.If most new jobs require skills that many workers do not have,they might experience lengthening periods of unemployment asthey wait for jobs appropriate to their skills to become available.On the other hand, the available statistical evidence does not ruleout the possibility that relatively slow output growth since the recessiontrough in 1991 is the major reason why recent levels oflong-term unemployment have been so high. Since high levels ofoverall unemployment have persisted for so long, the number ofpeople looking for work for a long period of time has also increased.A statistical analysis relating the percentage change in the numberof workers unemployed for 27 weeks or more to the percentagechange in output indicates that the behavior of long-term unemploymentin the most recent period of recession and recovery is notstatistically different from that during previous recession-recoverycycles. Although the recent behavior of long-term unemploymentmay not be different, it is worth noting that the average numberof long-term unemployed increased substantially during the 1970sand has remained high since then.Another possible indicator of worsening mismatch unemploymentis the number of discouraged workers. Because they have given uplooking for work, they are not counted as unemployed. Yet large increasesin the number of discouraged workers might be taken asindirect evidence that many people are having a very difficult timefinding jobs. Again, however, the slow speed of the recovery couldalso explain such an increase. Although the number of discouragedworkers is up, reaching 1.1 million in the fourth quarter of 1993compared with fewer than 800,000 in the first quarter of 1990, thepercentage increase in the number of discouraged workers is less110

than would be expected given its historical relationship with outputgrowth.In summary, after taking into account the effects of slow outputgrowth, neither recent high levels of long-term unemployment norrecent increases in the number of discouraged workers suggest thatthere has been an abrupt worsening of mismatch unemployment oran abrupt increase in the natural rate of unemployment in themost recent period of recession and recovery.A third indirect indicator of a changing natural rate of unemploymentis the share of permanent job losers in total unemployment.If unemployment is truly cyclical, firms lay off workers for a while,but recall them when conditions improve. However, if mismatch isincreasing, one might expect to see more permanent job losersamong the unemployed rather than individuals on temporary layoff.Indeed, the share of permanent job losers among the unemployedhit an all-time high of 43.9 percent in the second quarterof 1992, and has fallen only slightly since then. However, this numbermust be interpreted with caution. Despite the image of cyclicalunemployment as due to temporary layoffs, the fact is that theshare of permanent job losers among the unemployed rises in everyrecession. Recessions bring not only temporary interruptions in employmentdue to slack demand, but also business failures andforced restructurings that cause permanent job loss at a higherrate than during normal times.A statistical analysis relating the number of permanent job losersto output growth indicates that the relatively large number ofpermanent job losers in the most recent period of recession and recoverycan be explained by relatively slow output growth. Thusthere is little evidence of any recent increase in the natural rateof unemployment in this relationship, either. The predictions ofthis analysis for earlier periods do suggest that there was an abruptincrease in the number of unemployed permanent job losersin the early to mid-1970s, compared with what would have been expectedgiven business conditions. This is consistent with other datawhich suggest an increase in the natural rate around that time.DIRECT MEASURES OF THE NATURAL RATETraditionally, economists have used two methods to identify thenatural rate, and two additional methods for evaluating how itmight be changing. The simplest way to identify the natural rateis to look back and see at what unemployment rate the last accelerationof inflation began. Alternatively, a statistical model of inflationthat embodies the assumption of a natural rate (anaccelerationist "Phillips curve") can be used to estimate the naturalrate.Ill

Changes in the natural rate have been identified in two ways.Since different demographic groups have different unemploymentrates, it has become a common procedure to assume that the naturalrate changes whenever the composition of the work forcechanges. More recently, several authors have looked at the relationbetween unemployment and proxies for job vacancies. If increasesin the natural rate are caused by an increasing mismatch of workersand jobs, then the job vacancy rate should be rising along withthe unemployment rate.All these approaches have serious shortcomings. Many factorsother than the tightness of the labor market influence the rate ofwage and price inflation. Taxes, raw material prices, exchangerates, expectations, and a host of other factors all come into play.Thus, determining the natural rate by looking back to see what theunemployment rate was the last time inflation picked up worksonly if inflation was caused by labor market tightness.Some economists argue, however, that the principal causes of inflationsince the early 1970s have been factors other than tightnessin the labor market—for example, oil and other commodity price increasesin the 1970s and the falling value of the dollar in the late1980s. If this is true, estimating the natural rate by estimatingmodels of inflation is a misleading exercise unless all causes of inflationbesides tightness in the labor market are adequately controlledfor. Moreover, even estimates of the natural rate obtainedin this manner may be very sensitive to assumptions about theform of the Phillips curve relation. Without direct evidence of arapidly increasing rate of inflation below a particular unemploymentrate, estimates of a changing natural rate from statisticalmodels of inflation are suspect at best.Determining how the natural rate has changed by looking at demographicchanges also poses problems. In the 1970s, the apparentincrease in the natural rate was attributed in large part to increasinglabor force participation of women and teenagers—both ofwhom had higher than average unemployment rates at the time.However, as women have changed their attachment to the laborforce, their unemployment experience has also changed. In the recentpast, women have had a lower unemployment rate than men.Should we therefore believe that the increased labor force participationof women has tended to decrease the natural rate belowwhat it was prior to the surge in their participation? The share ofteenagers in the labor force has also fallen in the last decade, andthis too should have reduced the natural rate.Further, why focus on these particular demographic changes tothe exclusion of others? Black male labor force participation rateshave been falling over the last two decades. Since black men havehigher unemployment rates than white men, should we conclude112

that the natural rate is falling? More important, people with collegeeducations have a much lower rate of unemployment thanthose with less education, and their share of the labor force has increasedconsiderably over the last two decades. Again, this wouldsuggest that the natural rate should be lower today than in 1970,before the ratcheting up of the unemployment rate.Finally, although the U.S. Government does not collect the dataon job vacancies that would allow us to examine directly whetherthere is an increasing mismatch of jobs and workers, the ConferenceBoard does publish an index of help-wanted advertising.The relationship between this index and the unemployment ratehas changed over time, but there is no evidence of any increase inthe level of help-wanted advertising, given the unemployment rate,in the last decade. There is, however, a higher level of help-wantedadvertising at all levels of unemployment since the early 1970s.The increase in help-wanted advertising could be interpreted asevidence of an increase in mismatch unemployment, but manyother things affect the level of help-wanted advertising. Differenttypes of employers advertise in different ways for different types ofjobs. Changes in the industrial and occupational mix of employmentmake an advertising index a questionable measure of longtermchanges in job vacancies. Changes in advertising prices, thestructure of media markets, and legal requirements for advertisingcertain jobs also change the relationship between vacancies and advertisingin ways that call into question the meaning of any longtermchanges.Altogether, the various pieces of statistical evidence examined inthe preceding discussion suggest that the increase in the unemploymentrate since 1989 has been largely cyclical in nature. There issome evidence of an increase in the natural rate—possibly due toan increase in mismatch unemployment—in the early 1970s, butlittle evidence of any increase since then. The evidence also suggeststhat today's unemployment rate exceeds the natural rate bya significant amount. Therefore, wage-push price inflation is unlikelyto be a factor constraining economic growth in the near future.THE MAGNITUDE AND COSTS OF JOB LOSSThe U.S. economy is constantly in flux, and while there is no evidencethat the rate of churning in the labor market has increasedin recent years (see the discussion of job stability below), normalrates of structural adjustment are quite high and impose significantcosts.Estimates of the number of jobs created and destroyed each yearin the United States are staggering. Data from various sources suggestthat on average more than 10 percent of all jobs disappear113

every year, while even more new jobs are created. Luckily, notevery job that is lost forces someone to become unemployed. Companiesreducing the size of their operations can often do so usingnormal attrition—quits and retirements. When they cannot, workersgiven advance notice of an imminent layoff can sometimes findwork before they lose their old job, allowing a seamless transitionwith no unemployment. But for the many workers who do notmake such easy transitions, the costs of dislocation can be high.Between 1981 and 1990, about 2 million full-time workers peryear lost their jobs. These workers spent an average of nearly 30weeks unemployed, and of those who found new employment, abouta third suffered earnings losses of more than 20 percent.Wage losses were most severe for those who had been with theiremployers the longest. For example, those with 10 or more yearsof tenure on their previous job were nearly four times as likely tosee their earnings fall by 20 percent as to see them rise by 20 percentin their new jobs. They were also less likely than other displacedworkers to find new employment at all. One set of surveysasking about job loss found that 73 percent of all job losers had obtainednew jobs, but only 65 percent of those with 10 or more yearsof job tenure had found new work.The special problems of workers with long job tenure are understandable.Those who work for the same employer for a long timebuild up skills that are most valuable to that employer. Further,many employers reward long job tenure with higher wages as away of motivating employees and ensuring their loyalty. The lossof a job when one has obtained the privileges of long tenure canbe particularly devastating.SLOWING WAGE GROWTH AND WIDENINGINEQUALITYIn the last two decades, family income growth has stagnated andincomes have become more unequally distributed. In fact, the realincomes of the bottom 60 percent of American families were lowerin the early 1990s than for the analogous families at the end of the1970s. Underlying the rising disparity in the fortunes of Americanfamilies has been a rise in labor market inequality that has shiftedwage and employment opportunities in favor of the more educatedand the more experienced. Less educated workers suffered substantiallosses in real earnings during the 1980s. Here we consider thedimensions, and some likely causes, of slow income growth andwidening inequality.114

SLOW INCOME GROWTHIncome trends have been discouraging for about two decades—the median family today has virtually the same real income asthe median family 20 years ago. This stagnation is a marked departurefrom the substantial income growth that occurred over previousgenerations.From 1947 to 1973 the real income of the median American familyincreased by a robust 2.8 percent a year, more than doubling.In contrast, from 1973 to 1992 the income of the typical Americanfamily was essentially stagnant, rising by only 0.1 percent a yearafter adjusting for inflation. (The trend from 1979 to 1989—roughlyequivalent years in the economic cycle—is similar.) At the pace ofincome growth from 1973 to 1992, it would take centuries for realmedian family income to double.Although the labor force participation decisions of women andchanges in the composition of families have affected family income,the major trends in family income are dominated by trends in realwages. Chart 3-9 shows the changes in wages and total hourlycompensation, adjusted for inflation, since 1948. Both wages andcompensation suffered abrupt slowdowns in growth rates around1973.GROWING INEQUALITYFamilies have been affected unevenly by recent income trends.Real incomes at the top have increased smartly, real incomes atthe middle have essentially stagnated, and real incomes at the bottomhave fallen. Box 3-2 discusses the implications of these developmentsfor employment and unemployment.From 1973 to 1992, the average real income of the upper 20 percentof families rose 19 percent, or about 1 percent per year. Thisis well below the rate for the 1950s and 1960s, but far better thanfor the rest of the population. Between 1973 and 1992, the averageincome of the middle 20 percent of families rose a paltry 4 percentin real terms. Lower income families fared even worse. Among thebottom 20 percent of families, mean real income fell by 12 percentfrom 1973 to 1992. Chart 3-10 shows the growth of mean familyincomes for different income groups over the periods before andafter 1973. It makes clear just how abrupt the changes in the distributionof income growth have been. A trend toward greaterequality in the 1960s and toward greater inequality in the 1970sand 1980s is apparent in both income and consumption measuresof economic well-being. Rising inequality of family incomes duringthe 1980s is apparent in both pretax and posttax income measures.115

Chart 3-9 Real Hourly Compensation and WagesThe growth of real compensation per hour and of real hourly wages has declinedsince 1973.1982-84 dollars14.00Hourly Compensation12.0010.00Hourly Wages8.006.004.00j I I | | | I | | | |1948 1952 1956 1960 1964 1968 1972 1976 1980 1984 1988 1992Note: Compensation and average hourly earnings deflated by CPI-U-X1.Sources: Department of Commerce and Department of Labor.Box 3-2.—Growing Inequality of Employment andUnemploymentThe falling relative wages of those with less experience andschooling may explain, at least in part, some of the observedchanges in employment-to-population ratios for certain demographicgroups. The black and teenage populations tend tohave less schooling than the average for all Americans. Consequently,the wages they command have fallen, making workless attractive. To the extent that the shift in demand awayfrom less-educated workers is manifest in fewer available jobsinstead of lower wages, these groups face higher unemploymentrates as well.EXPLAINING SLOW WAGE GROWTHStagnant wages and slow total compensation growth since theearly 1970s largely reflect a substantial slowdown in productivitygrowth. From 1947 to 1973 productivity rose at a compound annualrate of 3.1 percent, and inflation-adjusted compensation per hour116

Chart 3-10 Average Annual Growth of Mean Family Income by Income QuintileFamily incomes in alt income groups grew more or less evenly, but slightly faster forlower income groups, before 1973.Average annual percent change1947-73322.992 652.76 2.792.461• } • • "nLowest Second ThirdQuintileFourthHighest1973-92I-0.69I-0.180.19I0.50I0.93SecondThirdQuintileFourthHighestSource: Department of Commerce.grew at a similar rate. From 1973 to 1979 the rate of productivitygrowth fell to an average of 0.8 percent a year, and compensationgrowth fell with it. Since 1979 the productivity growth rate haspicked up only slightly, averaging 1.2 percent on an annual basis.Chart 3-11 shows the close relation between productivity and realcompensation. Boxes 3-3 and 3-4 discuss some of the other effectsof productivity growth.The productivity slowdown has been intensely studied. Manypartial explanations have been given, but no complete accountinghas been made.EXPLAINING THE GROWTH OF INEQUALITYSeveral factors have contributed to widening inequality. Onemajor factor is increasing returns to education and experience. Thecollege-high school wage premium increased by over 100 percentfor workers aged 25 to 34 between 1974 and 1992, while increasing20 percent for all workers 18 years old and over (Chart 1-8). In addition,among workers without college degrees, the average wagesof older workers increased relative to those of younger workers.Since the relative supply of educated workers has increased at the117

Chart 3-11 Productivity Growth and Price Reductions, 1950-90Productivity growth in an industry leads to lower relative prices.Average annual percent change in relative prices2.0s. • Construction1.0 -1 Other services0.0-1.0 -• FIRE ^ \ ^Retail trade •Wholesale trade •H MiningManufacturingTransportation•Agriculture-2.01111-1.0 0.0 1.0 2.0 3.0Average annual percent change in productivityNote: FIRE = finance, insurance, and real estate.Source: Department of Commerce.same time that wage disparities have grown, the demand for educatedworkers must have increased faster than their supply. Somehave suggested that increasing trade has undermined demand forless educated workers in the United States, since they are plentifulelsewhere in the world. So far, however, several studies have beenunable to discern any substantial impact of trade on wage inequality,however. If increased trade were the cause of growing wage inequality,the relative prices of goods that use highly educated laborwould be rising relative to those of goods that use less highly educatedlabor. But studies have found no evidence of such a changein relative prices. Similarly, if increased trade were responsible forincreased wage inequality, the growth of wage differentials wouldlead firms in all sectors to substitute less educated labor for moreeducated labor. Instead, studies find that virtually all manufacturingindustries have increased their relative use of educated labordespite growing wage differentials. Rising wage differentials withgreater use of educated labor suggest that demand for skilled laborhas been rising broadly in the economy. Thus it appears that mostof the demand shift toward highly educated workers must haveoriginated domestically.118

Box 3-3.—Consequences of Productivity GrowthRising productivity has been shown to have a variety of beneficialeffects:• The prices of goods produced by industries that have hadrapid productivity growth have fallen relative to those ofgoods from industries with slower productivity growth.Chart 3-11 shows average productivity growth and pricechanges by industry for the 1950-90 period.• Periods of rapid productivity growth have been accompaniedby increases in real wages. The prices of productsin industries experiencing productivity growth also declinerelative to wages. This decline in product pricesmeans that real wages tend to rise during periods ofrapid productivity growth.• Periods of rapid productivity growth have also been periodsof low inflation. Productivity growth allows nominalwages to increase without putting pressure on prices.• Periods of rapid productivity growth have not been associatedwith large increases in unemployment In periodswhen productivity growth was more rapid, such as the1960s, unemployment rates have tended to be low. Incontrast, periods with slow rates of productivity growth,such as the 1970s, have been periods of relatively highunemployment.Since the use of more-educated labor has increased in all industries,a logical explanation of this trend is technical change. For example,one study shows that people who work with personal computersearn a substantial wage premium over those who do not,and that this can account for half of the increasing gap betweenthe wages of college and high school graduates.Although changes in labor demand induced by changes in thecomposition of trade do not appear to explain much of the increasein income inequality, the internationalization of the U.S. economymay affect wages in other ways. For example, the threat of increasedimport competition or of the relocation of a factory to anothercountry may undermine worker bargaining power or cause adecline in the number of workers employed in unionized firms. Atthis time, no reliable studies have properly quantified how importantsuch effects have been. In addition, there is no guarantee thatthe future will resemble the past. Trade could become a more importantfactor in bringing down the wages of less educated workersin the future. On the other hand, technical change could move in119

Box 3-4.—Why Productivity Growth Does Not CauseUnemploymentProductivity growth need not cause an increase in unemploymentbecause, as productivity rises, more goods can be producedwith the same number of workers. This means a costsaving, which must result in either increased profits, increasedwages, or lower prices. If profits or wages increase, those benefitingfrom the increase will increase their spending. If pricesfall, consumers' incomes will go further and they will buymore. In any case, the increased spending will lead to the purchaseof more goods and services, which will create new jobsoffsetting losses from the productivity increase. If the new jobscreated are not equal in number to the jobs lost, there will bea tendency for wages to change to equate supply and demandfor labor. Nonetheless, in the short run some workers are likelyto have to change jobs. As the discussion of the costs of jobloss makes clear, this can be a traumatic experience for the establishedworker.the direction of economizing on educated labor and making betteruse of less educated labor.In addition to rapidly increasing demand for educated labor, twoinstitutional factors seem to have contributed to rising wage inequality:the decline of unions and the erosion of the minimumwage by inflation. In the early 1970s, 27 percent of the work forcewere union members. By 1990 that fraction had declined to 16 percent,and it has probably fallen further since. Several studies concludethat this decline can account for about 20 percent of the increasein wage inequality.In 1970 the minimum wage was 50 percent of the average hourlywage of private production and nonsupervisory workers. By 1992 ithad fallen to 40 percent of the average. This erosion of the minimumwage has allowed a substantial fattening of the lower tail ofthe wage distribution and contributed to increasing wage inequality.The effect of the minimum wage on the distribution of incomeis less obvious, since it is possible that the decline in the inflationadjustedminimum wage may have caused an increase in employmentof low-wage workers.Immigration has increased the relative supply of less educatedlabor and appears to have contributed to the increasing inequalityof income, but the effect has been small. A study of the effects ofimmigration between 1980 and 1988 found that it explains lessthan 1 percent of the change in the college-high school wage differential.Although immigration flows were considerably larger inthe late 1980s than the early 1980s, this study makes it seem un-120

likely that immigration could explain more than a few percent ofthe total change in this differential.JOB QUALITYThe Administration is concerned about increasing the quality aswell as the quantity of jobs in the American economy. Job qualityencompasses a number of factors beyond wage levels—including jobsecurity, employer-provided benefits such as pensions and healthinsurance, and hours of employment.HOURS OF WORKAverage weekly hours in manufacturing were consistently higherthrough December 1993 than during most previous recoveries since1958 (excluding the short recovery in 1980-81), and they reacheda post-World War II high of 41.7 hours per week in November1993. This was slightly above the previous peak of 41.6 hours perweek reached in February 1966 (Chart 3-12). Factory overtimehours also reached a record in November at 4.4 hours per week,the highest level since the data series began in 1956.Chart 3-12 Average Weekly Hours of Production and Nonsupervisory WorkersAverage weekly hours in manufacturing are at a postwar high, while averagehours for all industries show a long-term decline.Hours4240Manufacturing383634Total Private Nonfarm32I I ! I I I I I I L . I I I1947 1950 1953 1956 1959 1962 1965 1968 1971 1974 1977 1980 1983 1986 1989 1992Source: Department of Labor.121

In contrast, over the past half-century, average weekly hoursworked by production and nonsupervisory employees on nonfarmprivate payrolls have declined significantly from 40.3 hours perweek in 1947 to 34.5 hours per week in 1993. The patterns of averageweekly hours of all private sector workers and those in manufacturinghave diverged over the last 50 years.In keeping with their long-term trend, average weekly hours ofall private nonfarm workers have been lower since the trough ofthe last recession than during comparable periods following thethree previous recessions after 1970. Average hours typically riseduring recoveries, as employers respond to rising demand by usingtheir existing work forces more intensively before they begin significanthiring of new employees. The increase in average hourssince the 1991 recession trough has generally been in line with previousrecoveries since 1970—although in recent months the increasein hours has been higher than in recent recoveries.Popular accounts have suggested that Americans are workingmore. How can this be if hours worked on the average job are declining?The answer is that women's labor force participation is up,so that average hours of paid work per person are up. How doworkers feel about their hours of work? Most studies find that, onaverage, people would like to work more hours if they were paidtheir hourly rate for the additional hours.JOB STABILITYThe slow pace of job creation and the relatively high unemploymentrate in the current recovery, along with continuing corporatedownsizing and increased use of part-time and temporary workers,have led to the perception that employment is becoming less stablethan in the past. The fear is that a decline in permanent employmentwill lead to a largely "contingent" work force, meaning thatthere will no longer be an understanding between worker and employerthat a job will last for a long time. Is the current sense ofless stable employment the result of the recent recession, or arelong-term forces at work?There are several different approaches to measuring the stabilityof employment. To some extent, growth of the contingent workforce can be measured directly. We can also look at how likely individualsare to stay with an employer, at the dynamics of firm size,and at changes in the industrial composition of employment.No official statistics are kept on the number of workers employedon a contingent basis. One study that examined employment practicesat a number of large firms in 1985 found that slightly lessthan 1.5 percent of the labor they used was explicitly hired on atemporary basis.122

We do, however, know how many workers are employed in thepersonnel supply industry (largely temporary workers). This numberhas increased dramatically since the early 1970s, and particularlyrapidly in the current recovery. From the trough of the recessionin March 1991 to December 1993, employment in the personnelsupply industry grew by 687,000 workers. This was 26 percentof all employment growth over this period.Taking a longer perspective, employment in the temporary helpindustry has grown from less than one-third of 1 percent of totalemployment in the early 1970s to nearly 1.3 percent today (Chart3-13). While growth has been explosive, the fraction of the workforce employed on a contingent basis is probably still less than 3percent.Chart 3-13 Help Supply Industry Employment as Share of Total EmploymentTemporary workers are a small but increasing share of total employment.Percent1.41.2 -1.0 -0.80.60.40.200I I I J I L .._1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992Note: Values before 1982 are estimated from the relationship between help supply industry employmentand personnel supply industry employment after 1982.Source: Department of Labor.Another potential indicator of declining job stability is the growinguse of part-time workers. Like temporary workers, part-timeworkers usually do not receive pension and health benefits andtend to have a weak attachment to their firms. Several authorshave included them when enumerating the contingent work force.Between August 1990 and December 1993, part-time employmentincreased by 6.4 percent, compared with only a 1.7-percent123

increase for full-time employment. But part-time employment alwaysexpands during recessions, and the increased use of part-timeworkers during this recession is not significantly different from thepattern of past recessions, given sluggish output growth. Over thelast several decades, however, there has been a small secular increasein the fraction of the labor force working part-time, but ithas not been a steady increase. The fraction grew considerablyfrom the late 1960s through the early 1980s, reaching a peak in1983. It then declined through the rest of the 1980s and increasedmoderately in the 1990 recession. The fraction of workers workingpart-time by choice has remained nearly constant since the early1970s (Chart 3-14).Chart 3-14 Part-Time Employment: Total and VoluntarySince the late 1960s the use of part-time workers has grown, but the numberworking part-time by choice has not.Percent of employment18/ \ Total16-*1412s'Voluntary10oI !I I I I I I I I1960 1963 1966 1969 1972 1975 1978 1981 1984 1987 1990Source: Department of Labor.What accounts for the secular shifts toward temporary and parttimeemployment? One possibility is that the underlying demandfor goods and services has become more volatile, leading firms todesire less permanent work forces so that they can more easily respondto shifting needs. If this were so, we should observe greatervolatility in the industrial composition of employment or in firmsize. Such evidence is lacking, however. Data from the Census ofManufactures show no long-term increase in variability of firm124

size. No data are available on volatility of firm size in the rest ofthe economy.A simple measure of the amount of reallocation of labor betweenindustries is the sum of changes in the share of each industry's employmentin total employment for those industries that are increasingtheir employment share. (This is equal to the absolute value ofthe sum of the decreases in the share of employment in each industrywith a shrinking share.) When total employment is constant,this measure is simply interpreted as the fraction of the work forcebeing reallocated between industries. According to this measure,the rate of change in the industrial structure across all industriesincreased in 1990 and 1991, which is typical for a recession. Therate of change in industry composition typically declines during recoveries,and the current recovery fits this pattern, with churningdeclining in 1992 and 1993 (Chart 3-15).Chart 3-15 Reallocation of Employment Between IndustriesThe rate of reallocation of employment between industries follows businessconditions but shows no upward trend.Percent of nonfarm employment3.02.5 -1949 1952 1955 1958 1961 1964 1967 1970 1973 1976 1979 1982 1985 1988 1991Note: The series measures one half the sum of the absolute value of changes in industry employment shares.Source: Department of Labor.Has the rate of change of the industrial composition of employmenttrended upward over time? Chart 3-16 shows that the answeris no. There is a big spike in 1975 after the first oil shock,but no trend. Over the entire 1949-93 period, the average rate ofreallocation was 0.9 percent per year. Recent experience appears151-444 0 - 9 4 - 5125

consistent with the past. Since 1980, the average rate ofreallocation has also been 0.9 percent per year.How are we to reconcile what we know to be major changes inthe industrial composition of employment (such as those due to defensecutbacks) with the fact that there has been no apparent increasein the rate of industrial change? Evidently the economy istypically experiencing significant changes in its structure. Just ashorseshoes gave way to tires and mechanical adding machines gaveway to electronic calculators, industries today continue to grow anddie.If job instability is increasing, it does not appear to be becauseof changes in the volatility of firm size or industry demand. If thereare significant changes in job stability, apparently they are happeningat the individual level. If individuals' attachments to theirjobs are becoming more tenuous, we should observe a drop in thelength of time workers spend with each employer, and an increasein the probability that a worker will leave his or her firm in anygiven year. But analysis of the Current Population Survey showsthe fraction of workers holding jobs for 8 years or more to havebeen 30 percent in 1979, and 31 percent in 1983, 1987, and 1991.A constant fraction of workers holding long-term jobs might hidechanges in the experience of individuals. For example, older workersare more likely than young workers to stay with the same employer.The aging of the work force might therefore have broughtabout an increase in average job tenure, even if individuals at anyparticular age were experiencing greater job instability. Two studiesthat have attempted to examine this question provide mixedevidence. Both find that employment for nonwhites and collegegraduates has become less stable, but both also find that employmentstability for some groups has increased. No strong trend towardincreasing overall instability can be found in either study. Itis impossible to rule out increasing overall instability on the basisof these studies, but if there has been an increase it is either toorecent or too subtle to be reflected in the aggregate tenure statisticsdiscussed in the previous paragraph.Whether or not job security is decreasing, two things are clear.First, there has aiways been a great deal of instability in the U.S.labor market. Second, there is no question that there is a perceptionthat job security is decreasing. This may be due entirely to thenormal increase in job losses during the recent recession, to mediaaccounts of mass layoffs at companies that used to offer unusuallystable jobs, or to increases in job instability that simply are not reflectedin aggregate statistics. Alternatively, a constant rate of jobloss combined with greater income inequality has meant an increasein income (as opposed to employment) insecurity.126

BENEFITSOne of the concerns raised by the growing use of contingentworkers is that fewer workers will be covered by employer-providedhealth insurance and retirement income programs. In fact, there issome evidence that this has occurred, at least for some recent periods.The timing of these changes, however, does not appear to correspondto the timing of increases in temporary or part-time work,but the changes are troubling nonetheless.After rising for several decades, the fraction of workers coveredby employer-provided health insurance has fallen since the mid-1980s. However, it is likely that this fall represents less than 10percent of all workers. Nonetheless, since 1985 the fraction of thepopulation covered by job-related health insurance has remainedroughly constant (around 60 percent). Evidently the decline in coverageper worker is being offset by the increase in the number ofhouseholds with more than one person working.Retirement income is another area where different surveys suggestdifferent conclusions. Business tax records show no decline inthe fraction of workers covered by retirement income programs;however, studies examining defined-benefit pension coverage find adecline in the late 1980s. The difference is at least in part due tothe growth of tax-exempt retirement savings plans provided by employers.These tend to be less generous than defined-benefit retirementplans, so that there has at least been a decline in the qualityof retirement security plans, if not in the quantity. Even here thestory is mixed. At least one recent study finds that pension coveragehas begun to increase again in the 1990s.TOWARD A COMPREHENSIVE WORK FORCEPOLICYThe labor market has changed. Although there is little evidenceof any recent abrupt changes in the fundamental behavior of thelabor market, three aspects of the longer term picture are worthyof concern: (1) the slow growth of incomes and increasing incomeinequality; (2) increasing unemployment and nonemployment, particularlyfor certain groups; and (3) the high rates of job loss anddislocation that are normal for our economy.Real income has grown very slowly since the early 1970s, and thereal incomes of the least well-off have actually fallen. The Administration'spolicies address these problems at four levels.First, the primary source of income growth is productivitygrowth. To increase productivity growth, we must invest more inresearch and development of new technologies. To take advantageof technical progress, we must invest more in new plant and equipment.Second, U.S. employers have learned new ways to organize127

work that make better use of the vast pool of talent in our workforce. These participatory techniques are particularly effective inorganizations adapting to rapid technical change but have widerapplicability as well. Third, to deal with the problems of incomegrowth and inequality, we must invest more and invest more equitablyin education and training for our work force. Finally, in orderto promote investment and to ensure that incomes grow with increasingproductivity, the Administration's macroeconomic policiesaim to encourage full employment built on a sound fiscal foundation.The Administration's main vehicle for encouraging investmentsof all sorts has been to reduce Federal borrowing so as to makeroom in credit markets for private borrowers. As noted in Chapter2, deficit reduction has resulted in much lower interest rates, makingit easier for firms and individuals to undertake productivity-enhancinginvestments. As the recovery continues, we expect to seemore individuals and firms taking advantage of these opportunities.Funding for research is also a high priority for this Administration,In addition to promoting capital formation and technical change,the Administration aims to increase the productivity of the workforce by helping employers make better use of their workersthrough increased worker participation. Numerous studies havenow demonstrated that cooperative techniques increase productivitysubstantially in a wide range of enterprises. By helping to disseminateinformation on what successful firms have been able toaccomplish, the Administration hopes to speed the adoption ofthese practices throughout the economy.Improvements in education and training to boost the skills andenhance the flexibility of the U.S. work force are top priorities. Tothis end, the Administration is increasing spending and reorganizingprograms to increase effectiveness. From increasing funding forHead Start to proposals for developing "lifelong learning," the Administrationhopes to address education and training needs everywherein our society. The Administration's Goals 2000: EducateAmerica Act and the Improving America's Schools Act aim to ensurea quality education for all students, first by guaranteeing allstudents a safe environment for learning, and then by setting nationalstandards for students and teachers. To ensure that all postsecondarystudents have access to the means to finance their highereducation, the Congress has passed legislation proposed by thisAdministration establishing a direct lending program where therate at which the loan will be paid back will depend on the recipient'sincome.Recognizing the need to coordinate education and job training,the Departments of Education and Labor have joined in an unprec-128

edented partnership to develop a number of new programs. Governmentprograms have traditionally provided extensive support forthose going to college. The School-to-Work initiative of the Departmentsof Education and Labor will help those who begin their careerswith a high school diploma to obtain meaningful work-basedtraining. This training will go hand in hand with a new system ofskill standards and certification, which will make the skills workerslearn more portable and consequently more valuable. The Administration'sWorkforce Security Act will provide training and jobsearch assistance to dislocated workers who are having difficultyfinding new work. The aim is to transform our unemployment systeminto a reemployment system. The Administration's proposedwelfare reform plan will provide funds for training to some of themost disadvantaged in our society: mothers and fathers with childrenin poverty.Another part of the Administration's answer to the problem ofgrowing inequality is the substantial increase in the earned incometax credit that has been put in place. This tax credit, primarily forlow-wage workers with children, along with the full range of othergovernment transfer programs, will lift many families with a fulltimeworker out of poverty. It is described in detail in Chapter 1.Increased productivity growth is the answer to stagnant realwages, and improved training and education—particularly for theleast advantaged—is a major part of the solution to growing inequality.But we cannot expect firms to purchase new equipmentunless there is demand for more products, and we cannot expectworkers to train for jobs that do not exist. Therefore, an integralgoal of the Administration's economic policies is the return to fullemployment.Maintaining a high rate of economic growth is also essential fordealing with the second major labor market trend of the last twodecades: increased unemployment. The analysis presented abovesuggests that most of the increase in average unemployment overthe 1970s and 1980s was due to slack aggregate demand. There isalso some indication of a permanent increase in the natural rateof unemployment in the 1970s. Whatever the cause of the increasein the natural rate, the Administration's Workforce Security Actshould help reduce the natural rate by facilitating a more efficientmatching of workers and employers.An initial step toward the establishment of a reemployment systemwas taken last fall with the passage of legislation extendingFederal emergency unemployment benefits. That legislation put inplace for the first time a system of worker profiling to help identifyworkers who are likely to experience long-term unemployment, andto provide them with a package of job search assistance services.Several controlled experiments have now shown such services to be129

effective in reducing the duration of unemployment. Once fully inplace, the Workforce Security Act will provide both job search assistanceand long-term training to those who lack the skills necessaryto secure good employment. This will help reduce mismatchunemployment and the natural rate of unemployment.Existing training programs for dislocated workers have beencriticized as ineffective. The new programs proposed by the Administrationaddress this problem by emphasizing long-term trainingand continuing postsecondary education. The large human capitalliterature shows substantial potential benefits from this approachto increasing worker skills.Dislocated workers have always faced problems with income securityand health care. With growing income inequality, the normallyhigh rates of dislocation in our economy mean greater incomeinsecurity. The Administration is moving to make job transitionseasier for displaced workers in a number of ways. The WorkforceSecurity Act will help ease transitions and help those who need itwith retraining for a new career. The Administration's health careplan will provide universal coverage, relieving one of the majorworries of a dislocated worker—what to do if a family member becomesill after health coverage from the lost job has lapsed.Overall, the labor, education, health, and welfare programs proposedby the Clinton Administration hold out the hope of lower unemploymentrates, reduced inequality, and stronger income growthfor American workers and their families.130

CHAPTER 4Health Care ReformTHE UNITED STATES SPENDS far more per capita on and devotesa much larger share of its income to health care than doesany other country. In 1993, one out of every seven dollars thatAmericans spent—14.3 percent of gross domestic product (GDP)—went to health services. In 1991, the most recent year for whichcomparable international data are available, the United Statesspent 13.2 percent of GDP on health care, while no other industrializedcountry spent more than 10 percent. Indeed the average forall the industrialized countries of the Organization for EconomicCooperation and Development (OECD) was only about 8 percent.Yet despite this massive commitment of resources, the UnitedStates insures a much smaller fraction of its population than domost other industrial countries, and ranks comparatively poorly onsuch important overall indicators of health outcomes as life expectancyand infant mortality. Tens of millions of Americans remainuninsured and live in constant fear of bankruptcy should they becomeill. Tens of millions more have inadequate insurance or riskbecoming uninsured if they lose their jobs.For the lucky Americans who have comprehensive benefits andlittle worry about becoming uninsured, the current system buyscare of high quality and provides genuine health security. For othersless fortunate, the system works less well or not at all. Andeven the lucky suffer from the shortcomings of the current system,as the costs of covering services for the uninsured and some of thecosts for those served by government programs are shifted ontohospitals and other providers and ultimately onto private sector insurancepremiums.Health care spending is not only high but growing rapidly. In almostevery year of the last three decades, health care costs haveincreased at more than twice the rate of total income. In the 1980s,real per capita health care spending increased at an annual rateof 4.4 percent in the United States, compared with an average ofonly 3.2 percent in Canada, France, Germany, Japan, and theUnited Kingdom. Current projections indicate that, without reform,the United States will devote nearly 18 percent of its GDP tohealth care by the turn of the century.At the level of the individual, the family, and the firm, the inexorablegrowth in health care spending means ever-increasing insur-131

ance premiums and ever-higher medical bills. And at the level ofFederal and State and local governments, rising health care costsmean that health expenditures claim larger and larger budgetshares, with less left over for essential competing demands likepublic safety, infrastructure maintenance and expansion, and improvementsin education and training. Despite a sustained reductionin real discretionary spending, the Congressional Budget Officeprojects that escalating health care costs will be the dominantforce pushing Federal budget deficits back up as the 20th centurynears its end.The facts speak for themselves: The United States faces a healthcare crisis that demands a solution, both for the health of its citizensand for the health of its economy over the long run.For analytical purposes, this crisis can be divided into four separatebut interrelated parts. First, the current system fails to providehealth security for millions of Americans, both insured anduninsured. Insured Americans do not have health security whenthey face the prospect of losing their coverage if they lose or changetheir jobs. Some estimates suggest that such worries may reducejob mobility by as much as 25 percent. The health security of theuninsured is still more precarious: Even when they do manage toobtain care, the evidence indicates that they receive less treatment,are sicker, and suffer higher mortality rates than the insured. Itis simply not true, as some claim, that all Americans get decentcare when they need it.Shortcomings in private insurance markets are a second and relatedproblem. Under the current system people who are lesshealthy pay more, sometimes much more, for insurance than peoplewho are healthy. Insurance for those with preexisting conditions isoften either unavailable or available only at prices that put it outof reach for many Americans. And many insurance policies simplydo not cover a variety of large financial risks—exactly the kinds ofrisks that insurance is designed to address in the first place.The third problem in our current health care system is the lackof effective competition, which in turn weakens the incentives forboth providers and consumers to make cost-conscious decisions. Inadequatecompetition is a major reason why the costs of the Americanhealth care system are so high. Studies suggest that a varietyof common procedures are often performed in circumstances wherethey are inappropriate or of equivocal value on purely medicalgrounds. Fee-for-service providers clearly have an incentive to providemore care, including care that is inappropriate, because theyare generally reimbursed for each additional test or procedure theyperform. Consumers often do not have the information they needto evaluate whether a particular service is indicated, and some donot have the choice among providers that might allow them to132

make cost-conscious decisions. In addition, many consumers haveweak incentives to choose among health care services on the basisof cost, and among health care plans on the basis of price. Finally,because many insurance policies do not cover preventive care, consumersmay underutilize cost-effective services at earlier stages ofmedical need.The fourth problem with our current system is the burden itplaces on public sector budgets. Large and growing public healthcare expenditures force governments to make painful choicesamong cutting other spending programs, increasing revenues, or increasingbudget deficits—each of which can have adverse consequencesfor long-term economic growth.None of these four problems can be solved in isolation. For example,in the absence of systemwide reform, arbitrary caps on Federalhealth care programs, which some have proposed, would simplyshift still more of government program costs onto the private sector.According to one recent estimate, uncompensated care and governmentprograms that reimbursed hospitals below market pricesshifted $26.1 billion onto the private sector in 1991. Caps on governmentprograms would simply aggravate this problem. Similarly,any attempt to provide universal coverage without complementarymeasures to improve competition and sharpen the incentives formore cost-conscious decisions would mean even more dramatic increasesin systemwide costs. And reforms designed only to addressthe most glaring shortcomings of private insurance markets wouldnot solve either the problem of providing health security for allAmericans or the problem of escalating public health care bills.In short, a piecemeal approach will not work. Health care reformrequires a comprehensive solution. At the same time, it requires asolution that preserves what is good about the current system andthat maintains choice at all levels. This is indeed a daunting challenge,but one that the Nation can ill afford to ignore.UNIVERSAL COVERAGE AND HEALTHSECURITYProviding universal health coverage and security for all Americansis an essential objective of health care reform. Chart 4-1shows the sources of health insurance for the American population.According to the Current Population Survey, over 15 percent ofAmericans—nearly 39 million people—were uninsured throughout1992. That is one of the highest shares in the industrialized world.While some people remain uninsured for long periods of time, manymore experience brief episodes during which they lack coverage, forinstance when they lose a job. The Survey of Income and ProgramParticipation (SIPP) found that over three times as many people133

are uninsured at some time during a given year as are uninsuredthroughout the year. The SIPP estimates that more than one infour Americans were uninsured at some point in a 28-month periodfrom 1987 to 1989.Chart 4-1 Distribution of Population by Source of Health Insurance Coverage: 1991Most Americans receive health insurance through their employers. Fifteen percent ofAmericans are uninsured.Employment Based 55.6%Other Private 7.3%m& Uninsured 15.4%Medicare 12.4%Medicaid 8.2%CHAMPUSandVA 1.0%Note: Detail does not sum to 100 percent due to rounding.Source: Employee Benefit Research Institute.The fact that so many people are uninsured at least some of thetime means that the prospect of being uninsured may influence thebehavior of a large number of Americans. As long as people canlose their health coverage simply by changing employment, healthinsecurity will remain a barrier to changing jobs or starting newbusinesses. An important rationale for universal coverage is thereforeto increase mobility and employment opportunities for thosewho already have insurance but do not have health security.Similarly, many people remain on welfare because they will losetheir medicaid coverage if they take a job. Some estimates indicatethat up to one-quarter of recipients of aid to families with dependentchildren (AFDC) would take a job if private health insuranceequivalent to that provided by medicaid were available to them. Asecond rationale for universal coverage is thus to reduce the numberof people on welfare and to further the Administration's goalof welfare reform.134

A third rationale for universal coverage is to improve the healthof the uninsured. The uninsured do use health care—they do notsimply do without. It is estimated that those without insurance forall of 1994 will consume about $1,200 of medical care per capita—60 percent of which will be paid for by governments and privatepayers, not by the uninsured themselves (Chart 4-2). This expenditureis roughly half the over $2,300 per capita consumed by thosewho are currently insured.Chart 4-2 Sources of Payment for Health Care by Insurance Status: 1994 EstimatesAbout 60 percent of care for the uninsured is financed by governments, other private payers,bad debt, free care, or workers' compensation.Uninsured All Year(Per capita spending = $1,224)Any Private Insurance(Per capita spending = $2,332)$95$129[ J Out-of-Pocket \/A Insurance ||| Government j_J Bad debt, free care,and workers' compensationSource: Department of Health and Human Services.While the uninsured do receive care, it is often neither timelynor appropriate. The uninsured are more likely than the insuredto receive care in the emergency room, are less healthy when theyare admitted to a hospital, and receive less treatment than peoplewith similar diagnoses once admitted. Some studies indicate—andcommon sense suggests—that the health of the uninsured suffersas a result.Indeed, without reform, the problem of adverse health outcomesfor the uninsured is likely to worsen over time. Historically, governmentsand private payers have shouldered the burden of financingcare for the uninsured. As health care costs continue to esca-135

late, however, these payers may become less willing to bear thisburden.Perhaps surprisingly, providing universal health insurance tocover those currently uninsured will not require a large increase intotal health expenditures. While the uninsured are poorer than thepopulation as a whole, they are also younger and healthier. Almostall of the elderly already have insurance—through medicare.Among the nonelderly population, 24 percent of those with employer-sponsoredinsurance are between the ages of 45 and 64,compared with only 17 percent of the uninsured. Only 9 percent ofthe privately insured are between the ages of 18 and 24, comparedwith 18 percent of the uninsured. And while uninsured adults oftenperceive themselves to be in poorer general health than the populationas a whole, they are less likely than the insured to havechronic conditions (Table 4-1). Estimates that account for these demographicand health factors generally find that insuring the uninsuredwould increase national health spending by less than 10 percent.TABLE 4-1.—Health Perception and Health Status by Type of InsuranceCoverage, 1987[Percent]Insurance coverageSelf-reported general health perception:FairPoorAny chronic conditionCharacteristicNote—The sample is composed of adults aged 18 to 64.Source: Department of Health and Human Services.Private,employmentrelated10.61.333.1Uninsured18.12.426.1A fourth rationale for universal coverage is to solve the "freerider" problem. At least some of the uninsured could afford to purchaseinsurance but choose to go without because they feel they donot need it, and because they know that if they do become sick theywill be cared for on an emergency basis at little cost to themselves.For some, relying on such "free" catastrophic insurance can bemore attractive than purchasing insurance in the private market.By requiring that all individuals pay something for coverage,health reform can help eliminate this problem.Finally, as discussed below, universal coverage is essential if everyonein the population is to share equally in the costs of insurance(Box 4-1).136

Box 4-1.—Moral Hazard and Adverse SelectionAll insurance markets face two potential problems. The first,called moral hazard, involves incentives. Insurance may encouragethose who are covered to use insured services morethan they otherwise would, or it may discourage the insuredfrom taking steps to lower their need for such services. Insuranceagainst any kind of risk—including health risks—alwaysinvolves some element of moral hazard. When people usehealth services more than they would without insurance, thetotal amount insurers must pay increases, and they in turnmust increase their prices. Furthermore, because individualspay less than the full social cost of the services they receive,too much of society's resources will be devoted to such services.The second problem is adverse selection. People who knowthat they are more at risk than others of falling ill are morelikely to purchase health insurance. Therefore, insurers whoset their prices at the average cost for the population as awhole are likely to discover that their prices do not cover theircosts, because their customers are on average sicker than thepopulation at large. To address this problem, insurers have incentivesboth to charge prices that exceed the cost of coveringthe average person and to select risks as best they can. Thehigher prices of insurance that result from adverse selectionhave the perverse effect of discouraging some healthy peoplefrom purchasing insurance. Because of the adverse selectionproblem, all people must be required to purchase insurance ifeach of them is to be charged the average cost of providing insurance.INSURANCE MARKET REFORMPrivate insurance markets have a number of shortcomings thatimpede the realization of universal coverage.INSURING MAJOR RISKS AND PREEXISTINGCONDITIONSEconomic theory suggests that at a minimum well-functioning insurancemarkets should insure against the expenses that accompanylarge medical risks because those are precisely the ones thatcause the most financial hardship to individuals and families, arethe least susceptible to moral hazard, and have the lowest administrativecosts as a share of benefits. In our current system, however,private insurance markets often fail even when judged against thisminimal standard.137

About 80 percent of conventional health insurance policies havelimits—generally ranging from $250,000 to over $1 million—on theamount that the insurer will pay over the policyholder's lifetime.Many insurers also initially exclude coverage of "preexisting conditions"—healthproblems that exist before the policy takes effect. Atypical rule, for example, is to exclude for 6 months a conditionthat was present in the 6 months prior to joining a plan. Some estimatessuggest that up to 80 million Americans have preexistingconditions that could be excluded from any new coverage or wouldrequire payment of a higher premium.Both the exclusion of coverage for preexisting conditions and thelimitations on maximum lifetime payments are ways that insurersrespond to the adverse selection problem discussed in Box 4-1.Such practices also reflect the fact that insurers who know in advanceabout the likely health status of their potential policyholderscan choose which risks they are willing to insure and which theyare not, and can choose to charge different prices to different individualsbased on this assessment.Such common insurance practices may be privately optimal forindividual insurers, but they are not socially efficient. People withpreexisting conditions and people who have exhausted their lifetimeinsurance limits may still require care, and someone mustbear the costs. If they cannot obtain private insurance and theyhave exhausted their own funds, either they will get insurancethrough public sector programs, such as medicaid, or the costs oftheir care will be shifted onto the premiums of those who are ableto obtain insurance. By compelling all insurers to cover preexistingconditions and by eliminating limitations on lifetime payments, thegovernment could reduce the adverse selection problem in privateinsurance markets and thereby improve how they function.COMMUNITY RATINGA second essential component of insurance reform is "communityrating"—charging everyone in a large group the same price regardlessof individual differences in demographic or health status. Currently,health insurance is often experience rated—the price formembers of a particular group is based in whole or in part on thatgroup's expected utilization of insured services. However, there arestrong reasons for requiring community rating.The rationale for any kind of insurance is to spread coststhroughout the insured population. Complete health insurancewould spread the cost of care across everyone in the population, regardlessof their health status. Similarly, complete insurance wouldguarantee that the price paid by each individual for coverage wouldbe the average cost of such coverage for the population. In contrast,experience rating means that the price one pays for insurance var-138

ies depending on one's health status. But at least for those healthproblems and their associated costs that individuals cannot influenceby their behavior, experience rating is at odds with the basicfunction of insurance—to insure against risk.In principle, of course, one can distinguish between those healthrisks that individuals can influence and those that they cannot,and apply experience rating to the former. In practice, however,this is often difficult to do, because it would require detailed monitoringof personal behavior. In addition, many major health risks,with the obvious exception of those associated with smoking, arelinked quite imperfectly to individual behavior, or the medical profession'sunderstanding of the linkage remains rudimentary. Basedon these considerations, community rating of health insurance, andcontinued public programs to deter smoking, are appropriate elementsof health insurance reform.However, community rating is difficult to enact without complementaryreforms. The adverse selection issue described in Box4-1 is one potential problem, which universal coverage could addressby requiring people to have coverage. A related problemstems from the fact that insurers who are compelled to charge acommunity rate will have incentives to seek out the healthiest consumers,because they can be covered for the lowest cost and thusare likely to yield insurers the highest profits. This risk selectionmay involve high administrative costs, for example in determiningthe medical history of each member of a group. Resources devotedto this activity increase the overall costs of health care without providingany additional health benefits.Several steps could be taken to minimize the possibility of suchselection. First, a system of "risk adjustment payments" could bedesigned—monetary transfers from plans that have a healthier mixof enrollees to plans with a sicker mix of enrollees. If risk adjustmentperfectly compensated for true differences in health risk, itwould eliminate the incentives for selection on the part of insurers.Second, all insurers could be required to offer the same packageof benefits, thereby eliminating the opportunity to use the variationsin the benefits package to attract better risks. Finally,"guaranteed issue" and "guaranteed renewability" of insurancecould be required—that is, people could not be denied the right toenroll initially or renew enrollment in a health plan because of demographicor health status.REDUCING ADMINISTRATIVE COSTSIn part because of the experience rating practices of insurancecompanies, there is insufficient standardization across insurers.Providers must deal with different insurers using different claimforms and covering different sets of services. Lack of standardiza-139

tion results in high administrative expenses. In 1991 over 6 percentof all health care expenditures went for administrative expenses.This exceeds total spending on all public health service programs.Standardizing benefits and billing procedures and increasing theautomation of bill payment could produce substantial administrativesavings. Grouping small firms and individuals into larger purchasingpools would have the same effect. As Chart 4-3 shows, theadministrative load charged by commercial insurers for smallgroups (1 to 4 employees) averages about 40 percent of claimspaid—in contrast to only about 5V2 percent for large groups (over10,000 employees).Chart 4-3 Administrative Expenses of Commercial Insurers as Percent of Claims PaidAdministrative expenses are much higher in proportion to claims paid for small groups than forlarge groups.Percent504040.035.03030.025.02018.016.010mi•Iilllli5-9 10-19 20-49 50-99 100-499Group size500-2,4995.510.000+Source. Hay/Huggins Company, Inc.CREATING A MORE EFFICIENT MARKET ANDCONTAINING COSTSThe third problem with the current health care system is that itappears to be far from efficient. As already noted, the UnitedStates spends a larger share of its GDP on health care than anyother industrialized nation. If Americans valued medical care more140

than people in other countries do, this might not be cause for concern.But the facts suggest otherwise.Although the fraction of national resources devoted to health carein the United States is partially explainable by our higher income,Chart 4-4 reveals that the United States is an outlier—we spendconsiderably more per capita on health care yet achieve a somewhatlower life expectancy than our higher income would predict.Nor can these differences be explained away by the age of theAmerican population. In fact, the percentage of the population over65 is lower in the United States than in most of the other OECDcountries. Since older people tend to use more medical care thanyounger people, the age distribution of the American populationsuggests that the United States should spend a smaller rather thana larger fraction of GDP on health care than do other industrializedcountries.Chart 4-4 Health Expenditure and Life Expectancy in Industrial CountriesThe United States spends more on health care yet has lower life expectancy thanwould be expected given its level of income.Deviation from predicted life expectancy (years)D4-Better outcome,lower expenditureBetter outcome,higher expenditureGreece2#Japan#

expenditures. No comparative studies have assessed whether violenceis a more important determinant of health care spending inthe United States than elsewhere.At least part of the higher health care costs in America stemfrom inefficiencies of various sorts. First, there are the administrativeinefficiencies in the insurance market discussed earlier. Inadequatecompetition among providers and inadequate incentives forcost-conscious behavior by both providers and consumers are a secondmajor source of inefficiency in the current health care system.Traditional fee-for-service plans, which pay providers for each testand procedure they perform, are used by 58 percent of private sectoremployees who receive health insurance through their employers.Such plans have built-in incentives encouraging providers toperform more care than may be appropriate. These incentives aresometimes reinforced by self-referral arrangements whereby providersprescribe tests or other services from laboratories or clinicsin which they have a direct financial interest. For example, onestudy found that doctors who performed and charged for their ownradiological tests prescribed them at least four times as often andcharged higher fees than did doctors who referred their patients tounaffiliated radiologists.Providers sometimes have an incentive to overprescribe tests andprocedures because they fear malpractice suits. Available estimatessuggest that such "defensive medicine" accounts for about 3 percentof total health spending.Even when there are many providers in a particular health caremarket, competition among them is often weak. Only 53 percent ofpeople insured through an employer, for example, can chooseamong alternative health care plans, and often the choice of acapitated plan, such as a health maintenance organization (HMO),is not available. Many small firms do not offer multiple policies.One study found that only 5 percent of workers in firms with lessthan 25 employees were offered any choice among health careplans. As a result, many consumers have only limited choicesamong both plans and providers. Consumers also may not have achoice of hospitals, since hospital selection is usually left to doctors,who choose on the basis of where they practice and may not chooseon the basis of price.Moreover, effective consumer choice depends on adequateconsumer information. But many consumers rely primarily on theirproviders for advice about what services are indicated in a particularsituation. Consumers often do not even know the prices of medicalgoods and services, and they seldom have the information theywould need to evaluate the quality of the services they receive.This means that providers are often in a position to influence boththe supply and the demand sides of their markets. In short, con-142

sumers are ill equipped to bring strong competitive pressures tobear on providers to make cost-conscious decisions.Nor do consumers themselves have strong incentives to exertsuch pressure. Even when they have a choice, consumers usuallyface weak incentives to opt for a low-cost health care plan. Manyemployers pay a fixed percentage—generally 80 percent—of whateverplan an employee chooses. Thus, when an employee selects aless expensive plan, 80 cents of each dollar saved goes to the employerand only 20 cents to the employee.As the earlier discussion of moral hazard suggested, the currentsystem of insurance may also encourage some consumers to usemore care or more-expensive care options than they would if theywere forced to pay higher out-of-pocket costs for services. On theother hand, if consumer copayments or deductibles were increasedto reduce utilization, some of the value of insurance would be lost.Higher copayments might also discourage utilization of preventiveservices, with potentially adverse effects on health outcomes. Furthermore,even drastic increases in deductibles would provide onlylimited incentives. Table 4-2 shows that even if all families had a$5,000 deductible, only 29 percent of health dollars would be spentby individuals or families paying the full marginal cost of care.TABLE 4-2.—Distribution of Population and Health Spending by SpendingCategory, Estimates for 1994Annual health spending (dollars)Percent ofpopulationPercent ofspending01-500501-1 0001,001-3,0003,001-5,0005 001-10 00010,001-30,000Over 30 000Note.—Health spending is in 1994 dollars. The estimates pertain to the noninstitutionalized population under the age of65, excluding people who receive aid to families with dependent children or supplemental security income. The distributionpresented is for health insurance units.Source: Department of Health and Human Services.Available evidence indicates that the weakness of effective competitionin the health care marketplace results in substantial fraudand abuse as well as inappropriate care or care of equivocal value.Some estimates suggest that fraud and abuse may account forabout 10 percent of total health care spending. And, as noted aboveand summarized in Chart 4-5, as much as one-third of some commonprocedures may be performed in cases where they are inappropriateor of equivocal value on medical grounds.7.826.013.125210.49.36.51.6001.42.513412.019.431.020.3143

Chart 4-5 Estimates of Inappropriate Care for Five Common ProceduresStudies have shown that as many as one-third of some procedures may be inappropriate orof equivocal value.Coronary Bypass Coronary Angiogram Pacemaker Insertion Carotid Artery Upper G.I. EndoscopySurgerySurgeryH| Appropriate j | Equivocal \_j InappropriateSource: The RAND Corporation.There are often large differences in the amounts of medical carethat people receive in different regions of the country, and even indifferent areas within the same region. These geographic differencesmay be evidence of resource misallocation. In 1989, for example,medicare physician payments per capita were 57 percenthigher in Detroit than in New York City. Other research has foundthat the level of use of hospital beds in a community is determinedprimarily by the number of beds in that community. People inareas with more hospital beds are not any healthier than peoplewho live in areas with fewer beds, but they are more likely to diein a hospital.EXPLAINING COST INCREASESNot only are the costs of the American health care system high,but they are rising rapidly as well (Box 4—2). Several factors havebeen identified as possible sources of cost growth, including theaging of the population; the growth in incomes and the reductionsin cost sharing by consumers; slow productivity growth in mosthealth care services; and technological change.144

By itself, the aging of the population can explain about 5 to 10percent of the growth in health care spending. Some estimates ofindividual behavior based on controlled experiments suggest thatroughly another quarter can be explained by more-rapid incomegrowth and the reduction in the cost-sharing component of heaUhinsurance over the last 40 years.Health care costs may also have risen rapidly because so muchmedical care consists of personally provided services rather thangoods. On average, over long periods of time, the prices of personalservices rise faster than the prices of goods because productivityadvances more rapidly in goods production than it does in services.Unfortunately, there is no reliable estimate of the magnitude ofthis factor. If there were no productivity growth at all in the healthsector, the relative price of health care would be expected to rise,on average, at the economy-wide productivity growth rate—about Ito IV-2 percent per year in recent years, which is about one-quarterto one-third of the observed increase in relative prices. There is,however, almost certainly some productivity growth in health care,so the so-called cost disease factor cannot account for even thismuch extra health inflation.Finally, many health economists believe that technologicalchange itself drives health care costs upward. Once again, however,no reliable measures of its quantitative importance are available.In theory, the introduction of a new technology may increase or decreasehealth care costs, depending on whether it substitutes for orcomplements existing methods of treatment and, if the former, onwhether it costs more or less than the technology currently available.In addition, some technological change may consist of applyingpreviously existing technologies to different diagnoses.Technology's influence on future trends in health care costs isdifficult to predict. Medical science is on the brink of new technologiesmade possible by the revolution in genetic research, andthese may prove to be less costly substitutes for existing technologies.In addition, as historians of technological progress havedemonstrated, technological change is not entirely exogenous—itsform depends on the incentive environment in which it occurs. Ahealth care reform that encourages more cost-conscious decisionsby providers and consumers may in fact encourage new technologiesthat are more cost effective. Finally, an increase in competitivepressure in health care markets will exercise greater pricediscipline on both existing and new technologies and thereby moderatetheir effects on the growth of health care spending.WHO PAYS FOR HEALTH CARE?Table 4-3 shows who paid for health care in 1991, and where themoney was spent. The largest amount of health care spending (38145

Box 4-2.—Recent Reductions in Health Care InflationThe rate of inflation in the health sector slowed in 1993,largely as a result of slower growth in prices for health services,including physicians and hospital care:Inflation rate of:Average1983-91Year endingDecember(percentages)19921993Total CP1Health careExcess of health care inflationover totalSource: Department of Labor.Historically, health care inflation tends to move in parallelwith inflation in the rest of the economy, but at a higher averagelevel. In 1993 the gap between health care inflation andoverall inflation narrowed somewhat, but the change does notappear to be statistically significant.Some have argued that the recent slowdown in health inflationis a sign that reform of the health care system is not required.But despite the slowdown, the relative price of healthcare continues to increase: The medical care component of theconsumer price index grew at twice the rate of total consumerprice inflation in 1993. Moreover, this argument overlooks severalother important motives for health reform: the lack ofhealth security and universal coverage, the failures of the insurancemarket, and the burden of health care expenditures ongovernment budgets. The cost problem will not be solved withoutreforms that increase competition in the health care marketplace.3.97.33.42.96.63.72.75.42.7percent) is for hospital care. Payments to physicians and otherhealth care professionals are the second-largest category, at 29 percentof total spending. The remainder of personal health care is forhome and nursing home care (9 percent), and drugs and other personalcare outside of hospitals and nursing homes (12 percent). Thecosts of insurance administration are estimated at 6 percent ofhealth spending. Finally, public health activities and research andconstruction total 6 percent of spending.Health spending is financed in four principal ways. Businessespay for health care directly through health insurance premiums($153 billion in 1991) and workers' compensation and disability insurance($18 billion). Total business spending ($171 billion) wasabout 23 percent of total health spending and 6.3 percent of total146

TABLE 4-3.- Sources and Uses of Health Care Funds, 1991[Billions of dollars!Private spendingGovernmentBusinessHouseholdUses of fundsTotalNonpatientrevenuePremiums'Workers'compensationPremiumsOutofpocketMedicareMedicaidEmployerOtherTotalHospital carePhysician careCther professionals,dental visitsHome health and nursinghome careDrugs, vision, otherpersonal careAdministrationPublic healthResearch and construction752289142737087442523153644218162200188710110052221460270014410263027520003315042210912373334733001014374311240040171150260091383117025141 Includes household and employer premiums.Source: Health Care Financing Administration.compensation. Households pay for health care through insurancepremiums ($52 billion in 1991) and out-of-pocket expenses ($144billion). Total household spending of $196 billion was 26 percent ofnational health spending. The average household spent about$2,100 on health care in 1991. The health care industry receivesadditional nonpatient revenues of $33 billion (4 percent of totalspending) from such activities as parking lot receipts.Finally, governments pay for 47 percent of all health spending($355 billion), most of it for medicare and medicaid. There is additionalspending on health insurance for government employees andon activities of the Department of Veterans Affairs, the Departmentof Defense, and the Public Health Service. About 21 percentof Federal Government revenues and over 21 percent of State andlocal government revenues are devoted to health care.Governments also subsidize health care indirectly, by excludingemployer-provided health insurance from taxable income. In 1991this tax expenditure cost the Federal Government an estimated$36 billion in individual income taxes. The government lost SocialSecurity revenues as well, although Social Security payments inthe future will also be somewhat lower.Chart 4-6 shows the evolution of these payment sources overtime. Between 1965 and 1991, payments by health insurers, medicare,and medicaid increased from 24 percent to 62 percent of totalhealth care spending. Other government spending fell from 25 to147

14 percent, and out-of-pocket spending declined from 46 percent to20 percent of the total. The dramatic extension of insurance coverage—inboth the public and the private sectors—may be both aresponse to and a cause of increased costs.Chart 4-6 Sources of Health Care Financing as Percent of Total ExpendituresHealth insurance and government-financed expenditures have been rising as a share of totalspending, while out-of-pocket expenditures have been falling.1965 1967 1969 1971 1973 1975 1977 1979 1981 1983 1985 1987 1989 1991Source: Health Care Financing Administration.While Table 4-3 shows who is responsible for paying for healthcare, it does not show the economic incidence—whose income is ultimatelyreduced because of high health care costs. In response tohigher costs, businesses have several options: They can reducehealth benefits; lower workers' wages or other benefits so that totalcompensation does not rise; reduce employment; lower returns toshareholders; reduce payments to other factors of production; reduceinvestment in plant and equipment or research and development;or raise prices to their customers.Economic theory suggests that most of the increase in healthcare costs will be reflected in lower wages. The reason is simple.Firms are indifferent between spending a dollar on wages or onhealth premiums. But since wages are taxed while health insurancepremiums are not, employees should be willing to "buy" increasedhealth insurance by sacrificing wages until the marginaldollar of health insurance is worth one dollar of after-tax wages, or148

about 65 to 70 cents for a typical family. At this point, the workershould also be indifferent between contributing more to health insuranceor to wages.Empirical research suggests that the dominant long-run responseof businesses to rising health care costs has indeed been to lowerthe rate of increase of workers' wages. Between 80 and 100 percentof increases in health care spending appears to be reflected inlower wages. As noted in Chapter 1, the share of wages in totalcompensation has been falling since 1960, while the share of businesshealth insurance spending has increased markedly.When firms slow wage increases to offset rising health insurancecosts, they limit the increase in their total labor costs, and thuslimit the job losses that might otherwise result. The slower wagegrowth due to rising business health expenditures has led to slowerincreases in incomes than would otherwise have occurred. If businessspending on health care were the same share of compensationtoday as it was in 1975, wages per employee could be over $1,000higher.If increases in business spending on health insurance are not entirelybalanced by reductions in other forms of labor payments,total compensation will rise. In this case, some other business decisionsare likely to be affected, such as employment, pricing, or investmentdecisions. Empirical research, however, has not exploredsuch alternative responses in any depth.In summary, the economic literature on the incidence of healthcare costs suggests that employees eventually pay for most of theiremployer-provided health coverage by taking home lower cashwages. Reforms that enhance the efficiency of the health care marketwill allow employees to have both more health care coverageand higher take-home pay at the same time. Greater efficiency willtherefore translate into an improvement in living standards for societyas a whole.HEALTH CARE AND GOVERNMENT BUDGETSThe final problem in the current health care system is the growingburden it places on government finances. Because governmentspay for such a large share of health spending, increases in healthcosts contribute directly to pressures on Federal, State, and localbudgets. Public sector spending on health care grew over 2 percentagepoints faster than private sector spending in the 1970s, and atabout the same rate as private sector spending in the 1980s. Theresult has been an increasing share of health spending by governments.In addition, as was pointed out in Chapter 1, health spendingis growing four times as rapidly as any other component of theFederal budget. Over the two decades ending in 1991, Federal149

health spending increased from 9 percent to 21 percent of totalFederal revenues (Chart 4-7). Similar changes have occurred inState and local government spending.Chart 4-7 Government Spending on Health Care as Percent of Total Government RevenuesFederal and State and local spending on health care account for increasing shares of totalgovernment revenues.1965 1967 1969 1971 1973 1975 1977 1979 1981 1983 1985 1987 1989 1991Sources: Department of Commerce and Department of Health and Human Services.The Federal Government has responded to increasing health carecosts in part by attempting to limit the reimbursement rates paidby public programs to health care providers. This approach in turnhas resulted in the substantial shifting of costs to the private sectordescribed earlier. In the absence of systemwide reform, the impositionof caps on Federal health care programs would either furtheraggravate the cost-shifting problem or gradually limit accessto care.Without health care reform, escalating health care costs will continueto confront the Federal Government—as well as State andlocal governments—with painful choices among additional taxes,cuts in spending on education and other programs that promoteeconomic prosperity, or increases in budget deficits. As alreadynoted, projected increases in Federal spending on medicare andmedicaid are the main force behind a projected increase in the Federaldeficit toward the end of this century.150

THE ARCHITECTURE OF THE HEALTHSECURITY ACTThe Administration's approach to health care reform, while boldand comprehensive, builds on the strengths of the current marketbasedsystem. The Administration considered but rejected radicalapproaches such as a single-payer system or government-set healthcare prices in favor of restructuring the current system and relyingon the forces of market competition. The Administration's frameworkpreserves and expands consumer choice among providers andpreserves the current employer-based system of health insurance.The Administration's plan also allows large firms to continue operatingself-insured plans. Such firms generally provide comprehensivebenefits, and many have managed to control health carespending. Indeed, the Administration's plan reflects many of thelessons learned from the experience of such firms.ELEMENTS OF REFORMTo address the Nation's health care problems, meaningful reformsmust address the four interrelated issues identified in thepreceding discussion: universal coverage and health security; reformof the private insurance system; efficiency improvements andcost control; and sustained deficit reduction. The Health SecurityAct, which the Administration proposed in 1993, contains reformsthat simultaneously meet these objectives. The principal features ofthe Administration's reforms are outlined in this section and discussedin greater detail in the remainder of this chapter.Universal CoverageThe Health Security Act guarantees all Americans a health insurancepackage with a comprehensive set of benefits. The medicareprogram will be left largely unchanged, and medicare will remainthe insurer for most Americans over the age of 65. Most medicaidrecipients under 65 will be absorbed into the new system.With very few exceptions, all other Americans will receive theirhealth insurance from the "health alliances" described below.Universal coverage is essential for the reasons noted earlier.Comprehensive benefits are equally important if health security forall Americans is to be achieved. Some reform proposals promiseuniversal coverage but guarantee coverage only for catastrophic expenses.In practice, people with high incomes may be able to affordadditional coverage beyond catastrophic, but many other Americanscannot. Plans that guarantee only catastrophic coverage leavemany people without genuine health security—subject to the riskthat their insurance coverage will deteriorate if they lose their jobs,just when their incomes are falling.151

Since the Administration's comprehensive benefits package includesa prescription drug benefit for the under-65 population, theAdministration's proposal also calls for a comparable drug benefitto be added to the medicare program. In addition, the proposal includesfunding for long-term care services, primarily to expand theamount of home- and community-based care.Reforming Insurance MarketsUnder the Health Security Act, individuals and families will receivecoverage through regional or corporate "health alliances"—pools of individuals who purchase from a set of health plans. Noinsurer will be able to impose restrictions on preexisting conditionsor lifetime limitations on insurance benefits, or to deny people theright to initiate or renew enrollment because of demographic orhealth status. Insurers will have to charge a community rate to everyonein an alliance.Because there will be only one regional alliance in each geographicarea, and coverage will be universal, healthy people in eacharea will naturally be pooled with sicker people. Pooling healthrisks makes insurance affordable for everyone. It also provides thehealthy with the knowledge that their insurance premiums will notrise if they or a family member become ill.Eliminating exclusions for preexisting conditions and lifetimelimitations on benefits guarantees that large financial risks will becovered. Providing for guaranteed issue and guaranteed renewabilityallows individuals to exercise their choices among health plans.Efficiency Improvements and Cost SavingsTo encourage cost-conscious decisions, the Health Security Act allowsconsumers a choice among several plans with identical benefits,gives them information about the quality of competing plansand their customers' satisfaction, and allows them to receive moreof the savings if they choose a less expensive health plan. In addition,the act sets a limit on the growth of premiums in the alliances.Promoting choice among health plans is essential to controllingcosts. By encouraging plan choice, the act attempts to create amore efficient health care delivery system and thus lower overallspending.The act's proposed limits on the allowable growth of premiumsare intended to guarantee control over the growth of costs, in caseenhanced private incentives fail to have the anticipated effect.These limits are an important safeguard because they reduce therisk to the government of runaway health spending.Deficit ReductionOver time, cost savings from the provisions just described andfrom reimbursement changes in public programs will provide budg-152

etary savings for the Federal Government. As noted above, longrunsuccess in keeping the Federal deficit under control is directlytied to success in reducing the growth rate of Federal health carespending. In the short term, the Health Security Act entails somenew Federal costs—discounts for the poor and for small and lowaverage-wagebusinesses, a new drug benefit for medicare, and coverageof long-term care. The savings from slowing the rate ofgrowth of health care spending start right away, but they are smallat first. Over time, these savings grow larger, and deficit reductionincreases accordingly.Maintaining ChoiceThe Health Security Act allows families, doctors, firms, andStates to make significant choices about the nature of their involvementin the new health care system.Households will get to choose their own doctors, and many familiesthat currently have no choice over their health plan will begiven several options. Doctors will get to choose the plan or plansin which they work, and may remain in the fee-for-service sectorif they wish. Large firms may choose to form corporate alliances orto join regional alliances. And each State will be allowed to adjustits health care system to its particular circumstances—includingthe establishment of a single-payer system if it so chooses.PROVIDING COMPREHENSIVE BENEFITSAll health plans organized under the Health Security Act mustoffer the same set of comprehensive benefits. These benefits includehospital services; services of health professionals; clinical preventiveservices; mental illness and substance abuse services; familyplanning services; hospice care; home health care; extended careservices; ambulance services; outpatient laboratory, radiology, anddiagnostic services; outpatient prescription drugs and biologicalagents; outpatient rehabilitative services; durable medical equipmentand prosthetic and orthotic devices; vision care; and pediatricdental care. The guaranteed benefit package to be in effect throughthe year 2000 provides the level of benefits currently offered by atypical medium-sized to large firm. In the year 2001 the benefitpackage expands to include services not fully covered previously—principally, adult dental benefits and broader coverage for mentalillness and substance abuse.Health plans will offer one of three forms of cost sharing. Thefirst is a "higher cost-sharing" option similar to those in traditionalfee-for-service plans. There is a general deductible of $200 per yearfor a single individual and $400 per year for a family, with separatedeductibles for mental illness and substance abuse treatment,prescription drugs, and dental services. After the deductible is met,the insured individual pays 20 percent of the cost of most services.153

The second option is a "lower cost-sharing" option similar to thosein HMOs. This option has only a $10 copayment for most services,a $5 copayment for prescription drugs, and higher copayments forservices such as hospital emergency room services, inpatient mentalillnesses services, outpatient psychotherapy, and orthodonticcare. Preventive services are covered without cost sharing under eitherschedule. The final option is "combination cost sharing" similarto that in preferred provider organizations (PPOs). This optionfollows the lower cost sharing for services provided inside a networkand the higher cost sharing for services outside of the network.Under all cost-sharing schedules, out-of-pocket payments willnot exceed $1,500 per year for a single individual or $3,000 for afamily. All of the cost-sharing limits are in 1994 dollars and are indexedin subsequent years to the rate of premium growth.ORGANIZING THE INSURANCE MARKETThe organizing mechanism for health insurance under theHealth Security Act is the health alliance. The alliance is the"broker" between consumers and plans—negotiating with healthplans and offering choices to consumers, and accepting premiumpayments from consumers and distributing them to plans.The act creates two types of health alliances: regional alliancesand corporate alliances. Regional health alliances are designed forworkers in firms with fewer than 5,000 employees, nonworkers,and most medicaid recipients. Each State will have one or more regionalalliances, but alliances may not overlap geographically.Boundaries of the regional alliances may not be drawn to segregatepeople with high expected health care costs in one area. Firms withover 5,000 employees will have the option to form a corporate alliance,but they must provide the guaranteed package and will notreceive any discounts on their premium contributions.The alliance structure is designed to enhance competition andthus produce efficiency savings. Within an alliance, consumershave a choice of health plans. Plans will be either fee-for-service,PPOs, or HMOs. HMOs must offer consumers the opportunity topurchase a point-of-service option, allowing them to use care outsidethe HMO as in a fee-for-service plan if they choose. All planswill offer the same set of benefits, so individuals will not fearchanges in covered services if they switch plans.There will be an annual open enrollment period during whichconsumers can switch from one health plan to another without lossof coverage. To increase consumers' ability to evaluate competingplans, the alliance will also publish price and quality data aboutthe different plans. Consumers are required to pay the cost of theplan they select, less the amount their employers are required tocontribute. Employers are allowed to supplement their required154

contribution, within limits. Outside of collective bargaining agreements,employers must offer the same supplementation to everyworker in a given rating pool (rating pools are described in thenext section). The supplementation cannot cause the total employercontribution to exceed the premium of the highest cost plan forthat rating pool in the alliance. Employers who choose to contributemore must give full rebates to employees who choose a plan thatcosts less. Thus, the consumer will realize the full savings (subjectto taxes) from choosing a less expensive health plan.Individuals may also use after-tax dollars to purchase health coveragefor benefits beyond the guaranteed package or for supplementalpolicies to reduce out-of-pocket payments. The Health SecurityAct specifies a floor for coverage below which individualsshould not fall, rather than a ceiling on the generosity of healthbenefits an individual can receive.On the provider side, the health alliance solves many of the problemsinherent in the current market. As a requirement for sellinginsurance in an alliance, plans must agree to community rating,guaranteed issue, and guaranteed renewability, and must cover individualswith preexisting conditions. The health alliance must acceptall qualified health plans into the alliance, with the exceptionthat the alliance can exclude plans that charge over 120 percent ofthe average premium.Some economists have argued that the Federal Governmentshould tax employer contributions for health insurance as if thesebenefits were paid as wages. Such a tax change would raise theprice to consumers of more-expensive health plans, thereby providingan incentive to limit health care spending. There are severalways to reform the tax treatment of health benefits. First, employeescould be prohibited from contributing pretax dollars to healthinsurance under certain employee benefit arrangements called "cafeteriaplans." This limitation is a part of the Health Security Act.Second, employer payments for covered services beyond the guaranteedbenefit package—whether in reduced cost sharing or in additionalservices—could be considered taxable income. This limitationis scheduled to occur in the year 2004 under the Health SecurityAct. Finally, all or part of the cost of a guaranteed benefitpackage above some level could be considered taxable income. Thischange is not part of the Health Security Act.PAYING FOR INSURANCEThe Health Security Act classifies people into four rating pools:singles, couples with no children, families with children and oneadult, and families with children and two adults. Table 4-4 showsthe estimated premiums in 1994 for policies for these four pools.For a two-adult family with children, for example, the national av-155

erage premium in 1994 is estimated to be $4,360. The actual premiumswill vary by region of the country, as health spending doescurrently.TABLE 4-4.—Estimated Premiums in the Regional Alliance, 1994Payments by.Rating poolAveragepremiumFamily(20 percent)Per-familyrequirement(80 percent)EmployerAverage numberof workersper familyPer-workerrequirementSinglesCouples (no children)One-adult familyTwo-adult family$1,9323,8653,8934,360$386773779872$1,5463,0921 3,4091.001.451.38$1,546Note—Premiums are national averages. Actual premiums will differ from alliance to alliance. Employer payments forone-adult and two-adult families are pooled.Source: Administration estimates.Employers are required to pay 80 percent of the average premiumfor each family. Single individuals are considered to haveone worker per family. An employer of a full-time single workertherefore pays 80 percent of the $1,932 premium cost, or $1,546.In the case of childless couples, there are on average in the UnitedStates about 1.45 workers per family. Since 80 percent of the premiumfor childless couples is $3,092, the amount per worker is only$3,092 divided by the number of workers per family, or $2,125. Employersmust pay this amount for each worker. Workers in familieswith children—whether the family has one adult or two—arepooled. The alliance computes total requirements ($3,409 per family)and divides this by the number of workers per family (about1.38 as a national average). The employer payment for a full-timeworker in a family with children is therefore $2,479. Because theseamounts are independent of the number of workers in a family,employers do not have to coordinate payments with employers ofother family members. This system is thus relatively simple to administer.Employer payments for part-time workers are prorated, based onthe percentage of a 120-hour month (about 30 hours per week) thatthe person works. If the employee works 60 hours per month, theemployer would owe one-half of an employer premium. No employerpayment is required if the individual works fewer than 40hours per month. Thus, an employee who worked at two 60-hourper-monthjobs would be credited with two half-payments, or onefull-time payment. An employee who did not work at any job forat least 40 hours per month is treated as a nonworker.Self-employed people will make their own employer payments, asthey do now. However, if a self-employed worker also has wage and2,1252.479156

salary income, payments from the employer will be credited againstthe amount owed on the worker's self-employment income. Thus, aworker who earns wages or a salary for half the year and is selfemployedfor the other half would owe only half of an employerpayment on his or her self-employment earnings, with discountsavailable for those with low self-employment earnings. In addition,self-employed people will be able to deduct all their payments forhealth insurance in computing taxable income, compared with the25-percent deductibility under current law.The equivalent of at least one employer premium must be collectedfor each family. In cases where no family member receivesemployer coverage, or the family members worked less than 12 fulltimemonths in a year, the balance of the premium is the responsibilityof the family. If the family members worked 6 full-timemonths, for example, the family would owe one-half of an employershare, the employer having paid the other half.Finally, each family owes any difference between the employercontribution and the price of the plan they select (but low-incomefamilies will be eligible for discounts on their share). For the averagefamily, this difference will be 20 percent of the total premium,or $872 in the case of a family with children. If the family choosesa more expensive plan, it will pay the additional cost. If the familychooses a less expensive plan, it will keep the savings.PROVIDING DISCOUNTSThe government provides discounts on the cost of insurance tosmall and low-wage businesses and low-income families. There arefive types of discounts in the Health Security Act, which are detailedin Table 4-5: discounts to families on their 20-percent shareof the premium; discounts to families that (for reasons just explained)owe some of the employer payment; discounts to early retirees;discounts to firms; and discounts to low-income families facinghigh out-of-pocket payments. The cost of providing these discountsis made up by government payments.Low-income families in the regional alliances receive a discounton their 20-percent share of the premium. No payment at all is requiredon the first $1,000 of income. The discount phases out at150 percent of the poverty line—about $23,000 for a family of fourin 1994. Income for these purposes is defined as adjusted gross incomeplus tax-exempt interest income. The $1,000 disregard andthe poverty line are indexed to the consumer price index.Additional discounts are provided for families that owe part of anemployer payment. No payment is required if nonwage income isbelow $1,000, and full payment is expected if nonwage income isgreater than 250 percent of the poverty level, or about $39,000 fora family of four in 1994. Nonwage income is defined as adjusted151-444 0 - 9 4 - 6157

TABLE 4-5.—Discounts Under the Health Security Act in 2000[Billions of dollars]DiscountPurposeAmountEmployerHouseholdNonretireeNonworker discounts to re-Limit employer payments for time spent not workingtirees.Early retireesOut-of-pocketCushionTotalLimit firm payments to 7.9 percent of payroll or lessLimit payment for 20 percent share of premiums and for time spent notworkingEliminate remaining employer paymentLower cost sharing for poor familiesAllowance for behavioral effects and unfavorable economic circumstances294775313103Source: Administration estimates.gross income less unemployment compensation and wage and salaryand self-employed income (up to $60,000 per year), and includingtax-exempt interest. Labor income is excluded from this calculationbecause it is assumed that families have already "paid" fortheir employer's contribution through lower wages and salaries.Beginning in 1998, if a retired individual is between the ages of55 and 64, has less than $90,000 in income, and meets the SocialSecurity earnings test, the government pays the entire employershare of the retiree's premium. This discount supplants any paymentfor the employer share that the individual or his or her employerwould have made. The largest benefit to corporations withearly retirees, however, will come not from this special provisionfor retirees (which will save firms about $2 billion), but from communityrating of premiums, which will save about $7 billion. From1998 through 2000, firms that are currently providing health insuranceto their retirees must pay the government 50 percent of thesavings they realize from this provision.Total household discounts are expected to be $59 billion in theyear 2000. This total includes $47 billion in nonretiree discounts,$7 billion in low-income discounts given to retirees, and almost $5billion in additional discounts to early retirees.Some firms will also receive discounts on their required payments.Contributions from each firm in the regional alliances arecapped at 7.9 percent of payroll. If a firm's required paymentswould be greater than 7.9 percent of payroll, the government paysthe overage. Small, low-wage firms are capped at even lower percentagesof payroll, as detailed in Table 4-6. Employer discountstotal $29 billion in 2000 (Table 4-5), about three-quarters of whichare for firms with fewer than 25 employees.Finally, low-income individuals can receive discounts for theirout-of-pocket payments if they live in areas where there are no158

TABLE 4-6.—Caps on Premiums by Firm Size[Percent of total payroll]Average wage (dollars)Less than 25Firm size (number of workers)25-4950-7475 and overLess than 12 00012 000-15 00015,000-18,00018 000-2100021,000-24,000Over 24,000Source: Administration estimates.3.54.45.36.27.17.9health plans that offer lower cost sharing or that charge premiumsat or below the average-cost plan. These discounts end at 150 percentof the poverty level. The total cost of these discounts is estimatedto be $3 billion in the year 2000.Numerous behavioral effects could influence the discounts thegovernment is obligated to pay. For example, firms that have highaverage wages, and therefore pay the full premiums for their workers,may find it in their interest to contract out for low-wage servicesfrom firms that receive discounts. To allow for this and otherbehavioral reactions, the projected discounts were increased by 15percent above the static estimate, or $13 billion in the year 2000.USING SAVINGS TO GUARANTEE HEALTH SECURITYAND REDUCE THE DEFICITAt the broadest level, the Health Security Act is designed to financenew spending and deficit reduction out of savings from reducedexpenditures relative to the no-reform baseline. Savings areexpected to result from reduced administrative costs, consumersswitching to less expensive plans, and lower costs from improvedincentives.Insurance reform will save money through lower underwritingcosts. On net, the cost of insurance administration should declineby about 3.5 percent of claims paid. Since current premiums for thepopulation that will be included in the health alliances are about$200 billion, the savings from the insurance reforms in the healthalliances should be about $7 billion annually.There are also likely to be savings from consumers switching tolower cost plans. Several studies have found that managed care arrangementshave lower health spending than open-ended plans.The most comprehensive forms of managed care—group and staffmodel HMOs—save an estimated 15 percent on health spending by,for example, finding alternatives to hospitalization.A number of governments and corporations have experimentedwith paying a fixed amount for health insurance, regardless of the4.45.36.27.17.97.95.36.27.17.97.97.97.97.97.97.97.97.9159

plan the employee chooses, and have found that these paymentrules have a large effect on individual choices. The State of Minnesota,for example, implemented a fixed-dollar contribution forpublic sector employees in 1989. Between 1988 and 1993, the shareof employees in the highest cost plan fell from 42 to 17 percent,while the share in the lowest cost plan increased from 28 to 54 percent.The State of Wisconsin implemented a similar system for itspublic employees in 1984. In one year, enrollment in HMOs increasedby over 60 percent. Similar responses have been observedin several private companies.Finally, there is the case of California, which passed laws in theearly 1980s increasing the ability of plans to contract selectivelywith providers. Since then, growth in health care costs has beenmuch lower in California than in other States. Between 1982 and1991, real per capita costs for hospitals, physicians, and prescriptiondrugs increased 2.8 percent annually in California, comparedwith 4.8 percent annually in the rest of the United States. As a result,California's per capita costs fell from 18 percent above the averageState in 1982 to 2 percent above the average in 1991.As a backup to the market incentives it provides, the Health SecurityAct places a limit on the growth of premiums in regional andcorporate alliances. Up to the year 2000, growth in total premiumsis constrained to the growth of inflation and population, plus an adjustmentfactor ranging from 1.5 percent in 1996 to zero in 1999and 2000 (Table 4-7). This reduction in growth rates is in anticipationof one-time savings in health expenditures. After 2000 thegrowth rate of spending is expected to increase, but not to the levelin the current system.TABLE 4-7.—Allowed Growth Rates[Percent]of Alliance PremiumsGrowth rate199519961997199819992000BaselineReformiAdjustment factor 29.09.01 Projected average annual growth rates. Some alliances may experience higher annual growth rates prior to 1998.2 Adjustment factor added to inflation plus population growth to find reform growth limits.Source: Baseline projections are from Congressional Budget Office, updated for higher estimates of inflation by theAdministration. Reform projections are Administration estimates.Each year, plans will submit bids on the premiums they proposefor serving the alliance population. If an alliance's expected weighted-averagepremium is above the premium limit, and plans do notvoluntarily reduce their bids, the premiums of the plans that exceedthe limit will be reduced so that the cap is met.9.55.81.59.25.31.09.04.8.58.94.3.09.04.2.0160

An example will illustrate the process. If the average premiumin one year is $4,000 and the target growth rate is 5 percent, theallowed increase in the average premium in the next year is $200.Suppose there are two plans with equal enrollments, one of whichwants to increase the premium by $100 and the other by $400.Under the cap, the second plan would be allowed to increase itspremium by only $300, so that the average increase would be $200.Finally, if more people than expected join high-cost plans, so thatactual premiums exceed the target, the premium target is reducedin the next 2 years to recoup the overage.Chart 4-8 shows the projected change in national health expendituresunder the act. Spending initially increases, because of theextension of coverage to the uninsured. By 1998, when universalcoverage is complete, spending is above baseline by 0.3 percent ofGDP. Over time, however, the savings from the market reforms—or, as a backstop, from the caps on premium growth—rise andspending falls relative to the baseline. In 1999 and 2000, spendingis projected to grow at almost the rate of nominal GDP, so thathealth care as a share of GDP rises by only 0.2 percentage point.By the end of the decade, health expenditures with reform are projectedto be below the level estimated to occur without reform.Both the new Federal health spending and deficit reduction arefinanced out of savings in the existing system (Table 4-8). Spendingrises with the implementation of universal coverage, but theslower growth of costs generates savings to the government. Healthreform is essentially deficit-neutral in the first 4 years and deficitreducingthereafter. By 2000, new Federal spending is projected tobe $94 billion, and savings are projected to be $132 billion, yieldingdeficit reduction of $38 billion.The new spending comes in five principal areas, detailed for theyear 2000 in Table 4-9. First, net premium and other discountstotal $42 billion. These discounts are the difference between $103billion in gross spending and $61 billion in medicare and medicaid"offsets," as people leave these programs and receive coverage inthe alliances instead. There is additional spending for the Departmentof Veterans Affairs, public health (including WIC [women, infants,and children] expansions and funding for academic medicalcenters), administration ($10 billion), the prescription drug benefitto the medicare program ($17 billion), and long-term care. Finally,allowing 100-percent tax deducibility of health insurance premiumsfor the self-employed will cost $3 billion in forgone revenues.These new costs are financed by seven sources of funds. First, atobacco tax will raise $11 billion, and a 1-percent payroll assessmenton corporations that choose to form their own corporate allianceswill raise $5 billion. There are also savings in public sector161

Chart 4-8 Health Expenditures as Percent of GDPHealth expenditures will increase in the short term but will fall below baseline by theend of the decade.PercentIOWithout Reform\ 17.41716.716.2 ,'*'^ 1 6 . 7TWith Reform1615.6 ,-''15^14.6^5III1994 1995 1996 1997 1998 1999 2000Note: Baseline is from the Congressional Budget Office, updated with Administration economic assumptions.Source: Administration estimates.iIIiTABLE 4—8.—New Federal Spending and Savings Due to Reform[Billions of dollars]Item199519961997199819992000Mew spendingSavingsChange in deficit3.514.5—11023.526.7-3.250.944.06.979.474.74.888.8107.0-18.292.1129.8-37.7Note.—A negative number for change in deficit denotes a reduction in the deficit.Source: Administration estimates.programs. Medicare savings are projected at $39 billion in the year2000. These savings result from 28 specific changes, ranging fromlower hospital payment updates to increased premiums for thehigh-income elderly. Medicaid savings are projected to be $27 billionin 2000, due to lower payments for hospitals that treat the uninsured(since everyone will be covered) and slower growth of costsfor medicaid beneficiaries in the health alliances, resulting fromthe improved incentives. Other programs such as those of the Departmentof Veterans Affairs, the Department of Defense, and theFederal Employees Benefit Program are projected to realize sav-162

TABLE 4-9.—Sources and Uses of Federal Funds Under Reform, 2000[Billions of dollars]Source Amount Use AmountTobacco taxCorporate assessment..MedicareMedicaidOther Federal programsOther revenue effects ...Debt service115392711352Discounts:Gross spendingOffsetsNetVeterans Administration, Public Health, New AdministrationMedicare drug benefitLong-term care100 percent tax deduction for self-employed103-61421017203TotalSource: Administration estimates.130Total spendingDeficit reductionings of $11 billion from slower cost growth, the provisions relatedto early retirees, and the increase in payments from private payers.Additional revenue amounting to $35 billion comes from a combinationof factors, including additional tax revenue from the reductionin employer health care costs over time, removing health insurancepremiums from "cafeteria plans" offered by employers, paymentsfrom corporations with early retirees, dedicated premium revenuefor academic health centers, and other tax changes. Finally, theplan generates $2 billion in lower debt service as a result of deficitreduction in years prior to 2000.To protect the Federal budget against open-ended commitments,the Health Security Act sets a ceiling on discounts that can be paid(Box 4-3). Authorized discount payments that are not utilized inany one year can be carried forward into future years to increasethe maximum payment. This reduces the probability that the limitswill be exceeded.ECONOMIC EFFECTS OF THE HEALTHSECURITY ACTThe Health Security Act is certain to have impacts both on theoverall American economy and on the health care sector in particular.MACROECONOMIC EFFECTSOne important concern about health care reform is its effect onemployment. Because employer mandates to provide insurance mayinitially increase labor costs to firms that are not now providing or9238163

Box 4-3.—Capped EntitlementsBoth the premium discounts and the new long-term care programare "capped entitlements." The long-term care program isan entitlement to States, not to individuals. The amount ofmoney that States may receive is specified explicitly. Federalliability is limited to that amount, even if demand is greaterthan predicted. Similarly, there is no authority to pay for premiumdiscounts beyond what is provided in the Health SecurityAct. In the event that spending is projected to exceed theamount in the legislation, the President must submit to theCongress a plan for addressing the issue. The Congress willthen act on this plan through an expedited process.The notion of a capped entitlement is not new. A number ofFederal entitlement programs operate under a budget limit, includingthe social services block grant and payments to Statesfor AFDC work programs. The legislated appropriation sets alimit on how much can be spent in total. Then, if spending isexpected to be above projections, the government must changethe eligibility requirements, change the benefits, or pass a supplementaryappropriation.are underproviding insurance, fears have arisen that labor demandmight decline as a consequence of reform.In fact, however, changes in employer-paid health insurancecosts can have several effects on workers other than changes in employment.As noted earlier, the dominant effect of increases inhealth care costs in the past has been a reduction in the real wagesreceived by employees.Chart 4—9 shows projections of total employer health insurancepayments with and without health reform. While reform will havedifferent effects on different firms, total employer spending is essentiallyunchanged through 1998 and then declines relative to thebaseline. This pattern reflects the balance of spending increasesfrom the employer mandate and spending reductions from cost savings.Through 1998 these effects are roughly equal, resulting in littleadditional business spending. Between 1998 and 2000, the savingsincrease but there is no increase in spending. The result is anet savings in employer payments.There are many things employers can do with the savings fromreform: They can hire more workers, pay higher returns to shareholders,or increase employee compensation. Empirical evidencesuggests, however, that as total employer payments fall over time,the likely result will be a corresponding increase in workers' wages.By the year 2000, wage and salary compensation could therefore164

Chart 4-9 Business Spending on Health InsuranceBusiness spending will increase slightly after reform but will fall below baseline by the endof the decade.Billions of dollars300 -Without Reform 303280 -260 -256240 -2 3 6 ^With Reform220 -218 ^ >200 -180 -180I I I1994 1995 1996 1997 1998 1999 2000Note: Business spending is for services and populations that will be in regional or corporate health alliances.Source: Administration estimates.IIllincrease by $20 billion to $30 billion, or about 0.6 percent of payroll.Although reform is unlikely to lead to a large reduction in thedemand for labor, it could affect the supply. Some individuals whowork mainly to obtain health insurance may voluntarily leave thelabor force after health reform is passed. Evidence from continuationof coverage (COBRA) laws passed by the Federal Governmentand many State governments suggests that the number of peopledeciding to retire is about 1 percent higher when they have the optionto purchase coverage through their former employer after retirement.These estimates must be raised to account for the lowerprice of insurance under reform; with this adjustment, it is estimatedthat about 350,000 to 600,000 additional people will be retiredas a result of the provisions in the Health Security Act.On the other hand, some welfare recipients are likely to decideto enter the labor force when health benefits become universal. Awelfare recipient currently receiving medicaid benefits who thentakes a job incurs a "tax" of two-thirds or more on earnings becauseof the resulting reduction in AFDC benefits, food stamps, and medicaidbenefits. Once health care is guaranteed universally, the loss165

of income associated with leaving welfare should fall by up to 10percentage points. A number of studies suggest that many morewelfare recipients will decide to work in response to these lowerimplicit tax rates.Weighing all this evidence, several private sector economistshave concluded, as has this Council, that the net effect of healthreform on employment is likely to be small: at most plus or minusone-half of 1 percent of total employment. The reason is that anumber of offsetting factors are in the plan, some of which will increaseemployment and some of which will reduce it. On net, thesefactors are likely to cancel out.SECTORAL EFFECTSHealth reform will affect different firms differently (Table 4-10).Firms that are not now providing insurance will face increasedcosts after reform. Firms that are currently offering coverage, however,will on average enjoy cost reductions. These gains come fromspreading the cost of universal coverage over everyone in the population,from premium discounts, and from slower growth of costsover time. Putting these two groups together, the average firm willexperience cost reductions of about $230 per worker in 2000. Therewill also be changes in the distribution of spending across industries.Industries that have traditionally provided generous benefitsto much of their work force, such as manufacturing, will see expenditurereductions compared with industries in which most firmsdo not currently provide insurance.TABLE 4-10.—Employer Payments for Health Care: Baseline and Reform,2000Insurance status of firmNumber of workers(millions)Average spending per worker (dollars)BaselineReformChangeAllCurrently offers insuranceDoes not offer insurance122.796.324.42.4783,09202.2452.4821.292-233-€101.292Source: Urban Institute.Employment is expected to increase in the health sector in theshort run, because of increased spending on the uninsured andunderinsured. Universal coverage by itself will increase health-relatedemployment by more than 400,000 jobs, although employmentwill not increase uniformly throughout the sector. Resourcesare likely to shift from administration to providing care. As thegrowth rate of health spending falls, employment in health carewill grow less rapidly than without reform. The number of employeeswill still increase over time, however.166

Health care reform should set the stage for increased productivitygrowth. As administrative expense and inappropriate care decreaseand the health care industry becomes more productive, theeconomy should be able to produce more output than it would havewithout reform. As a result, Americans will be able to consumehealth services of the same or better quality as before, as well asmore of other goods and services. This productivity increase willraise living standards, which is the principal objective of this Administration'seconomic policies.CONCLUSIONReforming the Nation's health care system is integral to thehealth of both our citizens and our economy. One-seventh of theNation's economy is currently characterized by weak competition,inadequate information, and inappropriate incentives. The Administration'shealth care reform proposal builds on the strengths ofthe current system while correcting its shortcomings. It preservesconsumer choice and our employer-based private insurance system.It relies on enhanced market competition and improved incentivesto provide health security for all Americans, slow rising health carecosts, and address our long-run budget deficit problem.167

CHAPTER 5Microeconomic Initiatives toPromote Efficiency and ProductivityAS WORKERS AND CONSUMERS, we conduct our economic affairsthrough markets. These markets provide us with a vast arrayof products and services to purchase, and a host of different waysto earn our livelihoods.Yet markets are not flawless. They may, for example, becomecontrolled by monopolies, generate excessive pollution, or lead toinsufficient investment in research and development. Through collectiveaction, we can sometimes correct such "market failures,"and thereby improve the ability of private markets to serve socialgoals. When targeted microeconomic policies are successful, theyreduce the costs of production and distribution, place goods andservices in the hands of those who value them most, and maximizethe increase in social well-being that derives from trade in the privatemarketplace. For these reasons, well-chosen government initiativesare as important for microeconomic policy as they are formacroeconomic policy.The United States has a long history of employing targetedmicroeconomic policies to improve the performance of private enterprisein significant industries. Roughly three-fourths of the Nation'sinvestment in canal construction before the Civil War waspublicly financed. Land grants and other subsidies encouraged thedevelopment of intercontinental railroads during the second half ofthe 19th century. Since 1914, the Extension Service of the Departmentof Agriculture, a cooperative venture of Federal, State, andlocal governments, has vastly improved the Nation's agriculturalproductivity by spreading information about modern farming techniques.Our massive national commitment to create high-technologyindustries critical to our defense, such as computers and jetaircraft, dates from the Second World War. Targeted microeconomicpolicies such as these have been employed throughout thehistory of the Republic, regardless of the political party in power.The Administration's initiatives described in this chapter areaimed at both correcting failures of private markets and improvingthe functioning of the Federal Government. The initiatives are organizedaround three themes: promoting efficiency in the public169

and private sectors, addressing environmental externalities, andpromoting technology.PROMOTING EFFICIENCY IN THE PUBLIC ANDPRIVATE SECTORSIn all modern industrialized nations, some goods and services areprovided directly by the government, others almost entirelythrough unregulated private markets, and still others by the privatesector through regulated markets. Because none of thesemethods of conducting our economic affairs is flawless, it is importantto develop ways of improving the performance of each. For thisreason, the Administration has developed initiatives to promote amore effective government, more competitive markets, and more efficientregulation.CREATING A MORE EFFECTIVE GOVERNMENTGovernmental activities, however well-intended, are not alwaysperformed as efficiently as possible. There are two importantsources of what might be termed "government failure."First, as recognized by both the framers of the Constitution andmodern scholars of public choice, all political systems provide interestgroups with an incentive for "rent seeking," that is, manipulationof collective action for private benefit. Rent-seeking behaviorcan bias public actions away from maximizing aggregate social welfare.It can, for example, lead government agencies to make decisionsthat benefit a particular interest group even though they arecostly to society as a whole.Second, the government—in providing services to citizens, in hiringand managing personnel, in procuring supplies, and in makinginvestments—generally does not face the same competitive pressuresas private industry to serve customers well and minimizecosts. Competition among the political parties; oversight by the Officeof Management and Budget (OMB), by the Congress, and byheads of agencies; and public scrutiny through the media providea partial but incomplete substitute for market competition. Frequently,internal governmental regulations, such as personnel andprocurement rules or reporting requirements, are introduced to addressthese problems. But these are blunt instruments that maycreate significant managerial inefficiencies of their own.The Administration has placed a high priority on governmentalreform—or "reinventing government." A major objective is to improvethe performance of government by introducing market-likemechanisms and benefit-cost tests wherever possible. Such mechanismsare designed to reduce rent seeking and the governmentalinefficiencies resulting from the lack of competitive pressures.170

The National Performance ReviewThe National Performance Review (NPR), directed by the VicePresident, took a fresh look at the way the Federal Governmentperforms its tasks, with less emphasis on the related issue, routinelyconsidered in the budgetary process, of whether those functionsshould be performed at all.The NPR identified 384 ways that the Federal Government couldsave money without reducing the level of service and, indeed, oftenwhile improving governmental performance. Its report concludedthat, by shifting to a market-like focus on customer service, by introducingcompetition where possible, and by streamlining internalgovernment processes to facilitate better management, we couldhave a government that "works better and costs less."The Administration has moved rapidly to introduce the NPR reforms.One important element is a set of recommendations to improvethe procurement process. These include changing laws andregulations to make it easier for the government to buy commerciallyproduced goods and services, to raise the threshold for theuse of simplified acquisition procedures, and to amend contract protestrules to streamline contracting and discourage frivolous protests.These reforms can be accomplished while preserving oversightby the Congress and OMB, which is necessary to protectagainst fraud and abuse. Other NPR recommendations identifyways to streamline management control; improve customer services;shift to mission-driven, results-oriented budgeting; improve financialand human resource management; integrate informationtechnology into the business of government; and improve the functioningof every executive branch department (Box 5-1). In a similareffort, the Defense Department has conducted a "bottom-up" reviewof its activities.A New Framework for Regulatory ReviewThe President's Executive Order 12866 on Regulatory Planningand Review provides a framework for developing regulations thatserve the best interests of the American people without imposingunreasonable burdens on business. The order directs agencies topromulgate only those regulations made necessary by law or compellingpublic need, such as correcting market failures. The regulatoryphilosophy that underlies the order calls on agencies to assessall the costs and benefits of the available alternatives whendeciding whether and how to regulate, including the alternative ofnot regulating. Further, the order requires that, to the extent permittedby statute, agencies select a regulatory approach that maximizesthe net benefits to the public (benefits less costs). Applyingthis test to public regulation will lead affected firms in the private171

Box 5-1.—Selected National Performance ReviewRecommendations• Allow agencies to create innovation capital funds fromretained savings to invest in innovations that can improveservice and provide a return on investment.• Provide line managers with greater budget flexibility toachieve results by expediting the reprogramming offunds within agencies.• Use electronic funds transfer to pay and reimburse expensesfor all Federal employees, to make payments toother agencies, and to pay for purchases from the privatesector.• Create competitive enterprises within the government tomanage real property on a fee basis, and give Federalmanagers the authority to choose their source of propertymanagement services.• Establish a corporation to provide air traffic controlservices.sector to roughly mimic what a properly functioning market woulddo absent the market failure that necessitates regulation.In conducting benefit-cost analyses of regulatory alternatives, theorder directs agencies to consider all the benefits and costs—thosethat are easily measured as well as those that are not. This approachaddresses one major criticism of centralized regulatory reviewin previous Administrations: that the use of a benefit-cost testwas subject to bias against appropriate regulations whenever thecosts of regulation were more readily quantified than the benefits—which happens frequently.In addition, the order encourages agencies to act to limit anyeconomic distortions their regulations cause. Agencies must, for example,design regulations to achieve their objectives in the mostcost-effective manner. To the extent feasible, agencies must specifyperformance standards rather than specify a behavior or manner ofcompliance. Agencies must also consider alternatives to direct regulationthat provide economic incentives to encourage the desired behavior.This framework does not apply solely to new regulatory initiatives.The Executive order also sets forth a procedure for review ofexisting regulations to ensure that they too maximize the net benefitsto society. This wide-ranging review of old and new regulationsalike promises to improve the performance of the public sector bymaking regulation more effective.172

PROMOTING COMPETITIONCompetition among the providers of goods and services is themost effective method ever devised for organizing most economicactivity. Competition simultaneously leads to low production costs,innovation in product design and production techniques, low pricesfor consumers, and the allocation of goods and services to thosewho value them most. For these reasons, our economy must relyupon competition to the maximum extent possible, and the governmentshould act to promote and strengthen competition throughoutthe private sector. When market failures necessitate public regulationor public provision of services, the resulting public policiesshould rely on market-like mechanisms to the extent feasible, inorder to realize the benefits of competition.Antitrust EnforcementFor more than a century, the antitrust laws have been, in thewords of the Supreme Court, "a comprehensive charter of economicliberty aimed at preserving free and unfettered competition as therule of trade." The antitrust laws address market failures arisingfrom the exercise of market power (Box 5-2). These laws are enforceddirectly by the Department of Justice, the Federal TradeCommission, the States, and private plaintiffs.Over the past dozen years, Federal antitrust enforcement hasemphasized challenges to mergers among competitors in concentratedindustries and the prosecution of bid-rigging schemes bygovernment contractors. Frequently, the defendants were smallfirms. Federal antitrust enforcement efforts are now beingrefocused to encompass harmful conduct by large firms, affectingbroad sectors of the economy, through means in addition to mergeror bid rigging.For example, the Justice Department is vigorously pursuing acourt case charging the major domestic airlines with widespreadprice fixing from 1988 to 1992. The conspiracies were allegedly accomplishedin a novel way: through the computerized exchange ofprospective fare information. In terms of the magnitude of the violationand the size of the firms involved, this alleged price-fixingscheme recalls the electrical equipment conspiracy of the 1950s.The government's actions to promote and protect competition gobeyond filing lawsuits. When appropriate, government agenciesissue guidelines that will encourage procompetitive behavior andminimize the private costs of understanding and complying withthe law. Merger guidelines are the best examples, but the two Federalantitrust agencies have also recently promulgated enforcementguidelines to promote competitive behavior among health care providers.173

Box 5-2*—Market PowerFirms are said to exercise market power when they reduceoutput below what a competitive industry would sell, in orderto raise prices above competitive levels. Firms may achievemarket power collectively—for example, through an agreementamong competitors to raise prices—or unilaterally, as by engagingin practices that inhibit the ability of current or potentialrivals to compete. Firms may also obtain market powerthrough government action, as when imports are blocked bytariffs or quotas.The exercise of market power is harmful for several reasons.First, an industry in which market power is exercised producesless and employs fewer workers than would a competitive industry.Second, sellers who exercise market power in effect taxbuyers unfairly, forcing them to pay more for their productsthan they would have paid under competition. Finally, firmsexercising market power may tend to innovate less than competitors,because they recognize that a successful new productcould cannibalize their existing market share and decrease thevalue of their capital. (In some industries, however, large firmsexercising market power may be more likely than small orcompetitive firms to take the risk of investing in large-scale innovations.)Although market power is costly to society, these problemsare of limited concern in markets in which new competitioncan quickly and easily appear. Then the exercise of marketpower is likely to be nonexistent or temporary, and new entrantsattracted by the opportunity to share monopoly profitswill tend to shift resources into their most socially valuableuses. In some circumstances, moreover, society accepts someexercise of market power in order to achieve another economicbenefit otherwise unavailable. For example, since the foundingof the United States, the award of a patent monopoly as aprize for a successful invention has been the cornerstone ofgovernment policy to encourage research and promote innovation.The antitrust guidelines for health care respond to the concernthat health providers may have delayed cooperative cost-cutting arrangementsbecause of uncertainty about antitrust restrictions. Togive providers some security, the guidelines establish a number of"antitrust safety zones," which describe circumstances under whichthe government will not normally challenge cooperative ventures.One example is a safety zone for hospital mergers if either of the174

merging hospitals averages fewer than 100 beds and less than 40patients per day over a 3-year period. Another is a safety zone forphysician networks (such as preferred provider organizations, orPPOs) that comprise no more than 20 percent of the doctors ineach specialty in the relevant geographic market, so long as thenetwork members share substantial financial risk. Mergers or jointventures by physicians that fall outside the safety zones are notnecessarily antitrust violations but will be evaluated individually todetermine their legality. The two Federal antitrust agencies havealso committed to reduce uncertainty by providing advice to healthcare providers on an expedited basis.Other government agencies have also taken steps to limit theexercise of market power. For example, a widely reported investigationby the Department of Transportation helped ensure that an establishedair carrier would not use anticompetitive practices to excludea new entrant.Government can go beyond simply preventing anticompetitivepractices; it can act to stimulate competition directly. Thus, the Departmentof Transportation has provided new airlines with assistancein complying with its regulations. Partly as a result of the department'sactions to promote competition, 18 new cargo, charter,and scheduled passenger carriers began service during 1993, and20 more new carriers are awaiting certification to begin passengerjet service.Spectrum AuctionsAs the Transportation Department's efforts to foster new air carrierssuggest, competition can be promoted by encouraging entry.The Federal Communications Commission (FCC) will soon seek topromote competition in this way by allocating portions of the electromagneticspectrum for telecommunications services. Legislationenacted in August 1993 authorizes the FCC to auction most of thenew licenses to use spectrum, and requires the FCC to begin issuinglicenses for personal communications services (PCS) by May1994. The allocation of spectrum to PCS will encourage competitionbetween new firms offering PCS and existing cellular providers.The auction mechanism will ensure that the spectrum goes to thoseprivate parties who place the highest value on it. The auction willalso raise billions of dollars for the government, by selling the rightto the use of a scarce public resource instead of giving it away.MORE EFFICIENT REGULATION OF NATURALMONOPOLIESEconomists have long recognized that competition will performpoorly in certain industries that are "natural monopolies" (Box 5-3). In Europe, natural monopolies have often been turned into governmententerprises. The traditional U.S. response is to impose175

ate regulation. For example, State public utility commissions typicallyregulate the local distribution of electricity, water, naturalgas, and telephone service, and Federal agencies regulate interstatepipelines and long-distance telephone service.Box 5-3.—Natural MonopolyAn industry is a natural monopoly if a single firm can servethe market at lower total cost than two or more firms. A naturalmonopoly may result when an industry's production technologyis characterized by economies of scale, that is, whenaverage production costs decline as output rises. A natural monopolymay also have economies of scope, in which two or morerelated products can be produced more cheaply by a single firmthan by separate firms. The size of the market interacts withthe production technology in determining whether an industryis a natural monopoly. For example, if most of the cost reductionsfrom producing at scale are achieved at low levels of outputrelative to market demand, the market is not likely to bea natural monopoly.In an unregulated market, some natural monopoly industrieswould be served by a single firm that exercises market power.Entry would be deterred even though the incumbent firmcharges a price in excess of its long-run average cost. Potentialentrants, tempted by the opportunity to undercut the incumbent'sprice, would refrain from doing so because they wouldrecognize that the incumbent would lower its price in responseand could sustain that lower price profitably while the entrantcould not. One way to avoid the exercise of market power insuch a case is to regulate the natural monopolist's prices.Oil Pipeline Rate RegulationFor nearly 90 years the Federal Energy Regulatory Commission(FERC) and its predecessors have regulated rates charged by interstateoil pipelines. Over this period, many if not most pipelineshave likely been natural monopolies. Pipeline rates were setthrough a cost-of-service methodology, similar to the approach thatState public utility commissions typically employ to determinerates for electricity, gas, water, and telephone service.Under the cost-of-service approach, the regulated firm is allowedto earn enough revenues to cover its expected costs of operationsplus a fair return on capital to its investors. The regulator setsprices on the regulated firm's individual services in such a waythat the firm's expected revenues (based on forecasts of buyer demand)will reach the permitted level. Although this method is generallysuccessful at preventing regulated firms from charging mo-176

nopoly prices, it has been criticized on several grounds. Cost-ofservicerate setting can be expensive to administer, as the regulatorycommission typically engages in a trial-type hearing beforedetermining rates. In addition, if the regulator adjusts rates rapidlywhen operating costs change, the regulated firm may lack astrong incentive to keep costs low, reduce costs further, or innovate.Incentive methodologies for setting rates promise to reduce inefficienciescreated by the cost-of-service methodology. One form of incentiveregulation is a "price cap." The regulator sets a maximumprice (or a price path, often set to decline over time) for a collectionof regulated services, and permits the firm to set whatever ratesit chooses for individual services so long as the price cap is not exceeded.If the regulator and the firm are willing to live by a pricecap for a long time, the administrative costs of regulation aregreatly reduced. In addition, the regulated firm is given a strongincentive to reduce costs and to innovate: As long as the price capis not revised downward, the firm gets to keep any additional profitsthat result from cost savings. Finally, if the price cap appliesto the average rate for a broad collection of services, this form ofincentive regulation permits the regulated firm to exercise significantdiscretion in rate design. The resulting rates may distortconsumer choice less than those set by regulators. For such reasons,in 1989 the FCC adopted price cap regulation for the longdistancetelephone rates charged by American Telephone and TelegraphCo. (AT&T).In 1993, FERC replaced cost-of-service rate setting for oil pipelineswith an incentive methodology. The new approach generallystarts with cost-of-service-based rates and caps rate increases forpipeline services at 1 percent below the increase in the producerprice index for finished goods. Moreover, wherever the scope of thenatural monopoly has narrowed, permitting the pipeline to demonstratethat it lacks significant market power, the regulatory constraintmay be removed in favor of relying on competition to determineprices and output.Telecommunications RegulationThe rapid pace of innovation in telecommunications is creatingnew industries, transforming old ones, and promising to change theway we live and work. In the coming years, American householdsand businesses will have access to a National Information Infrastructure(Nil)—an interconnected web of networks linking computers,databases, consumer electronics, and communications devicesthat will put vast amounts of information at every user's fingertips.The technologies to create, manage, manipulate, and useinformation will fuel economic growth, promote the international177

competitiveness of U.S. industry, and create challenging, high-payingjobs.Many of the innovations that are creating the new informationinfrastructure are also shrinking the scope of natural monopoly inthe provision of telecommunications services. Microwave technologymade competition in long-distance telephone service possible. Thedevelopment of low-cost private branch exchange (PBX) technologyhas carved out a competitive market for carrying telephone callswithin office buildings. For many business customers the local telephonemonopoly now ends at the street rather than continuing intothe building. Competitive access providers now sell alternativehigh-capacity services that allow some business customers to completecalls while bypassing some or all of the local telephone company'snetwork. It is now feasible and increasingly practical fortelephone lines to carry video programming, for cable lines to carrytelephone calls, and for wireless providers to carry both. If andwhen these developments end the natural monopoly in local telephoneand video service altogether, competition can replace regulationas the best economic mechanism for setting prices and providingtelecommunications services to buyers.The information highways that will be central to the emerginginformation infrastructure will be built in part with fiber opticlines, coaxial cable, and copper wire, and in part through wirelesstechnologies such as cellular telephone, PCS, and direct broadcastsatellites. The private sector will make the necessary investments,and the government will promote those investments by encouragingcompetition. In consequence, the market will determine, to theextent possible, which technologies provide the most value relativeto cost and, accordingly, how the information highways will bebuilt.The Administration's regulatory policies will promote competitionamong the firms that build and operate the information highways,and among the firms that sell their services and programmingthrough the network. Under the Administration's legislative proposals,for example, local telephone monopolies will be required tounbundle the services they offer and to interconnect with new entrantson a nondiscriminatory basis. This will facilitate new competitionin local telephone service by allowing new providers tocombine, for example, switching provided by the telephone companywith their own transmission facilities. The legislative proposalswill also set forth a process by which local telephone companieswill be permitted to provide new competition in the interstate longdistancetelephone market. The Administration's proposals willidentify safeguards that will protect against regulatory evasionthrough transfer pricing (strategic pricing of goods and servicessold to affiliates) and the abuse of monopoly power until the time178

that competition in local telephone service makes rate regulationunnecessary.Rapid developments in technology and the marketplace will createnew challenges for telecommunications regulation. Old regulatorystructures based on the natural monopoly paradigm are notappropriate for a market now characterized by mixed elements ofcompetition and monopoly. Accordingly, the Administration willpropose adding a new title to the Communications Act of 1934,specifying a flexible regulatory framework for this new environment.The new framework can adapt to technological and marketplacedevelopments, to protect consumers from monopolies withoutdiscouraging investment, innovation, or the growth of competition.In addition, the Administration's legislative initiative will give theFCC broad power to forbear from regulating when markets becomeeffectively competitive, and the power to preempt State and localregulation made unnecessary by the emergence of competition.The Administration's policies will also promote universal service,to avoid creating a permanent class of information "have-nots," andopen access to the network, to allow all service and informationproviders to reach potential customers. The government will alsoencourage research and development designed to create new technologiesand new applications, as discussed below along with othertechnology initiatives.ADDRESSING ENVIRONMENTALEXTERNALITIESThe notion of tradeoffs is among the most fundamental in economics:nothing is free; everything has an opportunity cost. In privatemarkets, tradeoffs are handled automatically, as consumerschoose among alternative goods and services and producers chooseamong alternative inputs. Prices guide these decisions. Tradeoffsinvolving the environment cannot be made so easily, however, becauseuse of the environment is generally unpriced. As a result,firms and individuals, in their marketplace decisions, do not alwaysmake the best tradeoffs from the standpoint of society as awhole. The effects of failing to price environmental goods and servicesare examples of externalities (Box 5-4). When externalities aresignificant, the government can often design policies that improvethe functioning of markets and thereby increase aggregate socialwelfare.The Administration has sought to encourage the development ofenvironmental technologies to mitigate tradeoffs and foster economicgrowth. Improvements in the technologies for preventing andtreating pollution, and efforts to spread knowledge about technologiesalready available, can free resources for other socially ben-179

Box 5-4.—ExternalitiesAn externality, or spillover, is a type of market failure thatarises when the private costs or benefits of production differfrom the social costs or benefits. For example, if a factory pollutes,and neither the firm nor its customers pay for the harmthat pollution causes, the pollution is an externality. In thepresence of this negative (harmful) externality, market forceswill generate too much of the activity causing the externality,here the factory's production, and too much of the externalityitself, here the pollution. In the case of beneficial externalities,firms will generate too little of the activity causing the externality,and too little of the externality itself, because they arenot compensated for the benefits they offer. For example, thedevelopment of laser technology has had beneficial effects farbeyond whatever gains its developers captured, improvingproducts in industries as diverse as medicine and telecommunications.Too little research and development and other activitiesgenerating positive externalities will take place in the absenceof some governmental intervention.To remedy market failures and induce the market to providethe efficient level of the externality-causing activity, the privateparties involved in the activity must face the full socialcosts and benefits of their actions. Policymakers may employ avariety of tools to accomplish this result, such as taxes, userfees, subsidies, or the establishment or clarification of propertyrights.eficial purposes or permit the attainment of higher environmentalgoals without increasing the burden on the economy. Given theworldwide explosion in environmental regulatory activity—in theFar East, in eastern Europe, in Mexico, and elsewhere—the developmentof more-effective and lower cost pollution control technologycan also increase our export competitiveness. In fact, we alreadyenjoy considerable success in this area. The United States is nowthe world leader in exports of environmental equipment. In a globalmarket for environmental technologies of $295 billion in 1992,the $134 billion U.S. share is the largest by far. Our trade surplusin pollution control equipment has been increasing and was $1.1billion in 1991.The Administration has also sought to improve the "technology"of regulating the use of natural and environmental resources. Thiseffort involves seeking a better balance among conflicting interestsin the use of natural resources, and developing approaches to regulatepollution that rely more on economic incentives and eliminatethe economic distortions of some current regulations. Examples of180

improving the technology for regulating the environment are foundin the Administration's plan for managing the old growth forestsof the Pacific Northwest, in its approach to grazing on Federallands, in the Climate Change Action Plan, and in the Administration'sposition favoring the reauthorization of the ComprehensiveEnvironmental Response, Compensation, and Liability Act, betterknown as "Superfund." To better assess where interventions to improvethe environment will benefit the economy, the Administrationis also engaged in efforts to define sustainable developmentand develop "green" GDP accounts.MANAGING RESOURCES ON FEDERAL LANDSThe Federal Government owns vast tracts of land, primarily inthe West. These lands contain natural resources of economic importanceto both local communities and the Nation, including timberand other forest products, forage for grazing livestock, and mineraldeposits. They are also sources of extremely valuable environmentalamenities, such as open space for recreational uses likewildlife viewing, scenery, camping, hiking, and hunting; fish andwildlife (including endangered species) habitat; watershed protection;and many others.Improving the "technology" of regulating the use of these Federallands is a centerpiece of Administration policy. Two principlesguide that policy: (1) reducing inefficiencies caused by improperpricing and regulatory restrictions, and (2) ensuring that both pricingand regulation will achieve a better balance among competinguses of these resources, particularly between extractive (timber,grazing, mining) and environmental uses. These principles can beseen at work in the Administration's plans for managing oldgrowth forests in the Pacific Northwest and for rangeland reform.Old Growth Forests, Spotted Owls, and TimberThe controversy over logging in the old growth forests and spottedowl habitat of the Northwest provides a case study in reconcilingenvironmental and economic objectives and illustrates how acareful balancing of competing interests can result in progress onall fronts.The forest products industry is a major industry in the PacificNorthwest, where it is heavily dependent on timber from Federallands. Much of the Federal land on which this logging has takenplace consists of mature forest stands. Referred to as "old growth,"this mature forest is the habitat of the northern spotted owl, athreatened species, and many other plants and animals.For several years Federal forest policy in the Northwest failed totake appropriate account of impacts on environmental quality andbiodiversity. In particular, timber harvests on Federal lands wereaccelerated substantially in the mid- and late 1980s: Such harvests181

in the habitat of the spotted owl rose from 2.4 billion board feet(bbf) in 1982 to 6.7 bbf in 1988. According to experts, these levelswere too high to be sustained indefinitely. Legal challenges to Federaltimber policy resulted in injunctions blocking the sale of timberon Federal forest lands in the spotted owl region, in part becauseagencies within the Federal Government had failed to workcooperatively to comply with environmental and forest managementlaws. The injunctions had a severe impact on the timber industry,albeit in large part because harvest levels had been extraordinarilyand unsustainably large.The Administration put a high priority on resolving the problemsassociated with forest management policy in the Pacific Northwest.Accordingly, in July 1993 the Administration announced a "ForestPlan for a Sustainable Economy and a Sustainable Environment."The plan attempts to end the uncertainty caused by legal wranglingand confusion and ameliorate the impact of economic dislocation,while achieving full compliance with existing laws. It alsoseeks to maintain and improve the ecosystem as a whole, balancethe interests of competing uses of the ecosystem for environmentaland economic purposes, and create a political consensus to avoideconomic instability.The plan provides for the maximum legally defensible harvestfrom Federal forests in the spotted owl region (about 1.2 bbf annually).The process of adjustment to the new, lower harvest levelswill be smoothed by an economic adjustment plan that is expectedto create more than 8,000 new jobs and 5,400 retraining opportunitiesin the region in 1994. Many of the new jobs will be in enterprisesthat improve water quality, expand the prospects for commercialfishing, and improve forest management in the region.The plan focuses on maintaining and improving the environmentalquality of watersheds in the region, recognizing how thecomplex interactions of flora, fauna, and human activities affectthat ecosystem. It establishes old growth reserves and protects over6.5 million acres of old growth forest (about 80 percent of existingold growth). It also establishes 10 "adaptive management areas" forexperimentation into better ways of integrating ecological and economicobjectives.Rangeland ReformThe Federal Government owns extensive rangelands throughoutthe West. While these lands are used primarily for grazing cattleand sheep, increased demand for environmental uses has fueledcontroversy over Federal management. The controversy over rangelandreform shows the importance of integrating pricing with regulationto use the Nation's resources more efficiently and strike abetter balance between economic and environmental objectives.182

A central point of contention involves the fees that the FederalGovernment charges ranchers to graze animals on Federal land.These fees should reflect both the value of the forage used by anadditional animal and the external environmental costs of grazingan additional animal (such as the value of reductions in recreationor water quality). Charging ranchers the marginal value of forage,the first component, encourages efficient use of the range. By preventingovergrazing, it protects the condition of the range forfuture grazing uses. It also promotes long-run efficiency in the livestockindustry: Prices for forage that are too low encourage excessiveinvestment in the industry. Forage value varies from tract totract because of differences in forage productivity, location, proximityto roads and other transportation, rainfall, and access to water.But it can still be measured easily and reliably using the value ofprivate rangelands in nearby locations. The second component, theexternal costs of grazing, cannot be determined from private markettransactions. But economists have developed ways of inferringthe value of open space or other environmental amenities from thecosts people willingly incur to use them or from sophisticated surveymethods.Current Federal management policies are relics of an earlier erawhen the Federal Government used resource subsidies to encouragesettlement of the West. One result is that grazing fees on Federallands average only 17 to 37 percent of the value of grazing oncomparable private lands. Moreover, the formula used to calculateFederal grazing fees has kept those fees from increasing along withprivate grazing lease rates. Promoting efficiency thus means bothincreasing grazing fees and ensuring that Federal grazing feeschange from year to year in accordance with changes in rent on privategrazing land. The Administration's plans for rangeland reformdo both. The current proposal calls for phasing in a new fee structurethat more than doubles current fees, and for using an updatingformula that will adjust Federal fees at the same rate that privatefees change.Pricing reform must be accompanied by changes in regulation.For example, Federal grazing permits have "use-it-or-lose-it" provisions,under which decreases in the number of animals grazed mayresult in the loss of a grazing permit or a reduction in the numberof animals that the permitholder may graze in the future. This policyprevents ranchers from temporarily reducing the number of animalsgrazed to improve range condition. The Administration's planallows the terms of grazing permits to be rewritten to allow ranchersto vary the number of animals they graze in response tochanges in weather or economic conditions. The plan also includesprovisions to strengthen environmental management.183

CLIMATE CHANGE ACTION PLANCertain gases emitted into the atmosphere by industrial, automotive,and other combustion have been implicated as a threat tothe global climate: By preventing reflected solar radiation from escapinginto space, these "greenhouse gases" may be causing a generalizedwarming of the planet. For this reason, an internationalagreement to reduce greenhouse gas emissions, the FrameworkConvention on Climate Change, was signed in 1992. The previousAdministration had adopted what was called a "no regrets" policy;it was willing to take steps to reduce emissions only if those actionswould be beneficial for other reasons—that is, even if greenhousegas emissions were ultimately found unrelated to changes in theglobal climate. In contrast, this Administration sees cost-effectivepolicies to reduce greenhouse gas emissions as appropriate "insurance"against the threat of climate change. Accordingly, the President,in his Earth Day speech on April 21, 1993, issued a "clarioncall" for the creation of a cost-effective plan to reduce U.S. greenhousegas emissions to 1990 levels by the year 2000.The President's call resulted 6 months later in the ClimateChange Action Plan, containing nearly 50 initiatives that cover reductionsin all significant greenhouse gases and will affect mostsectors of the economy. The plan was based on the understandingthat the climate change threat results from all greenhouse gases,that it depends on net emissions (after accounting for greenhousegas "sinks" such as forests and oceans), and that the problem isglobal. The strategies adopted to address the externalities associatedwith greenhouse gas emissions were chosen on the basis of aqualitative assessment of the cost-effectiveness of the alternatives,in part by selecting policies that make markets work better.Some of the strategies expand upon initiatives of this and previousAdministrations to promote energy-saving technology. For example,the Green Lights program improves the diffusion of technologyby providing consumers and firms with information aboutenvironmentally friendly products such as energy-saving lights thatpromise to reduce electricity generation and the resulting emissions.Other strategies reduce emissions by making governmentmore efficient. Two examples are (1) reform of regulations thatblock the seasonal use of natural gas (a low-polluting alternativeto coal) by electric utilities, and (2) removal of regulatory impedimentsto private investments in upgrading Federal hydroelectricfacilities.Parking CashoutGreenhouse gas emissions will also be reduced by improving thepricing of activities that generate externalities. The parkingcashout policy attempts to correct a distortion in private incentivesresulting from the tax treatment of employer-provided parking.184

Currently, the Internal Revenue Code allows employers to deductany costs for employer-provided parking as a business expense, andlets workers exclude the benefits from their taxable income (up to$155 a month). As a result, 95 percent of automobile commuters receivefree or subsidized parking, more than half of them in centralbusiness districts. All told, U.S. companies claim $52 billion peryear in parking-related deductions from this free or subsidizedservice.The Climate Change Action Plan proposes that Federal tax lawsbe modified to require that firms offer employees the option of takingthe cash value of their employer-provided parking benefit astaxable income rather than accepting their free parking space. Theprogram would apply initially only to those firms with more than25 employees that make monthly cash payments for their employeesto park in lots owned by third parties. Thus, only about 15 percentof employer-provided parking would be covered at first, althoughthe program would expand later as new parking leases arenegotiated.This policy change should reduce the overuse of automobiles forcommuting resulting from the current parking subsidy, by makingcommuters face more of the social costs of driving. As consumersshift to carpools and public transportation, greenhouse gas emissions,other pollutants, and traffic congestion should all be reduced.Other distortions of the choice between commuting by car and bypublic transit will remain uncorrected, however, to the extent thatcurrent regulation of automobile emissions does not fully capturetheir environmental, congestion, and health costs.International Strategies for Greenhouse Gas ReductionsOne hundred and sixty-one countries signed the Framework Conventionon Climate Change in 1992, agreeing that it is necessaryto stabilize greenhouse gas concentrations at a level that will prevent"dangerous anthropogenic interference with the climate system."Because this is a global problem, the Climate Change ActionPlan addressed what is termed "joint implementation"—the cooperativeeffort between countries or entities within them to reducegreenhouse gas emissions. The plan recognizes that there may beenormous cost savings to meeting global goals for greenhouse gasreductions if acceptable international strategies can be developed toreduce emissions where it is cheapest to do so, rather than haveeach country pursue its emissions reduction goals on its own. Someimportant questions need resolution, however, such as how reductionsare to be identified, monitored, and enforced. To begin testingthe joint implementation concept, the plan creates a pilot programthat evaluates investments by U.S. firms and government assistanceto foreign countries for new greenhouse gas emission reductions;measures, tracks, and scores these reductions; and, in gen-185

eral, lays a foundation for broader, more formal policy initiativesin the future.SUPERFUND REAUTHORIZATION: THEADMINISTRATION POSITIONThe Comprehensive Environmental Response, Compensation,and Liability Act, better known as Superfund, was enacted in 1980and amended in 1986 in response to widespread concerns that improperlydisposed-of wastes threatened human health and valuablenatural resources, such as groundwater aquifers. The act has beenunsatisfactory in addressing this problem. Fewer than 20 percentof the 1,300 disposal sites on the priority list drawn up by the EnvironmentalProtection Agency (EPA) have been fully "cleaned up,"although 3,500 separate actions have been taken to remove wastesposing an immediate threat to health.At the same time, the costs of the program have been substantial,running almost $7 billion per year. This figure includes directdraws on the Superfund trust fund collected from the oil and chemicalindustries to pay for EPA expenses (including $1.6 billion inspending on cleanups where no private parties can be assigned responsibility),$3.2 billion in spending by Federal agencies that ownor contributed to hazardous waste sites, and $2 billion in spendingby private parties, much of which goes to lawyers' fees and othertransactions costs in an effort to escape or reduce liability. Someestimates put the total cost of cleaning up the 3,000 sites projectedto be on the EPA's National Priority List (NPL) over the next 30to 40 years at $130 billion to $150 billion, with $200 billion to $300billion more needed for Federal facility cleanups.In response to the poor cost-effectiveness and slow pace of thisprogram, the Administration has proposed several significant reforms.The two most important involve the standards and processesgoverning the cleanup strategy chosen at a site, and the process forassigning and financing liability.Remedy SelectionUnder the current law, remedial measures at Superfund sites arechosen with a preference for treatment and permanent cleanup ofsoil and water. They are also selected to meet high standards ofcleanliness: land generally must become suitable for residentialuse, and water often must achieve drinking quality. Costs have littleweight in remedy selection; they come into play only to identifythe cheapest of the set of remedies meeting other criteria.The Administration's position establishes more-reasonable goalsand processes for cleanup decisions. It sets uniform national goalsfor health and environmental protection to guide remedy selection.It substitutes a concern for long-term reliability as a factor to considerin remedy selection, in place of the preference for treatment186

and permanence (except for treatment of "hot spots"). It explicitlyrecognizes containment as a legitimate cleanup strategy. It limitsthe use of State and Federal standards designed for other pollutioncontexts. Finally, it introduces greater flexibility and communityinput into the determination of appropriate land use for the site,permitting some sites to be designated for industrial use, with appropriatelylower levels of cleanup required.The Administration's proposal also offers a streamlined approachto remedy selection at individual sites. With EPA approval, partieswill be able to avail themselves of a set of cost-effective "generic"remedies established by the EPA that apply to certain frequentlyencountered types of waste disposal problems. Alternatively, theycan formulate designs that meet national cleanup levels that arebased on realistic assumptions and practices concerning risks. Ifthe party liable for cleanup believes it can devise an even cheaperremedy that can meet the national health standards, it can performa site-specific risk analysis to make its case to EPA. This optionallows parties to propose remedies based on the ultimate goalof protecting health and the environment, rather than on the "intermediate"targets of reductions in soil or water concentrations,and helps tailor remedies chosen for a site to its particular features.Most important, a factor in the remedy selection process at individualsites will be a comparison of the reasonableness of costsagainst several measures of effectiveness. This approach introducesdiscipline, transparency, and recognition of tradeoffs into the remedyselection process, while retaining consideration of other factorssuch as community acceptance and meeting the primary criterionof protecting health and the environment. Cost will also be consideredin decisions on whether to defer final cleanups for cases wherea new technology is on the horizon to replace a current one thathas disproportionately high costs.The Liability SystemThe transactions costs associated with cleanups, especially litigationexpenses, have been massive under current law. One studyfound that these costs account for 19 to 27 percent of all Superfundcosts. Transaction costs are substantial in part because liabilityunder current law is strict, joint and several, and retroactive: Aparty that contributed waste to a site used by others can be heldliable for the entire cost of cleanup, and a party is liable for theresults of its dumping even if its action was legal at the time. Asa result, potentially responsible parties (PRPs) have strong incentivesto contest their liability (resulting in high enforcement coststo-the EPA), to sue other PRPs to recover costs, and to sue theirinsurance companies when the latter refuse to pay related claims.187

The Administration's proposal seeks to limit these transactionscosts by streamlining the liability allocation process and making itmore fair. The new allocation process is based upon nonbinding arbitration,in which PRPs are assigned a share of liability based onfactors such as the volume and toxicity of their wastes. PRPs whosettle for their assigned shares would surrender their rights to pursueother PRPs for contribution, be protected from suits by otherPRPs, and be offered, for a fee, protection from future liability arisingfrom remedy failure or undiscovered harms. As an added incentiveto settle, the EPA would pay settling parties for their shareof the "orphan shares"—the share of liability attributed to an identifiedbut insolvent party—but nonsettling parties could still beheld liable for all or part of the "orphan share."The Administration proposal also addresses the growing problemof Superfund-related insurance litigation. The problem arises becauseinsurance contracts written before Superfund was enacteddid not expressly allocate Superfund liabilities. Subsequently,courts in some States have interpreted those contracts to requireinsurance companies to assume most Superfund liabilities, butcourts in some other States have held the opposite. The scope ofinsurers' liability in most States is undecided. Building on a proposaloriginally suggested by the insurance industry, the Administrationproposal calls for creation of an Environmental InsuranceResolution Fund financed through fees and assessments on propertyand casualty insurers. If the PRPs can show sufficient insurancecoverage before 1986, the fund would be used to settle theirinsurance claims for cleanup and restoration costs at pre-1986 NPLsites, as well as some costs at non-NPL sites, at rates determinedsimultaneously for all of a PRP's sites. The combination of the allocationprocess and the insurance settlement process should substantiallyreduce transactions costs and increase fairness.SUSTAINABLE DEVELOPMENT AND GREENACCOUNTINGAccording to the 1987 report of the World Commission on Environmentand Development, sustainable development is that which"meets the needs of the present without compromising the abilityof future generations to meet their own needs." In short, futuregenerations must be able to attain a quality of life, in both economicand environmental terms, equal to ours if they desire. Tomake this possible, the present generation must leave the futurewith the wherewithal—the "social capital," consisting of human,natural, and physical (manmade) capital—to create our kind of lifeor a life of at least equal quality to ours. Although this definitionis widely accepted, its interpretation remains subject to debate.One controversy concerns the extent to which the three types of188

capital can substitute for one another, given the underlying scientificprinciples and economic behavior, while keeping the resultingdevelopment sustainable.However this controversy is resolved, it will be necessary tomeasure social capital and the value its use brings in order to understandwhether a growth path for the economy is sustainable.This is the province of "green accounting," an idea first raised in1969. Much of the recent research effort to augment the nationalincome and product accounts to incorporate previously unmeasuredaspects of social welfare focuses on identifying the net change inthe stock of social capital resulting from environmentalexternalities. This research effort seeks to identify the loss (depreciation)of social capital caused by pollution, the value of the reductionof finite resources (such as fossil fuels and minerals), the lossfrom overharvesting of renewable resources (such as forests andfisheries), and the value of the environmental services (e.g., cleanair) derived from investments in pollution control equipment.The President has made it a priority of his Administration toaugment the national accounts to incorporate these aspects of socialcapital. In his 1993 Earth Day speech the President directedthat "green" gross domestic product (GDP) measures be developedto improve existing national income and wealth accounts that ignorethe cost of pollution or the loss of natural resources. In thefirst phase of fulfilling this mandate, the Commerce Department'sBureau of Economic Analysis will publish modified GDP accountsin 1994 to reflect the depletion of selected natural resources andwill continue to explore measures that incorporate additional environmentalvalues. This effort will be aided by the Department ofInterior's forthcoming National Biological Survey, an effort to inventorythe biological and ecological resources of the Nation.PROMOTING TECHNOLOGYTechnological progress fuels economic growth. It creates new industriesand reinvigorates old ones. It can enable small businessesto do high-quality design and manufacturing work that previouslyrequired the resources of big business. It can help big businessesachieve the speed, flexibility, and closeness to customers that oncewere a defining characteristic of small business. Technology helpsto make our work force more productive and, in doing so, improvesthe Nation's standard of living. Every recent generation has seenits dreams turn into technological marvels, new products from newindustries that have transformed the way we live and work: fromthe telephone, radio, airplanes, and x-rays, to television, xerography,computers, and magnetic resonance imaging equipment. Ad-151-444 0 - 9 4 - 7189

vances in technical know-how have accounted for at least one-quarterof our Nation's economic growth over the past half-century.During the past two decades, powerful trends have altered theenvironment for American technology development. Commercialtechnology has become increasingly science-based and interdisciplinary.International competition has intensified as other nationshave advanced in wealth and technological sophistication. The Nation'sdefense capability has become increasingly dependent ontechnologies developed and applied first in commercial markets. Amicroelectronics-based revolution in production has transformedthe organization of office and factory work, increasing the need fora well-trained and flexible work force.By the end of the 1980s, many analysts believed that thesetrends required a reexamination of the existing approaches of governmentand industry for supporting technology development anddiffusion. Accordingly, in its first year the Administration has supportedtax incentives for investments in research and development(R&D) and new businesses, liberalized export controls, shifted Federalresources toward basic research and civilian technology, investedin worker skills, and promoted defense conversion. In addition,the Administration's technology initiatives, such as the promotionof the National Information Infrastructure discussed above,the Partnership for a New Generation of Vehicles, and the creationof a Manufacturing Extension Partnership, rely on an alliance ofgovernment and industry. They also require rigorous attention tothe economic rationales for cooperative efforts and then to the detailsof project design and assessment, to ensure that market failuresare corrected, not made worse, by government action.PRINCIPLES OF TECHNOLOGY POLICYThe Administration's technology initiatives aim to promote thedomestic development and diffusion of growth- and productivityenhancingtechnologies. They seek to correct market failures thatwould otherwise generate too little investment in R&D, with programsthat avoid "government failure."The Economics of AppropriabilityNew technologies often fail to attract sufficient private sector investmentbecause their technical risk is high or because of limitedappropriability—that is, the new technologies create economic andsocial benefits beyond what the investing firms can capture forthemselves. Indeed, despite intellectual property protection, the socialreturns to innovation have been estimated to exceed the privatereturns by between 35 and 60 percent.The most important innovations generate spillover benefits forinterconnected sectors, creating economic gains well beyond anythat eventually accrue to their inventors. These innovations include190

isky "pathbreaking" technologies that pay off in the creation ofnew industries (or the transformation of existing industries), andlower risk "infratechnologies" that can enhance the productive performanceof a broad spectrum of firms and industries but that receivelow levels of investment because of barriers to appropriabilityand implementation. For example, the development of refrigeratedsteamships at the end of the nineteenth century increased theavailability of perishable agricultural products throughout theworld. Most of this benefit ultimately accrued to farmers and consumersrather than to the inventors of refrigerated steamships.Similarly, the principle of interchangeable parts in manufacturing,originally developed for the production of firearms, soon was adoptedfor use in the fabrication of clocks, hardware, sewing machines,and other manufactured products.The appropriability problem is not limited to basic research, butfrequently extends to so-called precommercial technology developmentand eventual commercial applications. Indeed, technologicalprogress is full of feedbacks where developments downstream alterthe course of behavior upstream, as well as the degree of ultimatemarket success. A sharp distinction between basic research andprecommercial development activities is difficult to draw. Investmentsthat are necessary to the utilization and adoption of researchresults—investments in information gathering, work forcetraining, or the integration of new production equipment into automatedsystems—can also create spillover benefits that the investingfirm cannot perfectly appropriate. In addition, new manufacturingprocesses that lower cost or improve quality may not be patentable,and new ideas embodied in computer software can often beimitated rapidly without violating the originators intellectual propertyrights. In all of these cases, public actions can offset the effectsof underinvestment by the private sector that is caused by limitationson appropriability.Avoiding "Government Failure"The goal of technology policy is not to substitute the government'sjudgment for that of private industry in deciding which potential"winners" to back. Rather, the point is to correct a genuineand significant market failure—underinvestment in basic researchand in precommercial R&D resulting from the divergence betweenprivate and social returns to those activities. A complementary goalis to design the technology investments that the government itselfmakes in public goods—national security, public health, education,a clean environment, an efficient transportation system—in waysthat maximize the potential external benefits for the Nation's commercialtechnology base. In both cases, technology policy enhancesthe Nation's economic and social welfare.191

Investments in R&D are risky. Like all risky investments, publicor private, government-supported explorations sometimes drill dryholes—such as the efforts during the 1960s and 1970s to developsynthetic fuels, a supersonic transport, and a fast breeder reactor.Yet even research that never delivers an enormous economic payofffor itself often contributes useful technical knowledge and lessonsfor the future. And when the drilling strikes oil, as with governmentsupport of R&D for computers and integrated circuits, jet enginesand airframes, and biotechnology and medical equipment, theinitial gusher can generate an entire field of newly productive,wealth-enhancing, job-creating economic activity. For this reason,the success of government R&D policy must be measured by therate of return on the entire portfolio of R&D investments supportedby the public.We can learn from both the gushers and the dry holes about howto design programs to promote investments in basic andprecommercial R&D to maximize their prospects for success. FederalR&D investment programs leading to successful commercialproducts tend to share certain design features: They are insulatedfrom the demands of distributional politics; they subject potentialprojects to rigorous technical and economic evaluation; and theyrecognize that product specifications must be developed with an eyetoward manufacturability and a balance between product performanceand cost that will be acceptable to commercial customers. Accordingly,the Administration's efforts to promote innovative technologycontain design features that are meant to limit the possibilityof "government failure" in the implementation of technology policy:• To ensure that R&D funded by the government in cooperativeventures with the private sector has direct market applications,participating firms must bear a significant share of programcosts. In most cases, the Administration's technologypartnerships require that private firms cover at least 50 percentof the costs.• To ensure that both the timing and the content of governmentinvestments in technology-based infrastructure impart maximumleverage on industry's competitive efforts, researchframeworks for collaborative R&D should be initiated and designedby private industry and should be closely coordinatedwith industry investment patterns.• To insulate publicly supported R&D efforts from political pressuresexerted on behalf of special interests, evaluations of competingR&D proposals should be conducted by independent expertsin the relevant scientific, technological, and economicfields. Political considerations should not be allowed to influ-192

ence a project's technical objectives, the location of R&D facilities,or the way that management of the project is structured.• Investments in a broad array of technical fields, including materialssciences, manufacturing product and process technologies,biotechnology and biomedical sciences, and telecommunicationsand computer-related technologies, shouldcompete for a finite flow of funds. This competition will helpto ensure that expanded Federal support for precommercialR&D does not get captured by the champions of any particulartechnology or by any particular set of firms.• Government investments in basic and precommercial R&Dshould be reviewed while in progress to determine whetherfunding should continue. Such reviews are difficult because thesuccess of an R&D project is often not apparent for manyyears, but rigorous assessments can nevertheless be made byindependent expert panels at regular intervals.A New ApproachAn enduring American approach to promoting technology developmentand diffusion evolved just after the Second World War. TheUnited States channeled public investment into basic research atuniversities and government laboratories, then supported the initialapplication of the results in products and production processesprocured by public agencies. New technologies first developed for(and procured by) the Department of Defense, the Department ofEnergy, or the National Aeronautics and Space Administration(NASA), or supported by the National Science Foundation or theNational Institutes of Health (NIH), would then diffuse, or "spinoff," into commercial use. In this manner, the Federal Governmentsupported the development and diffusion of jet aircraft and engines,semiconductor microelectronics, computers and computercontrolledmachine tools, Pharmaceuticals and biotechnology, advancedenergy and environmental technologies, advanced materials,and a whole host of other commercially successful technologies.This system worked well as long as military systems representedthe leading-edge applications of new industrial technologies and aslong as foreign competitors, with direct support from their own governments,did not pose a significant competitive challenge. In manyareas of basic research supported outside the defense establishment,including biomedical research and the development of pharmaceuticals,biotechnology, and medical diagnostic devices, the systemcontinues to work well. But the circumstances that allowed theUnited States to rely primarily on a defense-led model havechanged. With the end of the cold war, demand for new defensesystems is now less than it was. Commercial product spinoffs frommilitary research have also diminished from their heyday of the193

1950s and 1960s, and American companies face intense internationalcompetition from increasingly capable foreign firms. Onthe other hand, these changes also create exciting new opportunities:Innovative defense technologies are now more likely to emergefirst in commercial products and production techniques, and Americancompanies are taking advantage of expanded opportunities inforeign markets. Accordingly, the Administration's technology initiativesare shifting the composition of Federal R&D from militaryto civilian concerns, and the composition of military R&D towardthe development of so-called dual-use technologies—those with applicationsto both military and commercial products.THE ADMINISTRATION'S TECHNOLOGY INITIATIVESThe Administration's investments in growth- and productivityenhancingtechnologies encompass a wide range of physical andhuman resource priorities. They finance basic research and leverageprivate funds for technology development and commercialization.They promote the diffusion and adoption of advanced manufacturingtechnologies by U.S. industry. They facilitate defenseconversion by easing defense suppliers into civilian markets, focusingmilitary R&D on dual-use technologies, and freeing the Pentagonto purchase commercial products and processes. They seek topromote the development of a national telecommunications infrastructurefor the information age. Finally, they create partnershipswith industry and academia to ensure that the government's investmentsto solve pressing problems in energy, transportation,and the environment simultaneously work to promote the Nation'seconomy and overall standard of living.Basic ResearchThe Administration worked with the Congress to increase budgetauthority for basic research in all categories to $13.8 billion in fiscalyear 1994. This includes a 7.2-percent increase in the NationalScience Foundation's budget to a total of $1.9 billion. The NationalScience Foundation will continue to provide strong support for fundamentalresearch critical to manufacturing, advanced materials,environmental technologies, and biotechnology. It has also doubledits support for modernizing academic research facilities and instrumentation.In addition, basic space science research is continuingat NASA, representing an investment of $1.9 billion in fiscal 1994.The Department of Defense has been appropriated $1.2 billion forbasic research in fiscal 1994; the Department of Energy will supportan additional $1.7 billion in basic research, in areas includingmaterials science, chemical science, engineering and geoscience,high-energy nuclear physics, and nuclear fusion. Finally, the Administrationcontinues to support basic research conducted throughthe National Institutes of Health, which account for over 40 per-194

cent of federally sponsored basic research. NIH is projected tospend nearly $6 billion for basic research in fiscal 1994, exceedinglast year's level by almost $300 million (or 5 percent).Technology Development and CommercializationThrough the Commerce Department's Advanced Technology Programand through the hundreds of cooperative research and developmentagreements that have been signed between private firmsand researchers at many of America's 726 Federal laboratories, thegovernment is investing in industrial projects to develop and topromote commercialization of technologies with high payoff potential.The Nation's antitrust laws have also been clarified to avoiddiscouraging beneficial private research collaborations.The Advanced Technology Program (ATP). The ATP is administeredby the Commerce Department's National Institute of Standardsand Technology (NIST). In four competitions completed overthe past 4 years, the ATP has made 89 awards to 66 companiesand 23 joint ventures. The projects receiving awards have includedventures to develop a way to control personal computer programsthrough "natural language" instructions; a pen-based characterrecognitionsystem for the Chinese language, with the goal of enhancingsoftware exports to Chinese-speaking companies; and atechnology for preserving patients' bone marrow during chemotherapy.The ATP is designed to avoid government failure. Governmentacts as the catalyst, but the ATP relies on industry to define andcarry out its R&D projects. Independent expert panels selectprojects through rigorous competitions based on both technical andbusiness merit. The ATP provides technology development fundsunder cooperative research agreements. It requires single-companyapplicants to pay their own indirect costs, and joint ventures toprovide matching funds. In general, award recipients may patentinventions or copyright software developed under an ATP award,but the government retains a nonexclusive license.The total of ATP awards plus private sector funds over the lifeof the first 89 awards amounts to over $500 million. The Administrationhas proposed to increase the ATP budget from $68 millionin 1993 to $750 million in 1997, and $200 million has been appropriatedfor the program in 1994. In addition to announcing about100 new awards to industry in fiscal 1994, the ATP will embarkon a set of "strategic" program competitions. These competitionswill focus on particular technology areas recommended by industryas having especially significant potential to generate large economicand social payoffs.Cooperative Research at Government Laboratories. The Nation's726 Federal laboratories, especially the three large, multiprogramnuclear weapons laboratories (Los Alamos and Sandia in New Mex-195

ico and Lawrence Livermore in California), offer a repository ofvast technical expertise that can be leveraged to enhance the competitiveperformance of American industry. As part of its plan toalter the balance between military and civilian objectives in theFederal R&D budget, the Administration has authorized the weaponslabs to redirect at least 10 to 20 percent of their defense programbudgets to commercial technology-transfer activities with industry.The Department of Energy's 31 laboratories, which employover 23,000 scientists and engineers and perform $6 billion in civilianand military research annually, already have in place over 650cooperative research and development agreements (CRADAs) withprivate firms, totaling $1.4 billion in combined public and privatefunds. CRADAs are also used to structure public-private partnershipsinvolving laboratories at NIST and the Department of Defense.A similar program is in place at NASA.Using CRADAs, Federal laboratories have already begun orstrengthened jointly financed collaborations with companies and industryconsortia in a number of research and productionprototyping projects. These have covered semiconductor productionequipment, flat panel display technology, new technologies for textilemanufacturing, the investigation of new polymer blends,biosensors, new aerospace alloys, and microscopic-sized machinesknown as microelectromechanical systems. These partnerships maybegin a longer term process of redirecting the defense-oriented labs'missions toward civilian needs—ranging from the development ofenergy-efficient and environmentally sustainable industries to theinvention of new medical, manufacturing, and transportation technologies—whileutilizing the labs' expertise in such fields as highperformancecomputing, communications, and new materials.Collaboration in Research and Development. Competition promotesR&D, but collaboration can also promote both research andthe effective commercialization of research results. When firmshave complementary skills or information, an R&D joint ventureamong them may speed the development and commercial adoptionof a new technology. And when firms have similar skills or information,an R&D joint venture may avoid costly duplication of effort.Yet allowing collaboration in R&D risks facilitating undesirablecooperation in the firms' other activities. For example, it maymake it easier to engage in price fixing or other anticompetitivepractices in the sale of the products manufactured by the firms collaboratingon research. This risk is small if collaboration is limitedto early-phase R&D, however.The Congress balanced these concerns in 1984 when it passedlegislation guaranteeing that collaborative research would violatethe antitrust laws only if the collaboration were found unreasonable.That legislation also provided that research joint ventures196

could register with the government and thereby limit their antitrustexposure to actual damages, rather than face the usual trebledamage penalty for antitrust violations. Legislation enacted in1993 extends these protections to production joint ventures, therebyremoving a barrier to collaborative efforts to implement newmanufacturing techniques and production processes. Because theseaspects of the production process can be understood as researchinto product commercialization, this extension serves a purposesimilar to that of the 1984 legislation.Development and Diffusion of Advanced ManufacturingTechnologyAnecdotal examples abound of technologies developed in theUnited States, such as numerically controlled machine tools, thatwere commercially exploited first or more successfully abroad.These anecdotes point to market failures other than imperfectappropriability that also contribute to insufficient adoption and utilizationof research results. For example, firms may face unnecessarilyhigh transactions costs for obtaining information, and firmswith good ideas but limited sources of collateral or internal financemay find themselves unable to raise funds in the capital markets.The effort to commercialize a new technology often presentsfirms with an array of organizational challenges: New manufacturingprocesses and distribution channels must be developed, workersmust be retrained, and new suppliers and perhaps even new customersmust be identified. In meeting these challenges, firms developa great deal of valuable information—from manufacturingknow-how to marketing insights—some of which cannot be protectedas intellectual property or trade secrets.On the other hand, firms sometimes have difficulty gaining accessto other types of technological know-how developed insideother companies and the ways different firms have met implementationchallenges. Adoption of advanced manufacturing technologyis typically a "systems" problem. Suppliers must be able to sellcomponents that fit into complex automated production systems.Buyers must be assured of compatibility among machines, robots,transfer lines, and the like, or they will not adopt the technology.To help remedy these market failures, and so promote morerapid and extensive commercialization and diffusion of importantnew technologies, the Administration is expanding NIST's ManufacturingExtension Partnership (MEP) program. ManufacturingTechnology Centers (MTCs) form the backbone of the program.MTCs offer impartial advice to small and medium-sized manufacturersfrom people with extensive industrial experience. This adviceis backed by hands-on technical assistance. MTCs will belinked among themselves to a set of smaller Manufacturing OutreachCenters (MOCs), geared to areas with smaller concentrations197

of industry. MOCs will be affiliated with technical colleges, vocationalschools, and State technical assistance centers. TogetherMTCs and MOCs will help firms to identify, evaluate, install,adapt, and then commercially exploit appropriate advanced technologyin their manufacturing and business operations. The Administrationanticipates that 100 centers will be established nationwideby 1997, up from 7 at the outset of this Administration.Linkages have also been formed between the MEP and otherFederal agencies with roles to play in the delivery of technical assistance,work force training, and small business support services.These agencies include the Department of Energy, NASA, theSmall Business Administration, and the Department of Labor. Inaddition, the Department of Energy dedicated over $400 million toadvanced manufacturing-related technologies in fiscal 1993 andhas under way or in negotiation more than 115 advanced manufacturingcooperative projects involving over 60 companies. One ofthese is the AMTEX Partnership, a model collaboration betweenthe Department of Energy's national laboratories and the Americantextile industry. Finally, the deployment portion of the Administration'sdefense conversion Technology Reinvestment Project (discussedbelow) includes an additional $87 million for manufacturingextension programs.Telecommunications Infrastructure for the Information AgeAll Americans have a stake in the construction of the advancedNational Information Infrastructure described earlier in this chapter.Private industry is already developing and deploying the Nil,and, as explained above, it is the private sector that should buildand own the Nil of the future. There nevertheless remain essentialroles for the government to play in ensuring the growth of an affordableand universally accessible telecommunications infrastructure.Many of the key breakthroughs in telecommunications andcomputing stemmed from research funded by the Federal Government.For example, the Internet and laser technology both grewout of government-sponsored research.The Administration will continue the High-Performance Computingand Communications program, which funds R&D into morepowerfulcomputers, faster computer networks, and more-sophisticatedsoftware. A key objective of this program is the applicationof computers to economically important problems. The Departmentof Energy has funded several collaborations among national laboratories,universities, and industry, applying these computing technologiesto materials, chemistry, energy, and environmentalproblems. Beyond that, the Administration has created a new componentof the program, emphasizing information infrastructuretechnologies and applications. This program will develop and applyhigh-performance computing and high-speed networking tech-198

nologies for use in the fields of health care, education, libraries,manufacturing, and provision of government information. Additionalresearch on information technologies and applications will beconducted by the Department of Energy's national laboratories.Finally, the government is supporting an array of Nil pilot anddemonstration projects. Federal matching grants will be awardedon a competitive basis to school districts, libraries, State and localgovernments, health care providers, universities, and other nonprofitentities to connect institutions to existing networks, to enhancethose networks, and to permit users to interconnect amongdifferent networks. The program is presently funded at $28 millionper year and is planned to grow in coming years to $100 millionannually. Its goal is to ensure that every school and library in thecountry is connected. In addition, NASA has launched the AdvancedCommunications Technology Satellite, an experiment totest pioneering concepts and technologies that promise to advanceon-demand, flexible communications services.Transportation, Energy, and the Environment: NewTechnologies for GrowthEnvironmental improvements have traditionally been viewed assomething we trade off for increased economic performance. Yet, asnoted earlier in this chapter, a strong environmental policy frameworkcan encourage innovation, strengthen key competitive industries,and improve our environment simultaneously. Environmentalpolicy can create new demand for the goods and services of the environmentalprotection industries, which then increase employmentand production to meet this demand. Policies that call for leadingedgeenvironmental solutions can induce U.S. industry to respondwith novel, world-class technologies. This response positions U.S.industry to meet the rapidly growing world demand for advanced"green" technologies, providing additional economic and environmentalbenefits for U.S. consumers and producers.Accordingly, this Administration is developing an environmentalpolicy framework whose objective is to maintain and strengthen environmentalprotection while also promoting economic and technologicaldevelopment. The Administration is working with the U.S.business and research communities to promote the developmentand deployment of new technologies that simultaneously preventpollution, increase energy efficiency and the efficiency of the Nation'stransportation infrastructure, and promote economic growth.Clean technologies—such as energy-efficient light bulbs and motors,alternative fuel vehicles, computerized traffic managementsystems, and advanced steelmaking—reduce many kinds of pollutants.Such technologies can also reduce the energy needs of U.S.companies, trimming costs and improving international competi-199

tiveness. Again, the hoped-for result is both enhanced environmentalquality and greater long-term economic growth.Partnership for a New Generation of Vehicles. This initiative,begun in September 1993, is a joint effort of the Federal Governmentand the three leading domestic automobile manufacturers.The initiative aims to develop the technologies necessary to createa new type of automobile, one that is both safer and up to threetimes more fuel efficient than today's cars. In both its goals and itsimplementation, the program is characteristic of this Administration'stechnology policy. It focuses on developing technologies thatmay generate technological progress in two important areas: inmaking U.S. automobile producers more technologically competitivein the international marketplace and in reducing air pollution. Theinitiative is structured as a set of public-private partnerships inR&D. One such partnership seeks to develop a "hybrid" vehiclethat combines electric propulsion with conventional heat enginesystems to increase efficiency and meet tight emission standards.The Environmental Technologies Initiative. The EPA haslaunched the Environmental Technologies Initiative to stimulatetechnological innovation to meet the Nation's environmental objectives.The initiative aims to create a more productive environmentaltechnology marketplace and works toward incorporating environmentalconsiderations into the design of new technologies andinto upgrades of existing technologies. This program is also designedto aid the Administration's defense conversion effort by facilitatingthe use of military bases for demonstrations of environmentalremediation or "cleanup" technologies. In addition, the EPAand the Commerce Department are jointly developing environmentaltechnology programs at NIST regional technology centers;and the EPA has undertaken a new collaborative venture with theSmall Business Administration to help small businesses access informationon pollution prevention. These and other domestic initiativesalso support the Administration's strategic framework for environmentaltechnologies exports, which engages U.S. environmentalbusinesses in the design and implementation of market-specificexport assistance and export financing strategies.The NICE 3 program (National Industrial Competitivenessthrough Energy, Environment, and Economics), jointly administeredby the EPA and the Department of Energy, aims to promoteinnovative technologies that simultaneously improve energy efficiency,reduce waste generation, and increase economic competitivenessand productivity. The program also seeks to improvecooperation between State agencies and industry. In addition, thePresident has directed the Department of Energy and the EPA toaccelerate the commercialization of advanced, energy-efficient technologiesthrough the formation of partnerships with key market200

players. These partnerships may include contests for new technologyintroductions; working with government procurement agenciesto leverage their purchasing power to acquire qualifying products;and working with utilities to coordinate incentives for marketsfor new technologies. For instance, the Department of Energy,together with the EPA and utilities, is using such partnerships tocreate a new market for manufacturers of chlorofluorocarbon-freerefrigerators (chlorofluorocarbons have been implicated in degradationof the atmospheric ozone layer).Finally, the Department of Energy is engaged in developing anddeploying innovative environmental remediation and cleanup technologiesto deal with the cleanup of military bases slated for closure,as well as of contaminated facilities and sites administered bythe Energy Department itself.Other Transportation Technology Initiatives. The Department ofTransportation has begun a series of outreach seminars entitled"Promoting Transportation Applications in Defense Conversion andOther Advanced Technologies." In addition, the department has initiatedstudies aimed at having a prototype demonstration of anautomated intelligent vehicle highway system by 1997. The DefenseDepartment's Advanced Research Projects Agency (ARPA)has selected six regional coalitions—in Hawaii, Sacramento, LosAngeles, Indianapolis, Atlanta, and Boston—to work on electric andhybrid electric vehicle technology and infrastructure. A team of officialsfrom the Departments of Defense and Transportation is alsoinvestigating how to augment the existing satellite-based global positioningsystem for use in improving air navigation and collisionavoidance. The Department of Energy's Clean Cities programmakes use of the Federal Government's purchasing power to acceleratethe introduction of alternative fuel vehicles (and an alternativerefueling infrastructure) into urban areas in order to reduceemissions. Finally, the Administration is continuing to fund researchinto an array of next-generation transportation technologies,including high-speed ground transportation, advanced subsonicplanes, and supersonic air transports.Facilitating Defense ConversionThe share of gross domestic product (GDP) devoted to nationaldefense is expected to shrink from 6.5 percent in 1986 to 3.3 percentin 1997. This decline in defense spending, resulting from theend of the cold war, is smaller relative to the size of the economythan the cutbacks that followed World War II and the Korean andVietnam wars, and much more gradual. Yet the impact on particularregions, such as southern California, is severe, and three additionalfactors work to make the economic adjustment this timemore difficult. First, the economy's recovery from the recession of1990-91 was weaker than the average postwar recovery, while ef-201

forts to cut the massive Federal budget deficit leave little room forfiscal expansion to stimulate economic growth. Second, many defensefirms and workers are more isolated from commercial marketpractice than during earlier builddowns, because the defense procurementsystem that has evolved over time has erected a wall betweencommercial sectors and defense. Third, technological innovationand the economic growth it generates may be hard hit by thedefense retrenchment, because nearly 60 percent of Federal supportfor domestic R&D was defense related and because roughlyone-fifth of the Nation's engineers work in defense-related areas.The end of the cold war was an unanticipated event with seriouseconomic consequences for several domestic economic sectors. OurNation has long accepted a collective responsibility to ease thetransition for those most heavily affected by major economicshocks, for example by providing unemployment insurance and disasterrelief. This principle readily extends to transitional assistancewhen the shock results from a large and unanticipated structuraleconomic change, particularly when government is effectively theagent of that change.For workers, the problem of large, regionally concentrated economicdislocations is made worse by a capital market imperfection.It is often difficult for workers to borrow for retraining and relocationbecause their human capital cannot serve as collateral. Suchcapital market transactions are particularly difficult to arrange forpeople who have just lost a job or who have incurred a capital losson their home—a frequent consequence of geographically concentrateddefense cuts. Moreover, dislocated workers may have adifficult time learning about job opportunities in other regions oroccupations.Defense conversion is also difficult for firms. Although many defensecontractors have access to knowledge, production facilities,and skilled workers that could be valuable if channeled to commercialapplications, the many years spent designing their organizationsto serve the needs of one customer—the Defense Department—oftenleave them without crucial skills or the right organizationalconfiguration to serve the commercial marketplace. To theextent that these firms lack internal funds to finance new investment,and to the extent they are unable credibly to demonstrate tolenders and other capital providers their potential to serve otherlines of business, these resources will not be able to move to theirmost efficient uses.The Administration's 5-year, $22 billion Defense Reinvestmentand Conversion Initiative addresses these problems of the post-coldwar transition.Workers. The initiative provides $5 billion over 5 years for workeradjustment, including funding for retraining displaced defense202

workers and early retirement benefits for military personnel withat least 15 years of service. In addition, the Administration is sponsoringpilot programs to train defense workers and personnel leavingthe military for national service as teachers, health care workers,and law enforcement personnel.Communities. The Administration is also expanding the DefenseDepartment's Office of Economic Adjustment, so that communitiesaffected by scheduled military base closures have the resources andtechnical assistance necessary to plan a smoother adjustment tonew economic activities. More resources are being devoted to theCommerce Department's Economic Development Administration, totarget help to communities hardest hit by the defense industrydrawdown. Meanwhile the Defense Department is working withthe EPA and other public and private bodies to make sure that theprocess of environmental cleanup and restoration at closed militarybases does not hamper local economic recovery.Technology: The Technology Reinvestment Project. The Administration'sTechnology Reinvestment Project (TRP) is an effort to promotethe development of dual-use (commercial and military) technologiesand to help small defense firms make the transition tocommercial production. The TRP is jointly implemented by a sixagencycouncil representing the Departments of Commerce, Energy,Transportation, and Defense, NASA, and the NationalScience Foundation, and is chaired by an official from ARPA. Onehundredand sixty-two projects had been selected for TRP supportas of early December 1993, totaling nearly $1 billion in combinedpublic and private funds (the Federal share is about $415 million).The TRP funds three types of projects: technology development(46 projects), technology deployment (70), and manufacturing educationand training (46). Examples include construction of a highwaybridge from composite plastics, development of a new jaws-ofliferescue device powered by pyrotechnic cartridges, and the explorationof medical uses for a noninvasive diagnostic device thatmeasures oxygen levels in the blood. The TRP is also funding thedevelopment of a new manufacturing engineering curriculum at aState college, a manufacturing technology center to help defensesuppliers adapt to other fields, and a project to retrain laidoff defenseengineers in pollution-prevention and remediation.MARITECH. The Defense Department's MARITECH (maritimetechnology) initiative, a defense conversion program focused onshipbuilding, is structured similarly to the TRP. This 5-year, $220million program will supply matching funds to help U.S. shipyardsshift production from military to commercial markets.203

TECHNOLOGY POLICY, GROWTH, ANDCOMPETITIVENESSGovernment must work with American industry to provide asound communications and transportation infrastructure and asolid science and industrial technology base. These are among theprerequisites for economic growth. Yet to be effective in a marketeconomy, technology policy must leverage private investment, notdirect it. It must be sensitive to those reasons why markets bythemselves may lead to insufficient investment. The Administration'stechnology initiatives take their inspiration from a longAmerican history of public-private partnerships, from the AgriculturalExtension Service to the Arpanet (now the Internet worldwidecomputer network). These initiatives seize strategic opportunitiesinherent in the shifting composition of Federal R&D frommilitary to civilian concerns, help remedy the underinvestment inR&D created by the limitations on private appropriability of itseconomic returns, and focus Federal R&D funds on facilitating thecommercialization and commercial diffusion of technology. Togetherthese technology initiatives are essential to promote U.S. economiccompetitiveness, meaning not only the ability of American firms tosell high-quality goods and services in the international marketplace,but more importantly, the ability to do so while maintaininghigh and rising wages and living standards for the Americanpeople.204

CHAPTER 6The United States in the WorldEconomySOON AFTER TAKING OFFICE, the President described thebasic principles and goals of his Administration's international economicpolicy in a February 1993 speech at American University.He committed the United States to active global engagement topromote world trade and growth, to aid the development of lessprosperous nations, to address the emerging problems of global environmentaldegradation, and to encourage market reform in Russiaand other parts of the former Soviet empire. The President affirmedthat the United States would continue to champion openmarkets and expanded trade: In the President's words, "We mustcompete, not retreat." Acting upon these words, the Administrationsuccessfully concluded two of the most important trade agreementsin the Nation's history: the North American Free Trade Agreement(NAFTA) and the Uruguay Round Agreement under the GeneralAgreement on Tariffs and Trade (GATT).Like previous Administrations, Democratic and Republican alike,this Administration recognizes that international trade—the voluntaryexchange of goods and services across national borders—isa means of increasing standards of living and economic well-beingboth at home and abroad. During the last half-century, world tradehas grown enormously, largely as a result of American leadershipin liberalizing global markets. Trade has been a major engine ofgrowth for the world economy since World War II, in marked contrastto the 1930s, when protectionism worsened and helped spreadglobal economic depression. As economists have long predicted,freer trade has been a win-win strategy for both the United Statesand its trading partners, allowing all to reap the benefits of enhancedspecialization, lower costs, greater choice, and an improvedinternational climate for investment and innovation. American industries—boththeir workers and their owners—have benefitedfrom increased export markets and from cheaper imported inputs.American consumers have been able to purchase a wider variety ofproducts at lower prices than they could have without the expansionof trade.Recent changes in the global economy pose new challenges andnew opportunities for the United States as we maintain our com-205

mitment to an open international trading system. The new opportunitiescome from the explosion of global markets, while the newchallenges come from the development of new global competitors.During much of the last 50 years, the United States was the onlyglobal economic superpower. But now there are three: the EuropeanUnion (EU, the deeper integration of the European Community),Japan, and the United States; and all increasingly interdependentas a result of trade and capital flows, and increasinglycompetitive. All three superpowers face both intensifying competitionfrom and expanding market opportunities in the rapidly industrializingcountries of East Asia, which continue to increase theirexport competitiveness even as they open their own markets togreater trade and investment. Meanwhile the global trading systemis being transformed by the emergence of new democratic and market-orientedregimes in central and eastern Europe, the former SovietUnion, Latin America, and Asia—regimes that have made substantialprogress in tearing down their protectionist barriers andare now actively encouraging exports, accepting imports, and seekingforeign capital for development.This Administration is committed to a high-wage strategy to enablethe United States to take advantage of the new opportunitiesand to meet the new challenges of the changing global marketplace.This strategy consists of two distinct but interrelated parts:trade policies that will promote trade and foster more-open marketsboth at home and abroad; and domestic policies that will helpAmerican companies remain the world's productivity and technologicalleaders, and American workers remain the most skilled andproductive in the world. This two-part strategy reflects the fundamentalgoal of the Administration's other economic policy initiatives:higher living standards for all Americans. Realizing this goalrequires that America compete not on the basis of lower wages, buton the basis of superior productivity, technology, and quality. Italso requires that our trade policy be complemented by domesticpolicies designed to increase labor force skills and facilitate the adjustmentof American workers and communities to changing economiccircumstances—whatever their source. Other chapters inthis Report have analyzed the domestic economy. This chapter addressesthe international dimension.TRENDS IN U.S. TRADETrade has become increasingly important to the American economy.As shown in Chart 6-1, the share of exports of goods andservices in real gross domestic product (GDP) has gradually risenand now stands at a postwar high of 11.6 percent. Between 1985and 1993, U.S. merchandise exports increased from $222 billion to206

$460 billion in current dollars, and by 95 percent in real terms. By1992, the United States had regained its status as the world's largestexporter, and one in six American manufacturing jobs was directlyor indirectly related to exports.Chart 6-1 U.S. Trade as Share of Real Gross Domestic ProductThe importance of trade to the U.S. economy has risen more or less steadilyfor three decades.Percent of real GDP14Imports of12 r- Goods and Services 410fExports ofGoods and Services4J | L1965 1968 1971 1974 1977 1980 1983 1986 1989 1992Source: Department of Commerce.Imports have also grown in significance. As Chart 6-1 shows, theshare of imports of goods and services in GDP has increased steadilyand is also at a postwar high of 13.2 percent. Perhaps the moststriking development has been the increasing role of multinationalcorporations in U.S. trade and, indeed, the growing importance ofintrafirm trade—cross-border trade between the separate operationsof a single firm. By 1990, multinational firms accounted forover 75 percent of total U.S. merchandise trade, and around 40percent of U.S. merchandise trade was intrafirm. And whereasintrafirm trade initially involved mainly U.S.-based multinationals,more recently it has been led by foreign-based firms, especiallyJapanese firms.The impact of international trade on the national economy is notrestricted to exports and imports. International trade also affectsthe fortunes of producers who do not directly export or import butinteract with producers who do. According to input-output analy-207

ses, which take such intersectoral or interproducer relations intoaccount, when the indirect effects of trade are included, exports accountedfor nearly four-fifths of the increase in domestic productionof manufactures between 1987 and 1992. Moreover, exports havebecome more dependent on imports. Between 1982 and 1987, themost recent years for which data are available, the import contentof exports rose from 10 percent to 14 percent. Thus exports are becomingmore important for the economy, and imports are becomingmore important for exports. Overall, international trade is increasinglyvital to American prosperity.The growth of U.S. trade has been accompanied by significantchanges in both its sectoral and its regional composition. As shownin Chart 6-2, real exports of nonagricultural merchandise and serviceshave grown rapidly during the past quarter-century (Box 6-1),while the contribution of agricultural exports has remained relativelysmall. At the same time, the relative contributions of particularsectors within nonagricultural merchandise trade have beenshifting (Table 6-1).Chart 6-2 U.S. Exports of Goods and ServicesExports of services and nonagricultural goods have grown rapidly sincethe late 1960s.Billions of 1987 dollars500NonagriculturalMerchandise^300200Services100AgriculturalMerchandisej |1967 1970 1973 1976 1979 1982 1985 1988 1991Source: Department of Commerce.208

Box 6-1.—U.S. Exports: More Than PeanutsIn 1992, American service firms exported to nonafflliatesabroad:• over two-thirds as much in passenger fares ($17.4 billion),such as seats on U.S.-flagged air carriers, as theUnited States exported civilian aircraft ($24.5 billion)• more educational services ($6.1 billion) than the UnitedStates exported corn ($5.7 billion)• more financial services ($5.4 billion) than the UnitedStates exported wheat ($4.6 billion)• more equipment installation and repair services ($2.8billion) than the United States exported agricultural machinery($2.1 billion)• more information services, including computer and dataprocessing and database services ($2.6 billion), than theUnited States exported aluminum ($1.2 billion)• more legal services ($1.4 billion) than the United Statesexported vegetable oils ($1.0 billion)• more management consulting services ($0.78 billion)than the United States exported milled rice ($0.72 billion)or peanuts ($0.21 billion).TABLE 6-1.—U.S. Merchandise Trade by Industry, 1972 and 1992[Percent of total]IndustryExports1972ImportsExports1992ImportsAgricultural and forest productsMineralsFuelsChemicalsTextiles, apparel, leather products, and footwearPaperNonmetallic minerals productsIron and steelMachineryTransportation equipmentFurniture and fixturesInstrumentsMiscellaneous manufacturesOther industriesNote -The classifications are based on the SITC Revision 1 coding system,reexports.Detail may not add to 100 percent due to rounding.Source: United Nations, Commodity Trade Statistics Division.18.53.13.28.43.91.51.21.727.016.9.32.83.77.815.45.88.53.68.82.32.35.314.017.5.71.66.57.511.72.32.610.43.41.5.91.030.517.7.93.65.77.96.22.311.15.410.51.61.81.924.815.71.43.17.76.3Import figures have been adjusted to net out209

An important sectoral development in recent years has been thegrowth of high-technology products and industries in both U.S. exportsand imports. In 1992, the United States exported $107 billionin advanced technology products, up in nominal terms from $83 billionin 1989. Imports of these products also increased—from $56billion in 1989 to $72 billion in 1992. Aerospace, information andcommunications, and electronics together contributed the predominantshare of U.S. high-technology exports. These sectors, alongwith a few high-technology product lines within other industrialsectors, are considerably more export-intensive than U.S. manufacturingas a whole. Indeed, aircraft and computers and office equipmenthave the highest ratios of export sales to value added amongall manufacturing industries.Heightened foreign competition and the globalization of production(technology respects no border) have made many high-technologyindustries relatively import-intensive as well. In fact, themost export-intensive of America's high-technology industries (withthe marked exceptions of plastics and aircraft) are now also themost import-intensive. The electronics industries have been thearena of the most dramatic penetration of the U.S. high-technologymarket, both because Japanese and East Asian electronics producershave become more formidable competitors, and because Americanelectronics multinationals have spread their own productionaround the world.Just as the commodity composition of U.S. trade has been changing,so has its geographical composition. As shown in Table 6-2,the shares of U.S. exports going to and imports coming from developingcountries have risen, while the shares to and from industrialcountries have fallen. These trends reflect the fact that the developingcountries as a group have been growing more rapidly thanthe industrial countries.TABLE 6-2.—U.S. Merchandise Trade by World Region, 1972 and 1992[Percent of total]RegionExports1972ImportsExports1992ImportsIndustrial countriesJapanEuropean Community 1OtherDeveloping countriesAsiaMiddle EastWestern HemisphereOther ,66.810.026.830.033.28.94.114.65.672.416.324.032.127.69.61.612.63.858.510.723024.941.516.64.516.93.557.718.017.622.142.322.83.113.03.41 Membership as of 1992.Note-Detail may not add to totals due to rounding.Source: International Monetary Fund.210

The fast-growing countries of Asia have provided a rapidly expandingmarket for U.S. exports; their share of the total nearlydoubled from 9 percent in 1972 to 17 percent in 1992. Indeed, by1992 our trans-Pacific trade was 50 percent greater than our trans-Atlantic trade. The increasing importance of Asia in U.S. trade appearsto contradict the common contention that the world is devolvinginto three trading blocs centered on Europe, Asia, and NorthAmerica. Nor is such a conclusion supported by more-sophisticatedevidence. When researchers have modeled the pattern of tradeflows among different countries, they have found no real evidencethat intraregional trade flows in Asia are unusually large once economicfundamentals are taken into account. The observed increasesin intraregional flows can be explained largely in terms of differencesin economic growth rates and geographical proximity.Likewise, when researchers have looked at financial flows, exchange-ratedetermination, and the like, there is little evidencethat a "y en bloc" is developing in Asia.In addition to leading the world in trade, the United States leadsthe world in the stock of foreign direct investment, both as investorand as recipient. In 1992, U.S. firms owned 25 percent, and theUnited States hosted 22 percent, of the world's foreign direct investmentstock. The largest hosts of outward U.S. foreign direct investment(ranked in order of importance) are the United Kingdom,Canada, Germany, Switzerland, and Japan, which together accountfor nearly half the total (Table 6-3). Similarly, five industrial countries(again ranked in order of importance)—Japan, the UnitedKingdom, the Netherlands, Canada, and Germany—account formore than three-quarters of existing foreign direct investment inthe United States. The predominant role of high-wage industrialcountries in both inward and outward foreign direct investment inthe United States refutes the popular notion that such investmentis motivated primarily by the search for lower wages. In fact, manyforeign investment decisions are motivated by other considerations,most often the need to have an active presence in large or rapidlyexpanding markets or the need to overcome trade and other barriersthat impede access.It is sometimes argued that outward foreign direct investment"exports" jobs. However, the parallel expansion of two-way foreigndirect investment and intrafirm trade suggests that such investmentis more likely to complement rather than substitute for trade,creating high-wage jobs domestically rather than destroying them.Several recent studies have concluded that foreign direct investmentis more likely to create trade than reduce it. Another recentstudy found that inward foreign direct investment brings with itcompetition, new technologies, and new management techniques,211

TABLE 6-3.—Stock of U.S. Outward and Inward ForeignDirect Investment, 1992CountryNVESTMENT BY U.S. FIRMS ABROAD (OUTWARD):United KingdomCanadaGermanySwitzerlandJdpdnAll countriesBillions of dollars77.868.435.428.726.2486.7INVESTMENT BY FOREIGN FIRMS IN THE UNITED STATES (INWARD):JapanUnited KingdomNetherlandsCanadaGermanyAll countries96.794.761.339.029.2419.5Note.—All figures are on a historical cost basis.Source: Department of Commerce, Bureau of Economic Analysis.each of which has contributed to the resurgence in U.S. productivity,further enhancing national competitiveness.TRADE, JOBS, AND WAGE INEQUALITYIn the short run, both the level of output and the level of employmentin the American economy depend on the level of aggregatedemand. One component of aggregate demand is net exports, thedifference between exports and imports. Thus, as long as there isslack in the economy, an increase in net exports will stimulate productionand create jobs. For example, most scholars estimate thatNAFTA will create additional American jobs over the next severalyears because it will boost U.S. net exports to Mexico. Once theAmerican economy nears full employment, however, additional netexports could create upward pressure on prices as well. Even whenthe economy is at full employment, however, and even if trade liberalizationincreases both imports and exports equally, leaving netexports unchanged, the American economy still reaps the benefitsof freer trade in the form of greater productive efficiency, lowerprices, and higher living standards.Despite the possible benefits of trade liberalization for the levelof employment in the short run, and the certain benefits of tradeliberalization for living standards in the long run, some observersworry that expanding trade with developing countries will depressthe wages of low-skilled American workers. As explained in Chapter3, wage inequality has, in fact, increased over the past two decadesas the share of trade in the U.S. economy has grown. Not surprisingly,concerns have been voiced that greater internationaltrade may be responsible for greater inequality in the wage distribution.212

Such concerns are plausible and are consistent with economictheory. Skilled labor is relatively abundant in the U.S. economy.According to theory, when the United States trades with economiesin which unskilled labor is relatively abundant, we will tend to exportproducts requiring skilled labor and import products using unskilledlabor. The relative prices of skill-intensive goods will thereforerise in the United States, and U.S. production will expand inexport industries and contract in industries that compete with imports.Demand for skilled labor will rise, while demand for unskilledlabor falls. These changes in labor demand will raise thewages of skilled workers relative to those of unskilled workers.Thus, on a priori grounds, one might expect an expansion of tradewith developing countries to lead to greater wage inequality in theUnited States.Despite the plausibility of the theoretical argument, however,several studies find that it is difficult to discern any substantialimpact of trade on wage inequality. Economists have posited a systematicrelationship between the relative prices of goods and therelative returns to factors of production. If increased trade with developingcountries were the cause of growing wage inequality, therelative prices of goods that use highly skilled labor would be risingrelative to those of goods that use unskilled labor. However, onestudy has found no evidence that the relative price of skill-intensivegoods has risen in the United States. Indeed, it is difficult tofind any evidence of the changes in relative prices that would berequired for changes in trade patterns to have altered the relativereturns to different types of labor.Similarly, if increased trade were responsible for increased wageinequality, the growth in wage differentials would lead firms in allsectors to substitute unskilled labor for skilled labor. Instead, studiesfind that virtually all manufacturing industries have increasedtheir relative use of skilled labor despite growing wage differentials.Rising wage differentials along with greater use of skilledlabor suggests that demand for skilled labor has been rising broadlyin the economy. As expected, these wage differentials have ledto an upgrading of skills in the work force, allowing firms to meettheir rising demand for skilled labor.Taken together, this evidence (little change in relative prices,and economy-wide increases in the demand for skilled labor) suggeststhat growing demand for skilled labor has resulted fromwidespread changes within industries rather than from changes inthe structure of production engendered by greater trade. The preponderanceof evidence indicates that the primary sources of growingwage inequality are domestic rather than foreign. As discussedin Chapter 3, the sources of wage inequality are difficult to pinpoint,but to the extent that growing inequality can be explained,213

technical change has been offered as the leading candidate. Increasedtrade with developing countries may have reinforced someof the changes in wages caused by technological change, but carefulstudies have failed to discern a sizable impact of trade on wage inequality.Two explanations of this finding have been offered. First, althoughtrade with developing countries has been growing, mostU.S. trade—about 60 percent—still involves other industrializedcountries whose skill levels and wages are similar to those in theUnited States. Second, while trade is a growing part of the U.S.economy, it remains a relatively small part. Only extremely largechanges in the composition of trade could have a discernable impacton wages and wage disparity in the U.S. economy.Nonetheless, the expansion of trade will inevitably disadvantagesome workers in the short run. One goal of Administration policy,as described in Chapter 3, is to facilitate the adjustment of thelabor force to changing economic circumstances whatever the putativesource of change. It is by recognizing both the opportunitiesand the challenges presented by the changing global economy thatthe Administration seeks to achieve a productive and stable basisfor U.S. engagement in the world economy.THE ADMINISTRATION'S TRADE INITIATIVESThe Clinton Administration supports the goal of freer trade ona reciprocal basis. In pursuit of that goal, the Administration isdedicated to working with the private sector and its trading partnersto open foreign markets through bilateral, regional, and multilateraltrade agreements. At the same time, the Administration believesthat trade policy should complement, not substitute for,domestic policies to enhance the global competitiveness of Americancompanies and their workers and to make the United Statesan attractive production location for both domestic and foreignfirms.DOMESTIC INITIATIVES: THE NATIONAL EXPORTSTRATEGYThe Administration's trade policy begins at home with an activistcommitment to promote American exports both by reducing domesticbarriers to them and by improving the efficiency of our exportpromotion programs. Working within the interagency Trade PromotionCoordinating Committee, created by the Congress to reducethe fragmentation of our export promotion programs, the Administrationunveiled a new National Export Strategy in September1993. This strategy reflected six underlying themes: streamliningand combining functions across agencies, allocating resources stra-214

tegically, involving the private sector and State and local governments,effectively advocating the interests of U.S. exporters abroad,measuring performance, and reducing export controls (restrictionson exports to meet national security, antiproliferation, or foreignpolicy objectives). Among the actions to be undertaken immediatelyare:• Revising outmoded export controls on high-technology products.The specific technical revisions are expected to reduceregulation significantly on an estimated $35 billion worth ofhigh-technology exports. For example, export restrictions thatpreviously affected sales of even some personal computers tomany foreign markets have been relaxed.• Consolidating all Federal export promotion services in one locationto facilitate "one-stop shopping." Initially, four centerswill be created; more will be added until a national networkhas been created.• Providing high-level government advocacy on behalf of U.S.firms pursuing major foreign government procurement opportunitiesthrough an interagency "Advocacy Network" and an"Advocacy Center" located in the Department of Commerce.• Improving our export finance programs by combating the "tiedaid" practices of other nations, increasing the limits on insuranceguarantees by the Overseas Private Investment Corporation,broadening assistance to U.S. companies seeking to participatein activities funded by the multilateral developmentbanks (such as the World Bank), and combining into one agencythe infrastructure feasibility funds that are the seed moneyfor U.S. firms' participation in major infrastructure projectsabroad.Taken together, the actions outlined in the National ExportStrategy are expected to increase both the responsiveness and theefficiency of export promotion efforts.BILATERAL NEGOTIATIONSAlong with these unilateral actions, the Administration has engagednumerous foreign countries in bilateral trade talks. The mostprominent of these efforts has been with Japan.The U.S.-Japan Framework TalksJapan presents a special case for the United States. Japan is theworld's second-largest economy, after the United States, and oursecond-largest trading partner, after Canada. And it is with Japanthat the United States maintains its largest bilateral merchandisetrade imbalance: a deficit of $49.6 billion in 1992 (Table 6-4). (Inthe same year, we enjoyed a $13.3 billion surplus with Japan inservices trade.) Japan's large surplus with the United States is animportant part of its large global current account surplus (the cur-215

ent account is a broader measure of trade that includes both goodsand services), which stood at $118 billion in 1992.TABLE 6-4.—U.S. Merchandise Trade Balances withSelected Countries, 1987-92[Billions of dollars]YearEuropeanCommunityJapanTotal"Greater China"People'sRepublic ofChinaHong KongTaiwanRest ofworld198719881989199019911992-20.6-9.21.26.317.09.0-56.3-51.8-49.1-41.1-43.4-49.6-25.9-20.6-22.6-24.4-23.7-28.4-2.8-3.5-6.2-10.4-12.7-18.3Note.—Exports are fas. and imports are customs value.China, Hong Kong, and Taiwan have been grouped together as "Greater China" for analytical convenience.Detail may not add to totals due to rounding.Source: Department of Commerce, Bureau of the Census.-5.9-4.6-3.4-2.8-1.1-0.7-17.2-12.6-13.0-11.2-9.8-9.3-49.3-36.9-38.9-42.5-16.6-15.5Moreover, certain of Japan's trade patterns appear to differ fromthose of other major industrial countries. Japan has an unusuallylow share of manufactured imports in domestic consumption, anunusually low share of intraindustry trade, an unusually smallstock of inward foreign direct investment, an unusually small shareof domestic sales accounted for by foreign-owned firms, and an unusuallyhigh share of intrafirm trade, which is predominantly controlled,moreover, by Japanese rather than foreign-based firms.Manufactured imports play a relatively small role in the Japaneseeconomy, with the share of manufactured imports in consumptionless than half that of the other major industrialized countries(Table 6-5). And while this measure has risen considerably in theother countries, it has remained relatively unchanged in Japan for20 years.TABLE 6-5.—Selected Trade Indicators for Six Industrialized Countries,1990IndicatorJapanUnitedStatesGermanyUnitedKingdomFranceItalyImport share of domestic consumption ofmanufactures (percent)Intraindustry trade indexForeign firms' share of domestic sales (percent)5.9.581.21 Data for 1989.2 Not available.Note.—Intra-European Community trade has been excluded from the intraindustry trade and import share calculations.Sources: Institute for International Economics; United Nations, Commodity Trade Statistics Division; World Bank; andDepartment of Commerce.15.3.8316.415.4.7314.017.7.79124.113.7.7728.412.6.67216

Another interesting aspect of Japan's trade pattern is its relativelylow level of intraindustry trade—trade in differentiatedmanufactures within a given industry. (One common example istrade in different makes and models of automobiles.) As economiesdevelop and the demands of firms and consumers become morecomplex, individual firms become less able to produce the vastlybroader range of products required to satisfy all demands.Intraindustry trade then increases, as firms penetrate each others'domestic markets to supply those particular products in which theyspecialize. Intraindustry trade, it is sometimes argued, is of particularimportance because the adjustment costs associated with anexpansion of intraindustry trade are thought to be lower than fora comparable expansion of interindustry trade—import-competingfirms can retool and specialize rather than disappear. If this is so,expansion of intraindustry trade should be more compatible withtrade liberalization.Japan also exhibits an unusually high share of intrafirm trade.Intrafirm trade is important both as a major channel of trade andbecause intracorporate transactions may be less responsive to normalprice and cost determinants than are arm's-length transactions.This issue is of considerable interest with regard to Japan becauseof Japan's unusual pattern of intrafirm trade. For most countries,intrafirm trade is dominated by shipments from parent firmsto their foreign affiliates. That is to say, intrafirm trade is exportoriented.Japan is unusual in that Japanese parents dominatetrade in both exports and imports. Some researchers have attributedthis dominance to the prominent role of giant trading companiesand keiretsu relationships in Japanese trade and argue thatthis pattern of trade is consistent with imperfectly competitive Japanesedomestic markets. (Keiretsu are large groups of Japanesefirms that share financial, production, personnel, and other linkages.)Table 6-6 reports data on U.S. bilateral trade with Europe andJapan. Intrafirm trade is a more important part of U.S.-Japantrade than of U.S.-Europe trade. Three-quarters of all U.S. importsfrom Japan are intrafirm (compared with less than 50 percent fortrade with Western Europe), and 36 percent of U.S. exports toJapan are intrafirm (compared with 32 percent for Western Europe).Japanese markets are not completely closed. Indeed, some U.S.firms excel in Japan. On the whole, however, the role of foreignfirms and foreign goods is strikingly small (Table 6-5).Explanations of Japan's apparent distinctiveness fall into twobroad groups, one emphasizing direct trade and industrial policyinterventions and the other emphasizing structural characteristics217

TABLE 6-6.—Intrafirm Trade as Share of Total U.S. Exports to andImports from Europe and Japan, 1992[Percent of total]U.S. importsRegion to fromregionEurope 32.4 46.3Japan 36.2 75.0World total 30.6 45.0Note.—Intrafirm trade is defined as merchandise trade between "related parties" (that is, between affiliates of the samefirm).Source: Department of Commerce, Bureau of the Census.of the economy. Domestic industrial support policies in Japan haveincluded subsidies to producers and to research and developmentconsortia, preferential tax treatment, preferential access to credit,government procurement preferences, establishment of producercartels, and lax antitrust enforcement. External policies have includedtrade protection, restrictions on inward foreign direct investment,and control over high-technology trade. These policies havebeen applied to both infant and senescent industries.With a few notable exceptions, including agriculture, Japanesetariffs and import quotas are not significant trade barriers. Yet Japan'smarket is regarded by many as effectively closed to importsof many foreign manufactures, especially those that directly competewith Japanese goods. Structural barriers alleged to deter importsinclude reliance on bureaucratic control to ensure productsafety; domestic cartels, discriminatory pr-ctices by the keiretsu,and weak enforcement of competition policies; inadequate intellectualproperty protection; government procurement procedures thatfavor domestic suppliers; imperfect capital markets that inhibit inwardforeign investment; and impediments in the distributionchannels for imported products—to name a few.Estimating the impact of the mostly overt barriers to trade inprimary products is relatively straightforward. One recent studyconcluded that complete elimination of all agricultural trade barriersin Japan might increase the incomes of U.S. producers by 28percent of the value of bilateral agricultural exports. This wouldoccur through a combination of higher export volumes to Japan andhigher prices on exports to all markets. Comparable figures for potentialgains in minerals and, importantly, services, are not available.What attracts the most attention, however, is the potential gainin manufactures. And here the story is far more controversial becausethe subtle nature of Japan's trade barriers poses difficultproblems for economists trying to assess their impact. In consequence,researchers have eschewed direct measurement of thesebarriers and focused instead on inferring their impact indirectly by218

examining differences in predicted and actual trade volumes. Thesestudies have been virtually unanimous in their conclusion that Japan'slow volume of manufactured imports cannot be entirely explainedby economic fundamentals.In addition to examining quantities, one can look at prices. Ifmarkets were really open, traded goods should sell at "internationalprices" adjusted for transport costs. A number of studieshave concluded that traded-goods prices are far higher in Japanthan in other countries. Among these surveys were two involvingexact brand and model comparisons conducted by the Departmentof Commerce and the Japanese Ministry of International Trade andIndustry as part of the Structural Impediments Initiative talks.The 1991 survey found that two-thirds of the products coveredwere on average 37 percent more expensive in Japan than in theUnited States; the 1989 survey obtained quantitatively similar results.Additional evidence comes from Japanese researchers whoused Japan's input-output table to calculate the tariff-equivalentsof Japanese nontariff barriers. In some sectors they discovered tariff-equivalentsof 500 percent and higher.The question naturally arises as to why these price differencesare not eliminated through arbitrage. Such large price differentialscould perhaps be dismissed as the product of exchange-rate misalignment,were they temporary, but their persistence suggeststhat they are the product of market closure. Indeed, one recentstudy concluded that Japanese manufactured imports might increaseby more than 20 percent if the price differentials were eliminated.These studies, which extrapolate well beyond the historical experienceand are therefore unavoidably imprecise, have reached a varietyof conclusions as to the importance of economic policy in determiningJapanese trade patterns. The preponderance of evidence,however, points to the closed nature of the Japanese market. Accordingto one recent comprehensive study, if Japan were to eliminateall formal and informal barriers to trade, U.S. exports toJapan would initially increase by somewhere in the range of $9 billionto $18 billion per year.It should be made clear, however, that even if these barrierswere eliminated, the bilateral balance would not change by this fullamount: Japanese imports would increase initially, but the resultantdepreciation of the yen and reallocation of resources wouldboost Japanese exports and reduce Japanese imports, at least partlyoffsetting the initial change in the balance. Moreover, liberalizationwould occur over an extended period of time, making it potentiallydifficult to disentangle changes in the balance due to liberalizationfrom those due to macroeconomic developments, even in retrospectbut this in no way diminishes the desirability of obtaining219

greater access to the Japanese market, though. With more-openmarkets not only will American firms sell more but, because of theexchange-rate adjustments, many American firms will receive morefor what they sell. Moreover, Japanese consumers will benefit—forthe same reasons that American consumers benefit—from openingtrade: Both will have access to a greater variety of goods at lowerprices. Open markets are a win-win situation in which both sidesgain.The existence of such a large, technologically dynamic, and distinctiveeconomy as Japan poses special trade problems for theUnited States. Current U.S. policy centers around the UnitedStates-Japan Framework for a New Economic Partnership, announcedin July 1993. The Framework is the successor to the1985-86 Market Oriented Sector Selective (MOSS) talks and theSII talks already mentioned. The Framework document adopted atthe time of the 1993 Tokyo economic summit calls for macroeconomic,sectoral, and structural reforms and cooperation on globalissues of common interest such as the environment. In particular,Japan committed itself to "actively pursue the medium-runobjectives of promoting strong and sustainable domestic demandledgrowth...intended to achieve...a highly significant decrease inits current account surplus...." Japan also committed to "promotinga significant increase in global imports of goods and services." Forits part, the United States "will...actively pursue the medium-termobjectives of substantially reducing the fiscal deficit, promoting domesticsaving, and strengthening its international competitiveness."The sectoral and structural parts of the talks are organized intofive baskets: government procurement, regulatory reform and competitiveness,other major sectors (in the first instance, automobilesand auto parts), economic harmonization, and implementation ofexisting arrangements and measures. Topics under the governmentprocurement basket include Japanese procurement practices insuch sectors as computers, supercomputers, satellites, medical technology,and telecommunications, as well as overall government procurementpolicies in both countries. Regulatory issues include policiesand practices relating to financial services, insurance, competitionpolicy, retail and wholesale distribution, and U.S. exportcompetitiveness. Economic harmonization covers foreign direct investment,intellectual property rights, access to technology, andlong-term buyer-supplier relationships. The implementation basketis concerned with carrying out existing agreements between thetwo countries (including SII). The Framework agreement explicitlystates that the United States and Japan are committed to the multilateraltrading system and that "benefits under this Frameworkwill be on a Most Favored Nation basis."220

The Framework represents a departure from previous negotiationsin two substantive ways. The first is the use of "objective criteria"to assess progress. The Framework agreement states that"assessment will be based upon sets of objective criteria, eitherqualitative or quantitative or both as appropriate," on which thetwo governments will agree. In this sense the negotiation is results-oriented,with both governments agreeing that "tangibleprogress must be achieved." By establishing objective criteria,progress can be independently verified, allowing negotiators toagree on those areas where problems have successfully been resolvedand to focus on those where progress is lacking.The other innovation of the Framework talks is procedural: Byexplicitly incorporating biannual meetings between the President ofthe United States and the Prime Minister of Japan, the Frameworkdramatically raises the political profile of the negotiations. Thehope is that this will significantly increase the pressure on policymakersto make steady progress on resolving outstanding issues.Trade with ChinaChina is also an important focus of U.S. trade policy because ofits size, its reforming economy, and its large trade surplus with theUnited States, which reached $18.3 billion in 1992.It is misleading to focus exclusively on China's bilateral balancewith the United States. Table 6-4 reports trade balances for China,Taiwan, and Hong Kong and aggregates them as "Greater China."It becomes apparent that the increase in the U.S. deficit withChina has been largely offset by declines in the U.S. deficits withTaiwan and Hong Kong. These developments are the result of largerealignments in exchange rates since the late 1980s that have encouragedfirms to relocate labor-intensive activities, such as theproduction of shoes, garments, and toys, from Hong Kong and Taiwanto China, where wage rates are lower. In other words, thegrowing U.S.-China trade imbalance represents in part a geographicreallocation of production, not a fundamental change inU.S. trade relations.With regard to China, U.S. trade policy centers on prison laborand workers' rights, intellectual property rights, market access,textiles, services, and the issue of China's most-favored-nation(MFN) status. In the area of intellectual property rights, the UnitedStates and China signed a memorandum of understanding inJanuary 1992. China agreed to provide product patent protectionbeginning January 1, 1993, and to adhere to international conventionson the protection of copyrights. A process has been establishedto enforce the memorandum, although there has been littleactual progress on enforcement thus far.In October 1992 the United States and China signed a marketaccess agreement, under which China committed itself to increase151-444 0 - 9 4 - 8221

the transparency of its trade regime, to remove import restrictionssuch as licensing requirements and quotas from hundreds of products,and to liberalize its import administration substantially. TheUnited States agreed to liberalize restrictions that limit Chineseaccess to technology, providing greater opportunities for U.S. producers.China is largely in compliance with the market accessagreement, although some issues remain unresolved with respectto transparency, quotas, and agricultural trade. The Administrationis continuing to push for greater access in these areas, as wellas for better access to the Chinese market for U.S. providers of financial,maritime, and air transport services.A memorandum of understanding on exports to the UnitedStates produced by prison labor was concluded in 1992 and providesfor prison inspections. China has begun to allow U.S. officialsaccess to prisons to investigate allegations, and there has been adecline in such allegations since the memorandum was signed.China continues to be denied coverage under investment guaranteesof the Overseas Private Investment Corporation, however.Coverage was suspended in 1990 on the grounds that China wasnot taking steps to extend internationally recognized workers'rights to its citizens.In the case of textiles, conflicts have arisen over China's shortcomingsin implementing the terms of the Multi-Fiber Arrangement,which regulates trade in textiles and apparel. Chinese producershave at times resorted to fraudulent practices to evade restrictionson Chinese exports of textiles and apparel to the UnitedStates. The most common technique has been to ship goods producedin China to third countries, and from there reexport them tothe United States under the third countries' quotas. In January1994 the United States and China reached a new agreement onthis issue. In the long run, the transshipment problem can besolved through China's entry into GATT and the tariffication of theU.S. import control system as envisioned in the Uruguay Roundagreement (discussed below). In the meantime, however, the UnitedStates will continue its two-track policy of negotiations with theChinese government combined with criminal prosecutions for customsfraud.The last major remaining U.S.-China issue is the annual renewalof China's MFN status. Under the terms of the Jackson-VanikAmendment to the Trade Act of 1974, MFN status can be extendedto nonmarket economies only if the President grants a waiver certifyingthat the country does not impede emigration. (The law wasoriginally designed to encourage the Soviet Union to permit theemigration of Soviet Jews.) China first gained MFN status in theU.S. market in 1980, and renewal was routine until the TiananmenSquare incident in 1989. Since then, renewal of China's MFN sta-222

tus has become increasingly controversial, with renewal in 1994tied explicitly to human rights improvements.In each trade area, the Administration is carefully monitoringChinese implementation of the bilateral agreements and will useall means at its disposal to ensure compliance. Successful implementationwill lay the foundation for Chinese accession to GATTand a far closer economic relationship between the United Statesand China.Trade and the Reform Process in the Former Socialist BlocAnother crucial focus of the Administration's foreign economicpolicy is support of the reform process in the countries of centraland eastern Europe and the former Soviet Union, especially Russia.Never before has a country of Russia's size and influence (with apopulation of 150 million, a large conventional military presence,and nuclear weapons) attempted such a rapid metamorphosis. Becauseof the immediate implications of Russian economic reform forworld peace, world economic growth, and the U.S. economy, thePresident has made support of the reforms one of his top foreignpolicy objectives. This involves both providing assistance to domesticreforms and facilitating the integration of Russia into the worldtrading system.Most of the fundamental issues in economic reform—includingliberalization (the freeing of prices), privatization (the transfer ofownership to private entities), and stabilization (the reduction ofinflation and the budget deficit)—are essentially Russia's domesticpolicy decisions. Nevertheless, outside organizations including theInternational Monetary Fund, the World Bank, the Group of Seven(G-7), and the U.S. Government have important roles to play. Indeed,along with its G—7 partners, the United States has been activelyassisting the cause of economic reform in Russia. In April1993 the G-7 pledged $15 billion of debt rescheduling and $28.4billion in other assistance. By the end of November over half of thistotal had been approved.Economic assistance packages such as the one presented inTokyo constitute a significant source of finance for reform policies.But Russian exports to the West represent another, perhaps evenmore important, source of hard-currency revenues. Because thetrade patterns of Russia and the other transitional economies wereformerly based on arbitrary central planning decisions, not marketforces, these countries have encountered difficulties in establishingnormal commercial relations with other countries. The transition toa market economy has involved dramatic changes in both the productcontent and geographical composition of trading patterns. Aftermost of these changes have been effected, Russia may be a substantialparticipant in world trade. Russia's share of U.S. trade isquite small (0.4 percent of total U.S. trade), but one study found223

that if the states of the former Soviet Union were like typical industrialeconomies, their share of world exports would eventuallyrise to over 10 percent, from around 4 percent in 1988. Through thefirst 9 months of 1993, Russia's two most important exports to theUnited States were aluminum ($326 million) and crude oil ($131million), which together accounted for more than 40 percent of thetotal.Expanding trade with economies in transition from socialismraises special problems for the application of U.S. antidumpinglaws, which divide the world into market and nonmarket economies(NMEs), with separate methodologies for assessing dumping specifiedfor each. (Russia, for example, is classified as an NME.) Formarket economies, dumping is determined to have occurred whena foreign producer charges lower prices in the U.S. than in itshome market (or, alternatively, prices below its costs in the homemarket). In the case of NMEs, since neither prices nor input costsare market determined, they are not used in dumping investigations.Instead, U.S. law instructs the Commerce Department toconstruct cost estimates based on costs in a "surrogate" country ata similar stage of development. In practice, the surrogates are oftenat quite dissimilar stages of development, thus potentially tiltingthe calculation toward finding large dumping margins. For example,the Department of Commerce has used Swiss, Canadian,Dutch, French, German, and Japanese producers as surrogates forChinese firms in antidumping petitions. Perhaps the best knownexample, however, is that of Polish golf carts, described in Box6—2.Box 6-2.—The Case of the Polish Golf CartsIn the mid-1970s an antidumping petition was filed againstPolish electric golf carts* Because Poland was an NME thathad no golf courses and therefore little domestic demand forgolf carts, the U.S. authorities rightly concluded that it wasimpossible to compare the prices at which the carts were soldin the United States with prices in Poland. Instead, the authoritiesemployed a surrogate-country approach: they attemptedto estimate what golf carts cost in a country similarto Poland. Canada was chosen. Unfortunately, Canada didn'tproduce golf carts either, so the final determination was basedon an estimate of what golf carts would have cost in Canada—if Canada had actually produced them.Reclassification of NMEs such as Russia as market economieswould not necessarily solve the problem, however, since they wouldthen become subject to U.S. countervailing duty law at a time224

when their subsidies to state-owned producers remain sizable. Asa result, either the market or the nonmarket methodology may impedeimports from economies in transition.This situation is particularly problematic since allowing Russiaand other economies in transition to export the goods in which theyhave comparative advantage benefits both these economies (whichobtain valuable hard-currency revenues as well as experience inworld markets) and Western nations (which obtain goods producedrelatively more efficiently than they can be produced in the West).Open market access is therefore a positive-sum means of encouragingthe reform process.REGIONAL INITIATIVESSome issues cannot be handled on a bilateral basis, and the Administrationhas been deeply engaged in a number of regional efforts.The most prominent of these has been the North AmericanFree Trade Agreement, which will solidify the ongoing reforms inMexico and help expand U.S.-Mexican trade.The North American Free Trade AgreementIn November 1993 the Congress ratified the North AmericanFree Trade Agreement, which went into effect on January 1, 1994.NAFTA creates a free-trade area of 370 million consumers and over$6.5 trillion of annual output, linking the United States to Canadaand Mexico, our largest and third-largest trading partners. Buildingon the earlier United States-Canada Free-Trade Agreement,NAFTA will contribute to productive efficiency, enhance the abilityof North American producers to compete globally, and raise thestandard of living of all three countries. By improving the investmentclimate in North America, and by providing innovative companieswith a larger market, NAFTA will also increase economicgrowth.NAFTA will help reinforce the market reforms already underway in Mexico (Box 6-3). Mexico's reforms have raised its rate ofeconomic growth, making it an increasingly important export marketfor the United States. A stable and prosperous Mexico is importantto the United States for both economic and geopolitical reasons.The United States shares a border roughly 2,000 miles longwith Mexico; and as economic opportunities in Mexico improve,Mexican workers will have fewer incentives to migrate to the UnitedStates. NAFTA will help forge a lasting relationship betweenthe two countries, based on open trade and cooperation.In addition to dismantling trade barriers in industrial goods,NAFTA includes agreements on services, investment, intellectualproperty rights, agriculture, and strengthening of trade rules.There are also side agreements on labor adjustment provisions,protection of the environment, and import surges.225

Box 6-3.—Mexican Economic ReformsMexico is one of the outstanding economic success stories ofthe last decade. After the debt crisis of 1982, the Mexican governmentbegan a broad program of economic reform, which hascontinued through the early 1990s. Fiscal policy changes,which moved the primary budget (that is, excluding interestpayments) from a deficit of about 7 percent of GDP in 1982 toa sustained surplus, were the first step. More-fundamental reformbegan in December 1987 when the Mexican governmentimplemented a concerted program that combined macroeconomicstabilization with microeconomic liberalization.Stabilization efforts in 1989-91 were pursued through a fiscalpolicy of tight spending controls and tax reform that broadenedthe tax base and lowered tax rates, while maintaining aroughly stable level of revenue. Monetary and exchange-ratepolicies were combined to reduce inflation while preventinglarge exchange-rate movements. Finally, incomes policies wereused to reduce expectations of inflation and any inflationaryinertia.The microeconomic reforms were sweeping. More than 80percent of the 1,155 public sector enterprises in existence in1982 have already been privatized or liquidated. Privatizationhas enhanced microeconomic efficiency and reduced the fiscaldemands imposed by badly run state-owned enterprises. In addition,Mexico joined GATT in 1986. Tariffs were cut sharplyand many nontariff barriers to trade, such as quotas and importlicenses, were removed. Finally, a renegotiation and restructuringof Mexico's external debt eased its debt burden andgreatly reduced the uncertainty associated with debt service.The results of these reforms have been impressive. Inflationfell from approximately 160 percent in 1987 to 12 percent in1992. At the same time, real GDP growth rose from -3.8 percentin 1986 to 4.5 percent in 1990 before slowing somewhatto 2.6 percent in 1992. The recent passage of NAFTA shouldstrengthen the reform effort in Mexico and make a positivecontribution to its economic performance in the future.NAFTA and Industrial Trade. As a result of NAFTA, existing dutieson most goods from member countries either were eliminatedon January 1, 1994, or will be phased out in 5 or 10 years (for certainsensitive items, up to 15 years). Among those industrial goodsfor which trade is now tariff-free are computers, medical equipment,agricultural equipment, internal combustion engines, andtelephone switches, all of which previously faced tariffs of 10 per-226

cent or more in the Mexican market. Approximately 65 percent ofU.S. industrial and agricultural exports to Mexico will be eligiblefor duty-free treatment within 5 years. NAFTA will also eliminatequotas and import licenses that are not essential for such purposesas protecting human health.NAFTA and Services Trade. NAFTA will allow U.S. service firmsto provide their services directly from the United States on a nondiscriminatorybasis, with any exceptions clearly spelled out. Forinvestors, NAFTA assures nondiscriminatory treatment: Americanswill generally be able to establish, acquire, and operate firms onthe same basis as Mexicans in Mexico and Canadians in Canada.NAFTA also protects U.S. investors against restrictions on their repatriationof capital, profits, and royalties, and against expropriationswithout full compensation. Investors can seek monetary relieffrom an international arbitral panel for violation of their rights.Virtually all types of inventions, including Pharmaceuticals andagricultural chemicals, are protected under NAFTA provisions thatrequire patents to be granted for both products and processes developedby firms in member countries. The agreement also protectscopyrights for computer programs and databases, and rental rightsfor computer programs and sound recordings. Service marks andtrade secrets are also covered, along with integrated circuit masksboth directly and as components of other products.NAFTA and Agricultural Trade. NAFTA will virtually eliminatebarriers to trade in agricultural commodities between the UnitedStates and Mexico over a 15-year period. All restrictions on productsrepresenting about 50 percent of U.S.-Mexico agriculturaltrade were lifted as soon as the agreement took effect. Productssuch as frozen beef, strawberries, and cut flowers—all of which previouslywere subject to tariffs of 20 percent or more in the Mexicanmarket—now trade tariff-free. For the remaining products, thephaseout will take between 5 and 15 years. The phaseout for mosttariffs imposed by the United States will simply involve an annualreduction in the tariff rate.In cases where the existing trade barrier is a nontariff barrier,such as an import license or quota, the phaseout process is morecomplicated. First, the license or quota will be replaced by a "tariffratequota," allowing a limited quantity of the good to be importedat a low (or zero) tariff rate, but charging a tariff for quantitiesabove the limit. Second, the tariff-rate quota will be phased outgradually over a 10- to 15-year period by increasing the quantitylimit and/or reducing the tariff rate applied to imports above thelimit.With respect to the other bilateral flows, U.S.-Canada trade liberalizationwill continue as specified under the earlier free-tradeagreement, with tariffs on all agricultural goods eliminated by227

1998, while nontariff barriers on a few products (poultry, eggs,dairy products, and sugar) are maintained. In a separate agreementunder NAFTA, Mexico and Canada will eliminate tariffs ontheir bilateral trade (except for the four products listed above). Allthree countries agreed to work for the elimination of agriculturalexports subsidies.As a consequence of these changes under NAFTA, U.S.-Mexicoagricultural trade is expected to grow significantly. U.S. corn growers,for example, can expect to export more corn to Mexico, whileMexican farmers can expect to export more fresh vegetables to theUntied States.NAFTA-Plus: The Side Agreements. The Clinton Administrationaccepted NAFTA as negotiated by its predecessor, but argued thatmore was needed. The result was the negotiation of three innovativeside agreements.The North American Agreement on Labor Cooperation representsthe first attempt to manage the terms of the potential change inlabor markets brought about by an accord between the UnitedStates and a trading partner. The agreement involves such issuesas restrictions on child labor, health and safety standards, andminimum wages. The supplemental labor agreement was developedaround three fundamental principles: (1) enhanced collaboration,cooperation, and information exchange among the three countries;(2) increased efforts to make each country's labor laws and theirimplementation explicit and highly visible; and (3) increased use ofeffective mechanisms to encourage the enforcement of nationallabor laws. The agreement establishes procedural mechanisms forenforcement, including channels of public communication, exchangesof information, discussion of issues, and various levels ofconsultations. If a solution cannot be reached, the agreement providesfor binding arbitration and assessment of penalties. In additionto signing the labor side agreement, the Mexican governmenthas pledged to link increases in the Mexican minimum wage toproductivity increases. Moreover, the United States has retainedits right to use its domestic trade laws, such as Section 301 of the1974 trade act, with respect to labor issues not covered underNAFTA.The North American Agreement on Environmental Cooperationexplicitly ensures our right to safeguard the environment. NAFTAmaintains all existing U.S. health, safety, and environmentalstandards. It allows States and cities to enact even tougher standards,while providing mechanisms to encourage all parties to harmonizetheir standards upward. The environmental side agreementcreates a new North American Commission on Environmental Cooperation,with a Council made up of the three countries' top environmentalofficials. The Commission will have a Secretariat with228

a permanent staff. There is a "layered" enforcement mechanism toensure that countries obey their own environmental laws. Themechanism starts with "sunshine" provisions that guarantee publicparticipation in monitoring the enforcement of environmental laws.Trade sanctions are then provided for, if other avenues are not sufficientto resolve disputes. Besides the Commission, two new institutionswill be established to fund and implement environmentalinfrastructure projects along the U.S.-Mexican border.The side agreement on import surges creates an early warningmechanism to identify those sectors where explosive trade growthmay do significant harm to domestic industry. The side agreementalso establishes that, in the future, a working group can provide forrevisions in the treaty text based on the experience with the existingsafeguard mechanisms.During the transition period, safeguard relief is available in theform of a temporary snapback to pre-NAFTA duties if an importsurge threatens serious injury to a domestic industry. And, unlessa NAFTA member's exports account for a substantial share of totalimports and contribute significantly to the injury or its threat,these exports must be excluded from safeguard actions taken byother members against imports from all countries.Other NAFTA Issues. NAFTA preserves the right of each memberto retain its own contingent protection laws (such as antidumpingand countervailing duty laws), but in reviewing determinationunder these laws, binational panels will replace domestic judicialreview (as in the case of the United States-Canada Free-TradeAgreement). The panel will apply to domestic law of the importingcountry, and its decision is final. Either the importing or the exportingcountry may request a review of a panel's determination.In other areas, such as intellectual property rights, dispute resolutionis layered. First, a country may request consultations, andshould these fail to resolve the dispute, it may call a meeting of theTrade Commission, which will include Ministers from each country.If the Commission is unable to resolve the dispute, it is submittedto an arbitral panel which issues a report. If the panel upholds thecomplaint, but the disputants are still unable to reach a resolution,the complaining country is authorized to suspend benefits as appropriate.The North American Development Bank (NADBank) was createdto address concerns about the environment and about worker dislocation.It will serve as a major lending institution to finance, coordinate,and implement environmental, infrastructure, and communitydevelopment projects, both along the border and elsewhere,related to continuing North American integration. NADBank willbe organized to invest specifically in the environmental, physical,and social infrastructure that will be needed to bring about an up-229

ward convergence in environmental and social standards and practicesbetween Mexico and the United States. In this way it will facilitatethe adjustment of workers adversely impacted by NAFTArelatedtrade liberalization. The bank will be capitalized to provide$2 billion to $3 billion in loans and guarantees and will be able toleverage additional private and public funds, to generate an estimatedtotal of $20 billion in project finance.The Economic Impact of NAFTA. NAFTA may be the most thoroughlystudied trade agreement in history. A review of the majorstudies of NAFTA's economic impact indicates a broad consensuson key points in the NAFTA debate: (1) All three NAFTA countriesgain from the agreement. (2) In the United States, labor will gainfrom increased employment, increased wages, or both. (3) Increasedinvestment in Mexico will not come at the expense of investmentin the United States. The few studies reaching contrary conclusionshave been strongly criticized by academic and other professionaleconomists.In a letter to the President, 286 academic economists, including13 Nobel Prize winners, expressed their support for NAFTA, stating,"While we may not agree on the precise employment impactof NAFTA, we do concur that the agreement will be a net positivefor the United States, both in terms of employment creation andoverall economic growth." Nineteen out of twenty studies surveyedfound that NAFTA would benefit the United States; the lone negativeassessment was based on the unrealistic assumption that factoriesliterally would be dismantled in the United States andmoved to Mexico.It has been estimated that the agreement will increase exportemployment in the United States by 200,000 jobs; on average Mexicanexport-related jobs pay wages 12 percent higher than the nationalaverage. Moreover, studies of NAFTA have found that gainswould occur even among groups sometimes alleged to be adverselyaffected. For example, it was found that union workers will benefitfrom NAFTA because the growing sectors of U.S. exports to Mexicoare disproportionately unionized. Likewise, African-American workersare more heavily concentrated in industries that export to Mexicothan in Mexican import-competing sectors. As a result, African-Americans too may benefit disproportionately from the agreement.Finally, by contributing to the creation of more and better jobs inMexico, NAFTA will discourage illegal immigration from Mexico tothe United States.In summary, NAFTA is an epochal agreement, and its passagewas a triumph of facts over fear. It is the world's first free-tradeagreement between industrial and developing countries. Its sideagreements embody innovative ideas to deal with environmentaland labor issues. The best available evidence shows that NAFTA230

will create good, high-paying jobs for American workers. It willstrengthen the ability of U.S. firms to compete in the global marketplace.It will help the Mexican and Canadian economies as well,providing a disincentive for illegal transborder migration and otherillegal activities. The Administration's trade policy can be describedas "export activism"—the United States will work actively to openforeign markets, and in return we will keep our market open.NAFTA is a key component of this activist strategy.Asia-Pacific Economic CooperationThe Asia-Pacific Economic Cooperation (APEC) was begun in1989 to encourage economic cooperation among countries of the Pacificregion. In the past quarter-century, the United States' APECpartners—Australia, Brunei, Canada, China, Hong Kong, Indonesia,Japan, Malaysia, Mexico, New Zealand, Papua New Guinea,the Philippines, the Republic of Korea, Singapore, Chinese Taipei(Taiwan), and Thailand—have increased their combined share ofworld income and trade by more than half (Box 6-4). These economiesnow account for more than half of all U.S. trade, or more thantriple U.S. trade with the European Union. Even if Canada andMexico are excluded from the calculation, U.S. trade with otherAPEC countries is 76 percent greater than our trade with the EUcountries.One consequence of this rapid growth is striking: as long as theAsian countries grow faster than the United States, they will becomemore important in our trade while we will become less importantin theirs. Therefore past trade strategies based on threats ofmarket closure are liable to become less and less effective.This analysis suggests that, to achieve its trade policy goals inthe region, the United States will increasingly have to act in concertwith other countries rather than unilaterally. Thus it may bedesirable to begin establishing the appropriate institutional infrastructurefor cooperation now, and APEC is the leading candidate.The United States held the rotating chairmanship of APEC in 1993and hosted the annual Ministerial meeting in Seattle in November,which was attended by economic policymakers from each of itsmembers. The President elevated the importance of APEC byhosting the first-ever meeting of APEC leaders in Seattle.At the APEC Ministerial meeting, a group of private individualspreviously commissioned by the APEC Ministers to serve as anEminent Persons Group presented its report. The report describedthe threats to trade and investment in the region and recommendedways to promote regional trade liberalization and cooperation.The Ministers indicated that those recommendationsclosely linked to ongoing work in APEC should be implementedpromptly. These include recommendations to achieve a common setof investment principles, harmonize standards, and create a mecha-231

Box 6-4.—The Asian "Miracle"Per capita gross national product (GNP) in East Asia grew,on average, by over 5 percent per year between 1965 and 1990.During the same period, per capita GNP in the industrializedcountries that make up the Organization for Economic Cooperationand Development (OECD) grew by less than 2.5 percentper year. What explains this relatively rapid growth inEast Asia? A recent World Bank book argues that a major partof the explanation is that the average OECD member wasmuch more technologically advanced than the average EastAsian country in 1965. By adopting and adapting techniquesfrom the industrial countries, the East Asian countries wereable to increase both productivity levels and per capita GNP ata rapid pace.This is undoubtedly true. But other countries that were poorin 1965 did not grow as fast as the successful East Asian nations.Why did East Asia experience faster growth? One keyfactor is almost certainly the macroeconomic environment: inflationand budget deficits were kept relatively low, and nationalcurrencies were kept from becoming overvalued. Macroeconomicpolicies encouraged, or at least did not discourage,high saving and investment rates as well as strong exportgrowth. Governments also emphasized education. The focuswas primarily on the quality of basic education, rather than onhigher education. As a result of these policies, East Asiancountries accumulated substantial physical and human capital,which spurred relatively rapid growth in GNP per capita.The impact of other, more interventionist policies on growthin several East Asian countries remains a source of controversy.Some government interventions in the market mayhave improved economic performance, particularly when theywere not excessively distortionary, were administered competently,were aimed at particular market imperfections, andwere adapted to meet changing circumstances*The Asian countries are expected to account for increasingshares of world income and trade. By 2000 it is likely that Asiawill have surpassed North America and Europe as the world'slargest economic zone. As its share of world income rises, sowill its share of world trade—the Asian share of U.S. trade isprojected to rise to 40 percent by the end of the decade.232

nism for resolving trade and investment disputes. Other recommendations,relating to deepening and broadening the UruguayRound of GATT, were singled out for additional study. The APECleaders instructed the Eminent Persons Group to elaborate on theirrecommendations relating to longer term trade liberalization in areport to be presented to the leaders in 1994 in Indonesia.MULTILATERAL INITIATIVES: THE URUGUAY ROUNDThe most far-reaching of the Administration's market-opening effortshas been on a global scale: the Uruguay Round negotiationsof GATT, whose 116 participating countries account for approximately85 percent of world trade. GATT was created after WorldWar II to reduce tariffs and remove nontariff barriers to internationaltrade. In seven rounds of GATT-sponsored multilateraltrade negotiations (the Uruguay Round is the eighth), the membercountries have lowered tariffs and agreed on codes of conduct fornontariff barriers.In the Uruguay Round negotiations, effectively completed on December15, 1993, the United States and other GATT membersagreed not only to lower tariffs on merchandise trade, but also tointegrate into GATT certain areas of trade and investment thathad not been subject to effective GATT discipline, including agriculture,textiles, trade in services, investment, and intellectualproperty rights. The Uruguay Round also made progress in reformingmultilateral dispute settlement procedures and other multilateraltrade rules, including those dealing with nontariff measures.The Congress is expected to ratify this agreement this year.The stakes in the Uruguay Round negotiations were enormous.In the short run, failure to complete the Round would have significantlyundermined business confidence around the globe and mighthave contributed to the erosion of the open trading system. In thelong run, the successful completion of the Round will mean a majorboost to the world economy. Preliminary studies suggest that thelikely gains to the U.S. economy alone are more than $100 billionbut less than $200 billion annually by 2005 (Box 6-5). These efficiencygains will manifest themselves in the form of more and betterjobs for American workers.The Round achieved major reductions in trade barriers facing industrialproducts. Key provisions of the market access agreementinclude the following:• Tariffs imposed by major industrial countries are to be eliminated,and those of many developing countries either eliminatedor sharply reduced, in the following areas: constructionequipment, agricultural equipment, medical equipment, steel,beer, distilled spirits, Pharmaceuticals, paper, toys, and furniture.233

Box 6-5.—The Economic Impact of the Uruguay RoundEven before the Uruguay Round was completed, researcherswere attempting to quantify its likely effects on the Americaneconomy. Studies based on existing formal economic modelsunanimously conclude that these effects will be beneficial. It isquite likely that new studies incorporating some of the Round'sfinal accomplishments in such areas as intellectual propertyprotection will yield even larger estimates of benefits.The Uruguay Round will increase American output becausethe specialization encouraged by more-open markets will raiseproductivity. As foreign markets open, we will produce more ofthe goods that make use of the highly skilled, highly productiveU.S. work force. Economic models offer a range of estimatesof the output gain from greater specialization. A recentOECD study estimates those gains to be 0.4 percent of GDP forthe United States. But this is almost certainly a gross under*estimate of the impact of the Round, because it ignored a hostof important factors, including gains from specialization withinthe manufacturing sector. Another study by World Bank andOECD economists estimates even smaller gains, but focuses onagriculture. Studies that more adequately capture gains fromspecialization suggest that the benefit to the U.S* economy islikely to be approximately 1 percent of GDP after the UruguayRound tariff cuts are fully phased in.Other important sources of benefit are not captured by theexisting models, which do not quantify the impact of trade liberalizationin services or enhanced protection of intellectualproperty rights. In addition, higher productivity will result inincreased investment and innovation, providing an importantadditional benefit. These additional gains are difficult to quantify,but they are almost certainly sizable and may even exceedthe more easily quantified gains. The total gain 10 years afterimplementation of the agreement begins is then likely to bemore than $100 billion but less than $200 billion annually.Major U.S. trading partners agreed to deep tariff cuts, rangingfrom 50 to 100 percent, on important electronics items includingsemiconductors, computer parts, and semiconductor manufacturingequipment.Tariffs of industrial and major developing countries on chemicalproducts are to be harmonized at very low rates (zero, 5.5,or 6.5 percent, according to product).The agreement significantly increased access to markets representingapproximately 85 percent of world trade by reducingtariffs on certain specific items of key interest to U.S. export-234

ers. Progress in textiles and apparel was particularly significant.For decades, international trade in textiles and apparelproducts has effectively been exempted from GATT rules. Instead,the Multi-Fiber Arrangement establishes a procedure forlimiting textile and apparel exports from developing to industrialcountries. Under the final Uruguay Round agreement,products covered by the Multi-Fiber Arrangement will be freeof quotas after 10 years, and textiles will be integrated intogeneral GATT rules. Tariffs will be reduced as well.Throughout the Uruguay Round negotiations, one of the mostcontentious issues was agricultural trade liberalization. The finalagreement on agriculture strengthens the long-term rules for agriculturaltrade and sharply limits national policies that distort thattrade. U.S. agricultural exports will benefit significantly from reductionsin foreign export subsidies and from market opening byour trading partners.The United States was successful in its effort to obtain meaningfulrules and explicit commitments to reduce export subsidies, cutdomestic subsidies, and increase market access. Agricultural exportsubsidies and trade-distorting domestic farm subsidies are not onlyto be reduced, but for the first time will be subject to explicit multilateraldisciplines. The United States also prevailed in establishingthe principle of comprehensive tariffication, which will lead to theeventual removal of all import quotas and other nontariff importbarriers. Nontariff barriers will first be replaced by tariffs, ensuringminimum or current access, and then these tariffs will graduallybe reduced.Progress in creating a more hospitable trading system for hightechnologyproducts was achieved on two fronts. First, the UnitedStates was able to win greater protection for intellectual propertyrights, such as patents, copyrights, and trademarks. This is veryimportant for a diverse set of U.S. industries, including the electronicsindustry (where semiconductor masks will be protected), thepharmaceutical industry (patents), and the communications industry(protection of copyrights).Second, the Uruguay Round agreement sets forth multilateralrules governing subsidies. Because of the beneficial social spilloversassociated with research and development activities, governmentsupport cannot and should not be ruled out altogether. The challengefor the multilateral trading system is to find rules that permitgovernments to support innovations that benefit all nationswhile precluding rent-shifting subsidies designed to benefit one nationat the expense of others. The Uruguay Round agreementmakes progress in this respect by establishing clearer rules andstronger disciplines in the subsidies area. It also makesnonactionable certain subsidies relating to basic research, regional235

development, and environmental cleanup, provided they are subjectto conditions designed to limit their distorting effects.Negotiators were able to agree on comprehensive GATT rulesgoverning trade and investment in services (the so-called GeneralAgreement on Trade in Services, or GATS), such as telecommunications,professional, and financial services. The agreement containsa strong national-treatment provision: Member countriesmust accord to service suppliers of other countries treatment noless favorable than that accorded their own suppliers. GATS alsoincludes a market access provision that incorporates disciplines ondiscriminatory measures that governments frequently impose tolimit competition. These measures include restrictions on the numberof firms allowed into the market, "economic need" tests, andmandatory local incorporation rules. Because of the breadth andcomplexity of these issues, not as much progress was made as wasdesirable. To realize additional progress, GATS establishes a proceduralframework for further negotiation.The Uruguay Round negotiations also yielded systematic prohibitionson trade-related investment measures. For example, theagreement prohibits so-called local content requirements, whichforce foreign firms to use a set amount of locally produced inputsas a condition for investment. It also prohibits "trade balancing" requirements,under which a foreign affiliate must export as much ofits production as it imports for use as inputs. These requirementshave bedeviled U.S. firms operating abroad in the past.Lastly, the Uruguay Round agreement prohibits so-called voluntaryexport restraints and other, similar measures that are oftenused as safeguards outside GATT rules. It also provides specifictime limits for the formation and operation of dispute settlementpanels and requires the automatic adoption of panel reports (exceptin the case of unanimous veto). Previously, any country, includingthe country against which the complaint was lodged, could effectivelyblock the implementation of a panel's decision. The new procedureswill greatly expedite the resolution of international tradedisputes. The members of GATT agreed to establish a new multilateralorganization, to be called the World Trade Organization(WTO), to enforce these new agreements.In summary, the U.S. negotiators in the Uruguay Round weresuccessful in negotiating broad-ranging multilateral trade liberalization.This was accomplished by reducing existing barriers andbringing areas of trade that had been largely outside the GATTsystem, such as agriculture, textiles, intellectual property, andservices, under the GATT rubric. At the same time, GATT procedureshave been strengthened to ensure that signatories meet theirobligations, without compromising our ability to implement our nationaltrade or other laws (Box 6-6). The liberalization of global236

trade resulting from these substantive and procedural achievementswill raise real incomes in the United States by billions ofdollars annually in the coming years.Box 6-6.—-The Uruguay Round and U.S. Trade LawsThe Uruguay Round final agreement contains a number ofprovisions that will enhance dispute resolution and facilitatebetter enforcement of U.S. rights. The agreement both movesGATT procedures closer to U.S. laws and complements U.S.laws for dealing with unfair foreign trade practices.Section 301 of the Trade Act of 1974 provides the basis foractions to enforce U.S, rights under trade agreements and torespond to foreign practices that impede or restrict U.S. exports.When disputes arise in areas covered by GATT* Section301 requires the United States to use GATT dispute resolutionprocedures before undertaking unilateral action. The UruguayRound brings agriculture, textiles, and services under GATTrules for the first time and enhances the speed and effectivenessof GATT dispute resolution procedures. As a result, theUnited States can now use GATT to accomplish objectives thatformerly required unilateral action. When disputes arise inareas outside the GATT framework, the United States can stilluse Section 301 to combat unfair foreign trade practices.The Uruguay Round brings GATT closer to U.S. practices inother areas. For example, in dealing with food safety measures,the Uruguay Round agreement allows countries to choose theirown levels of safety but requires that each country's standardshave a scientific basis and not be used as disguised trade barriers.Because U.S. laws already have a scientific basis, it isunlikely that they will be susceptible to challenge. Other countries,however, have used food safety regulations in an arbitrarymanner to block imports. The agreement adopts similarprovisions for dealing with technical barriers to trade, such asso-called conformity assessment procedures (registration, inspection,and laboratory accreditation procedures, among others)used to evaluate conformance with technical regulations.Antidumping is another area in which the post-UruguayRound GATT will become more like U.S. trade laws. The UnitedStates has a transparent process for implementing its antidumpinglaws. The Uruguay Round agreement will make foreignantidumping actions more transparent, which should helpU.S. exporters by improving the fairness of other countries'antidumping procedures.237

THE TRADE POLICY AGENDABy lowering tariffs and providing a framework for cooperation ininternational trade, GATT has contributed significantly to a moreharmonious world trading regime. But new issues in trade policyare coming to the fore as the world economy evolves. Among theimportant new issues confronting GATT and the new WTO will beissues relating to trade and the environment, competition policies,and regionalism.TRADE AND THE ENVIRONMENTTrade and environmental issues have become intertwined in recentyears. Some accuse GATT of being hostile to the environment,while others argue that some countries' environmental policies arethinly veiled protectionism. In reality, protectionism often contributesto environmental degradation by encouraging inappropriatepatterns of production. An obvious example is agricultural protection,which stimulates agricultural production in poorly suited locations.Farmers in these areas overuse chemicals or exhaust scarcewater resources to compensate for their natural disadvantages,thereby contributing to environmental degradation. Freer tradewould encourage more-appropriate patterns of production and improvethe environment even as it increased living standards.Standard economic analysis suggests offsetting government actionwhen prices fail to reflect environmental costs (Chapter 5). Buttrade restraints are rarely the best solution to environmental problems.If the environmental problem is limited to one country,domestic policies, not trade protection, should be employed. If pollutionor other environmental problems spill across borders, internationalrules and cooperation will be necessary. But here againtrade protection will seldom be the most effective remedy.Sometimes trade sanctions are used (or threatened) as a way toenforce environmental agreements. For example, the 1987Montreal Protocol, which seeks to reverse the depletion of theupper-atmosphere ozone layer caused by the release of chlorofluorocarbonsand other chemicals, requires trade actions againstcountries that do not abide by the environmental standards in theagreement. A second example is the Convention on InternationalTrade in Endangered Species of Wild Fauna and Flora (CITES),which aims to protect endangered species of wildlife by restrictingand monitoring their trade.During 1993, the possibility of using trade sanctions for environmentalpurposes was raised, pursuant to a recommendation ofCITES, in the case of trade by China and Taiwan in rhinoceros andtiger parts, and in regard to Norwegian whaling practices underthe Pelly Amendment to enforce the International Whaling Con-238

vention moratorium on whaling. In both cases, however, sanctionswere deferred.The founders of GATT could not have foreseen the present importanceof environmental problems. Some headway in harmonizingtrade and environmental concerns has already been made inthe environmental side agreement to NAFTA. And the preamble tothe agreement establishing the WTO recognizes the importance ofenvironmental concerns. The WTO negotiators have also agreed todevelop a work program on trade and the environment to ensurethe responsiveness of the multilateral trading system to environmentalobjectives.INTERNATIONAL TRADE AND COMPETITION POLICYAs tariff and nontariff barriers to trade fall and as nationaleconomies become more integrated into the world trading system,differences in national business practices and laws become moreimportant determinants of trade outcomes. Currently there are nomultilateral rules to redress possibly restrictive practices in theway companies compete—such as price fixing, price discrimination,and the preferential supplier and distributor relationships characteristicof Japan's keiretsu. Many nations, including the UnitedStates, rely on antitrust laws to prevent anticompetitive businesspractices by domestic firms in their domestic market.National antidumping laws are the most commonly used remedyin such circumstances. But unlike domestic antitrust laws, whichgenerally increase competition and lower prices, national antidumpinglaws sometimes reduce competition and raise prices. Bothin the United States and elsewhere, antidumping laws go beyondpreventing anticompetitive practices—which should be their rationale—andoften have the effect of protecting domestic industriesfrom foreign competition. For example, a recent study found that,during the Reagan Administration, nontariff barriers includingantidumping actions probably reduced U.S. manufactured importsby around a fifth—largely by discouraging foreign producers fromentering the U.S. market or by discouraging those that do exporthere from lowering their prices.If sound competition policies were present and effectively enforcedin more nations, and if such laws were more easily enforceableagainst foreign misconduct, they could serve as the first lineof defense against restrictive business practices by both domesticand foreign firms. The United States is currently pursuing thisgoal through such bilateral mechanisms as antitrust cooperationagreements.Here NAFTA is a step in the right direction. The agreement commitsits signatories to cooperate in the area of competition law enforcement,and imposes discipline on certain government-des-239

ignated monopolies. It also establishes a trilateral committee toconsider the relationship between trade and competition policy inthe NAFTA countries. Some other free-trade areas have gone further.For example, in the European Union and the Australia-NewZealand Free Trade Area, antidumping laws do not apply to tradeamong member countries, since this is considered internal trade,subject to organization-wide competition policies.Until there is greater convergence and international cooperationin the enforcement of antitrust laws against cross-border conduct,international disputes over unfair pricing between corporations ofdifferent national origins will often continue to play out in one oftwo ways: through the application of national competition laws,with the continuing difficulties associated with their internationalenforcement, or through the application of overly restrictive nationaltrade laws. As part of the Uruguay Round, the WTO Councilfor Trade in Goods will consider provisions on investment policyand competition policy in the future. The OECD is also pursuinga work program in this area.REGIONALISMAlthough there may be significant benefits to trade liberalizationon a regional basis, some nonmember countries could be hurtthrough trade and investment diversion, as trade and investmentare preferentially shifted from them to the member countries. Oneway to mitigate these concerns is for members of a free-trade areato move toward a customs union whose common external tariffwould match the lowest tariff within the region prior to the formationof the customs union. Another possibility would be to open regionalarrangements to new members. It has also been suggestedthat GATT rules be amended to allow compensation fornonmembers hurt by regional liberalization agreements. These andother proposals to deal with regional free-trade associations mayneed to be discussed in GATT in order to preserve the benefits ofregional trade liberalization while addressing the concerns of outsiders.FOREIGN EXCHANGE MARKETDEVELOPMENTSThe international value of the dollar, as measured by its tradeweightedaverage exchange rate, rose by an astonishing 50 percentbetween the end of 1980 and early 1985. By mid-1988, however,the dollar had returned to its 1980 level, and since then it has continuedon a slight downward trend, with much narrower fluctuationsthan earlier in the 1980s. The large appreciation and subsequentdepreciation of the dollar had a marked impact on the com-240

petitive position of U.S. firms. Had they been offset by differencesbetween the inflation rates of the United States and its tradingpartners, these large swings in the value of the dollar would havehad no impact on our competitiveness. Inflation differentials, however,were much smaller than the exchange-rate swings. As a result,the dollar appreciated and then depreciated in both real andnominal terms by roughly equal amounts.Chart 6-3 shows indexes of the value of the dollar relative to thecurrencies of our major trading partners. In addition to the nominaleffective exchange rate, which does not adjust for inflation differences,the chart shows two measures of the real effective exchangerate: one in which relative consumer prices are used for theinflation adjustment, and one in which relative unit labor costs areused. The chart clearly demonstrates the high correlation betweennominal and real exchange-rate movements since 1980. In addition,the chart shows that relative unit labor costs in manufacturinghave declined sharply since their 1985 peak. Partly as a result,U.S. manufacturing firms have become extremely competitive inworld markets.Chart 6-3 Nominal and Real Effective Dollar Exchange RatesThe value of the dollar has been more stable in the 1990s than during the 1980s.Index, 1985=100120110 ~1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993Real effective Relative unit labor Nominal effectiveexchange rate costs (manufacturing) exchange rateNote: Indexes are based on units of foreign currency per U.S. dollar. A decline in any of the indexes indicatesfalling relative costs and increasing competitiveness.Source: International Monetary Fund.241

The dollar ended 1993 roughly where it began. After risingsharply in the second half of 1992, it varied in a narrow range in1993 (Chart 6-4). The relatively small movements in the dollar'seffective exchange rate masked considerable changes in the valueof the dollar relative to individual currencies, however. The U.S.dollar rose relative to the Canadian dollar and most continentalEuropean currencies but declined sharply relative to the yen.Chart 6-4 Exchange Rates of the Dollar Against Selected CurrenciesThe dollar strengthened against the Canadian and German currencies after mid-1992but weakened against the yen.Index, January 1992=100120115 -Canadian $110 -105 -100 -f/-y^^^^K /iv^Effective^..r.^.yN~^T \/^ 1xN ^jN/DM95 -90 -85 -\ /\ /\ /\ /\ _ JYen80I1992 1993Note: Indexes are based on units of foreign currency per U.S. dollar.Source: International Monetary Fund.1The appreciation of the dollar relative to the European currenciesoccurred despite low short-term and falling (until November) longterminterest rates in the United States. Since low and falling interestrates are frequently associated with currency depreciations,this may at first appear puzzling. The decline in European interestrates during 1993 explains the apparent puzzle.The stability of the dollar and the cyclical behavior of the Japaneseand European economies are important in understanding thelikely impact of the President's deficit reduction package on theU.S. current account. As Chapter 2 points out, deficit reduction isgenerally associated with an increase in net exports. This expansionin net exports provides a stimulus that partially offsets theimpact of spending cuts and tax increases on domestic demand.242

The weakness in the economies of our major trading partners has,on the other hand, reduced demand for U.S. exports. Some of theboost to export demand that can be expected to result from the deficitreduction package may therefore be delayed until economic activitypicks up in Europe and Japan. But by 1995 export demandshould begin to rise.THE EUROPEAN MONETARY SYSTEMThe European Monetary System (EMS) was created in March1979 to limit exchange-rate variability among the European currencies(Box 6-7). A majority of countries in the EMS agreed toparticipate in the system's Exchange Rate Mechanism (ERM),under which most member countries were required to maintaintheir exchange rates within 2.25 percent of "central rates" betweentheir currency and each of the other members' currencies. When anexchange rate between two members' currencies moves to the limitsof the band, both central banks are required to intervene to preventthe exchange rate from moving outside the band. In the eventof irresistible pressure on a member country's exchange rate,realignments of the country's central rate are permitted.Inflation in most European economies declined by the mid-1980s,moving toward the rates of Germany and the Netherlands. Countriesconcentrated on maintaining their parities with respect to thedeutsche mark, since Germany had for historical reasons establishedan unwavering commitment to price stability. Increasingly,then, the deutsche mark became the monetary anchor for the EMS.By linking their monetary policies to German policy, other ERMmembers brought their inflation rates down. French inflation, forexample, declined from over 10 percent at the start of the 1980sto under 3 percent in 1992.To some observers, the disinflation achieved within the EMShighlights an important rationale for pegging exchange rates. Analternative view holds that disinflation was not simply a productof the EMS but was worldwide in scope. During the 1980s, for example,inflation also declined in the United Kingdom, which didnot join the ERM until 1990, and in the United States and Canada.So perhaps the relative stability of EMS parities in recent yearswas as much the result as the cause of a convergence in inflationrates.Realignments took place relatively frequently in the first yearsof the EMS but not thereafter. Between 1979 and 1987 there were11 realignments; these tended to be small as well as frequent andthereby occurred without major crises. After January 1987, essentiallyno realignments took place until September 1992.243

Box 6-7.—Exchange-Rate Volatility and International TradeProponents of the ERM argue that stabilizing exchange ratesis important for expanding trade. Exchange-rate volatility,they argue, is a source of uncertainty to firms engaging intrade because it adds volatility to the domestic currency valueof future foreign currency transactions. Firms therefore facegreater uncertainty in revenues and profits from foreign saleswhen exchange rates are more volatile. This added uncertainty,it is claimed, discourages firms from engaging in tradeand from making the investments that support trade.Such claims seem plausible, but they enjoy little empiricalsupport. The volume of U.S. trade did grow slightly faster between1950 and 1971, when the dollar was fixed, than between1973 and 1993, when the dollar floated. Relative to GDP, however,trade volumes grew more quickly in the second period. Inaddition, studies that have examined the extent to whichgreater exchange-rate volatility inhibits trade flows have generallyfailed to find a robust relationship. One possible explanationis that financial markets provide firms with riskmanagement tools that can be used to hedge exchange-ratemovements. For example, a firm can buy currencies forward tofix the domestic currency value of future payments. Whateverthe explanation, it is difficult to find empirical support for anadverse impact of exchange-rate volatility on trade volumes.THE EUROPEAN CURRENCIES IN TURMOILThe EMS has experienced a series of crises since the summer of1992. Germany adopted tight monetary policies in response to inflationarypressures that arose following German reunification in1990. As a result, German short-term interest rates, which hadbeen rising since 1988, continued to rise, reaching nearly 10 percentby the summer of 1992.German policy, in turn, created a dilemma for other ERM participants.Maintaining fixed parities with the deutsche mark requiredthem to tighten monetary policy despite stagnating or decliningoutput, rising unemployment, and low rates of inflation.When investors are free to choose among assets denominated indifferent currencies, the rates of return they expect to receive forcomparable degrees of risk cannot vary too far from one currencyto another. Expected exchange-rate changes are important in determiningexpected rates of return on assets denominated in differentcurrencies. If, for example, investors expect the French franc to depreciaterelative to the deutsche mark, they will move funds fromFrench franc deposits into deutsche mark deposits unless they are244

compensated by a higher franc interest rate. Thus interest rates onfranc-denominated assets would have to rise above the interest rateon deutsche mark assets to prevent sustained flows of capital outof franc assets and into deutsche mark assets.Speculative pressures motivated by the possibility of a change inparities precipitated a crisis in September 1992. In the UnitedKingdom, where output had declined by more than 4 percent fromits previous peak and the unemployment rate had topped 10 percent,pressure increased to realign or to drop out of the EMS sothat interest rates could be lowered. Finland and Sweden, althoughnot formal participants in the ERM, had been unilaterally maintainingpegged exchange rates, and so faced similar dilemmas astheir economies went through deep and prolonged recessions. InSeptember 1992, Finland, the United Kingdom, and Italy decidedto allow their currencies to float, with the last two effectively leavingthe ERM. Sweden followed in November. Spain, Portugal, andIreland all devalued within the ERM between September 1992 andJanuary 1993.A second crisis erupted in mid-July 1993, following additionalsigns of growing slack in the European economies. Massive speculativecapital flows occurred. Belgium, Denmark, France, and Portugalall raised interest rates and intervened heavily to defendtheir currencies. Nonetheless, the Belgian franc, the French franc,and the Danish krone dropped through their ERM floors. Sellingpressures on these currencies continued, and on August 2, 1993,the countries participating in the ERM decided to widen the bandsaround the (unchanged) central parities to ±15 percent (Chart 6-5). (A separate agreement maintains bands of ±2.25 percent for thedeutsche mark and the Dutch guilder.) Since all currencies werewell within the wider bands, central banks were not obliged to interveneand the speculative crisis stopped.The wider bands allow the participating countries much greaterlatitude to change interest rates independently. For the most part,however, the authorities have not used this ability to push interestrates down. Instead, they have sought to maintain relatively stableexchange rates with the deutsche mark and have cut interest ratesonly in parallel with Germany. By the end of 1993 the Belgian,Danish, French, Portuguese, and Spanish currencies were within ornear the old ERM limits relative to the deutsche mark. The UnitedKingdom aggressively cut interest rates after leaving the ERM inSeptember 1992.THE MAASTRICHT TREATY ON ECONOMIC ANDMONETARY UNIONIn the Maastricht Treaty of 1991, the members of the EuropeanCommunity agreed to replace the EMS with an Economic and Mon-245

Chart 6-5 French Franc-Deutsche Mark Exchange RatesLast summer's exchange-rate crisis precipitated a widening of the ExchangeRate Mechanism's intervention bands.Francs per DM4.03.8 -Upper intervention limit3.6 -September 16-17, 1992:Pound and lira leave ERMAugust 2, 1993:Bands widened \December 8, 1993:Franc returns tonarrow bands3.4 -3.23.0Lower intervention limit2.81992 1993Note: The Exchange Rate Mechanism prescribes intervention bands for participating members ofthe European Monetary System.Sources: Council of Economic Advisers and Board of Governors of the Federal Reserve System.etary Union (EMU), a common currency, and a European CentralBank overseeing a single monetary policy. Under the treaty,progress toward EMU would take place in stages, with the finalstage—under which exchange rates are fixed irrevocably—comingno later than 1999.The treaty establishes conditions for implementing a commoncurrency and monetary policy (Box 6-8). As of late 1993, no countryin the European Union met these conditions. With reunificationswelling its public sector deficit, even Germany failed to meet thecriteria.The process of ratifying the Maastricht Treaty was completed in1993, although the timing of full implementation will depend inpart on the achievement of the agreed conditions. In May 1993,Danish voters reversed the outcome of the previous year's referendumand accepted the treaty. The British House of Commons thenapproved the treaty in July. The final steps in the ratification processwere completed when court challenges to the treaty failed inJuly in the United Kingdom and in October in Germany. TheMaastricht Treaty entered into force on November 1, 1993, creatingthe European Union.246

Box 6-8.—Criteria for Joining the Economic and MonetaryUnionCountries acceding to EMU must meet several strict criteria:• The entering country's inflation rate must not exceed theaverage of the lowest three members' rates by more than1.5 percentage points.• Its interest rate on long-term government bonds cannotexceed those of the three lowest-inflation members bymore than 2 percentage points.• The country's general-government budget deficit mustnot exceed 3 percent of GDP, and outstanding governmentdebt must not exceed 60 percent of GDP.• For at least 2 years, the country's currency must haveremained within its narrow ERM band without realignment.Shortly after completing the ratification process, the EU countriesselected Frankfurt as the home of the new European MonetaryInstitute, the forerunner of the European Central Bank. Despitetheir failure to complete the first stage (bringing all countrieswithin narrow ERM bands), the EU countries are proceeding withthe timetable set out in the Maastricht Treaty.CONCLUSIONSThe year 1993 proved to be the most important year for Americantrade policy in half a century, thanks to developments thatvastly increased the prospects for free and open trade.During the past year, the Administration completed two landmarknegotiations. The first created a North American Free TradeArea encompassing the United States, Canada, and Mexico. Inmany respects this agreement is historically unprecedented: It isthe first free-trade agreement between industrialized and developingcountries; it is the first trade agreement to incorporate environmentalprovisions explicitly; and it contains technical innovationsin areas such as dispute settlement that may become models forthe global trade regime.The Administration did not stop there, however. It also led a successfulconclusion of the Uruguay Round of GATT, the most farreachingglobal trade agreement in history. This agreement will reducetrade barriers, protect the legitimate interests of U.S. producersin areas such as intellectual property rights where none existedbefore, and bring areas of trade such as agriculture and textilesinto the multilateral system for the first time.247

Besides bringing these endeavors to fruition, the Administrationlaunched several new trade initiatives and breathed new life intosome old ones. The Administration made major progress in establishingAPEC as a prominent forum for advancing our interests inthe critical Asia-Pacific region. In addition, the United Statesreached a new bilateral agreement with Japan. Complementing thenew international initiatives, the Administration also launched anew National Export Strategy to promote American exports.This Administration understands that expanding trade relationsare not only inevitable but critical to the future health of the U.S.economy. It is determined to ensure that the growing interdependencewith our trading partners brings benefits to the United States.To this end the United States Government is committed to act unilaterally,bilaterally, regionally, plurilaterally, and globally to openmarkets to maintain the ability of U.S. firms to compete aroundthe world. Through increasing integration into the global economy,we can achieve ever-rising living standards for all of our people.248

Appendix AREPORT TO THE PRESIDENT ON THE ACTIVITIESOF THECOUNCIL OF ECONOMIC ADVISERS DURING 1993

LETTER OF TRANSMITTALCOUNCIL OF ECONOMIC ADVISERSWashington, B.C., December 31, 1993MR. PRESIDENT:The Council of Economic Advisers submits this report on itsactivities during the calendar year 1993 in accordance with therequirements of the Congress, as set forth in section 10(d) of theEmployment Act of 1946 as amended by the Full Employment andBalanced Growth Act of 1978.Sincerely,Laura D'Andrea Tyson, ChairAlan S. Blinder, MemberJoseph E. Stiglitz, Member251

Council Members and their Dates of ServiceNamePositionOath of office dateSeparation dateidwin G NourseLeon H. KeyserlingJohn D. ClarkRoy BlcughRobert C. Turner\rthur F. BurnsNeil H. JacobyWalter W. StewartRaymond J. SaulnierJoseph S. DavisPaul W. McCrackenKarl BrandtHenry C. WallichWalter W. HellerJames TobinKermit GordonGardner AckleyJohn P. LewisOtto EcksteinArthur M. OkunJames S. DuesenberryMerton J. PeckWarren L SmithPaul W. McCrackenHendrik S. HouthakkerHerbert SteinEzra SoiomonMarina v.N. WhitmanGary L. SeeversWilliam J. FellnerAlan GreenspanPaul W. MacAvoyBurton G. MalkielCharles L. SchultzeWilliam D. NordhausLyle E. GramleyGeorge C. EadsStephen M. GoldfeldMurray L. WeidenbaumWilliam A. NiskanenJerry L. JordanMartin FeldsteinWilliam PooleBeryl W. SprinkelThomas Gale MooreMichael L. MussaMichael J. BoskinJohn B. TaylorRichard L SchmalenseeDavid F. BradfordPaul WonnacottLaura D'Andrea TysonAlan S. BlinderJoseph E. StiglitzChairmanVice ChairmanActing ChairmanChairmanMemberVice ChairmanMemberMemberChairmanMemberMemberMemberChairmanMemberMemberMemberMemberChairmanMemberMemberMemberChairmanMemberMemberMemberChairmanMemberMemberMemberChairmanMemberMemberChairmanMemberMemberMemberMemberChairmanMemberMemberChairmanMemberMemberMemberMemberChairmanMemberMemberChairmanMemberChairmanMemberMemberChairmanMemberMemberMemberMemberChairMemberMemberAugust 9, 1946August 9, 1946November 2, 1949May 10, 1950August 9, 1946May 10, 1950June 29, 1950September8, 1952March 19, 1953September 15, 1953December 2 1953April 4, 1955December 3, 1956May 2, 1955December 3, 1956November 1, 1958May 7, 1959January 29, 1961January 29, 1961January 29, 1961August 3, 1962November 16, 1964May 17, 1963September 2, 1964November 16, 1964February 15, 1968February 2, 1966February 15, 1968July 1 1968February 4, 1969February 4, 1969February 4, 1969January 1, 1972September 9 1971March 13, 1972July 23, 1973October 31, 1973September 4, 1974June 13, 1975July 22, 1975January 22, 1977March 18, 1977March 18, 1977June 6, 1979August 20, 1980February 27, 1981June 12, 1981July 14, 1981October 14, 1982December 10 1982April 18, 1985July 1, 1985August 18, 1986February 2, 1989June 9, 1989October 3, 1989November 13, 1991November 13, 1991February 5, 1993July 27, 1993July 27, 1993November 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 1969December 31, 1971.July 15, 1971.August 31, 1974.March 26 1973August 15, 1973.April 15, 1975.February 25, 1975.January 20, 1977.November 15, 1976.January 20, 1977.January 20, 1981.February 4, 1979.May 27, 1980.January 20, 1981.January 20, 1981.August 25, 1982.March 30, 1985.July 31, 1982.July 10, 1984.January 20, 1985.January 20, 1989.May 1, 1989.September 19, 1988.January 12, 1993.August 2, 1991June 21, 1991January 20, 1993.January 20, 1993.252

Report to the President on the Activities of theCouncil of Economic Advisers During 1993The Statutory Mission of the CouncilThe Council of Economic Advisers was established by the EmploymentAct of 1946 to provide the President with objective economicanalysis and advice on the development and implementationof a wide range of domestic and international economic policy issues.The Chair of the CouncilThe inauguration of President Clinton brought changes to themembership of the Council of Economic Advisers. In February1993, Laura D'Andrea Tyson was appointed Chair of the Counciland a Member of the President's Cabinet. Dr. Tyson is on leavefrom the University of California, Berkeley, where she is Professorof Economics and Business Administration and Research Directorof the Berkeley Roundtable on the International Economy. AsChair of the Council, Dr. Tyson is responsible for communicatingthe Council's views on economic developments to the Presidentthrough personal discussions and written reports. She is the Council'schief public spokesperson.Dr. Tyson represents the Council at Cabinet meetings and variousother high-level meetings including those of the National SecurityCouncil focusing on economic issues, daily White House seniorstaff meetings, budget team meetings with the President, andmany other formal and informal meetings with the President, seniorWhite House staff, and other senior government officials.Dr. Tyson is one of six members of the Principals Committee of thenewly established National Economic Council and is a member ofthe Domestic Policy Council. She guides the work of the Council ofEconomic Advisers and exercises ultimate responsibility for thework of the professional staff. Dr. Tyson succeeded Michael J.Boskin, who returned to Stanford University, where he is theFriedman Professor of Economics; he is also a Senior Fellow at theHoover Institution on War, Revolution and Peace.151-444 O - 94 - 9253

The Members of the CouncilAlan S. Blinder and Joseph E. Stiglitz are the other new Membersof the Council of Economic Advisers. They succeeded PaulWonnacott, who is now a Senior Fellow at the Institute for InternationalEconomics, and David F. Bradford, who returned toPrinceton University. Dr. Blinder is on leave from Princeton Universitywhere he is the Gordon S. Rentschler Memorial Professorof Economics. Dr. Stiglitz is on leave from Stanford Universitywhere he is the Joan Kenney Professor of Economics. Members ofthe Council are involved in the full range of issues within theCouncil's purview and are responsible for the daily supervision ofthe work of the professional staff. Members represent the Councilat a wide variety of interagency and international meetings and assumemgyor responsibility for selecting issues for the Council's attention.The small size of the Council permits the Chair and Members towork as a team on most policy issues. The Chair works on thewhole range of economic issues under the Council's purview. Therecontinues to be, however, an informal division of subject matteramong the Members. Dr. Stiglitz is primarily responsible for microeconomicand sectoral analysis and regulatory issues. Dr. Blinderis primarily responsible for domestic and international macroeconomicanalysis and economic projections. All three Members,under Dr. Tyson's lead, are heavily involved in international tradeissues and participate in the deliberations of the National EconomicCouncil.MACROECONOMIC POLICIESThe Council advised the President on all major macroeconomicissues in 1993. The Council prepared for the President, the VicePresident, and the White House senior staff a comprehensive seriesof memoranda on the statistical releases that help monitor U.S.economic activity. It also prepared special analyses of economic policyissues and briefing papers on significant economic events, suchas the 1993 floods in the Midwest (and the earthquake in southernCalifornia early in 1994).The Council participated in discussions of macroeconomic policyissues with officials from the Department of the Treasury, the Officeof Management and Budget (OMB), and other members of thePresident's economic policy team. It was a leading participant inthe formulation of the Administration's economic policies throughvarious Cabinet and sub-Cabinet working groups. The Council alsoplayed an important role in setting priorities within the fiscal 1994and 1995 budgets.The Council analyzed the macroeconomic effects of all major Administrationpolicy proposals, including the President's deficit re-254

duction budget package, the North American Free Trade Agreement,and the Uruguay Round of the General Agreement on Tariffsand Trade (GATT). In addition, the Council carefully monitored theresponse of the interest-sensitive sectors of the economy to thesharp reduction in long-term interest rates that followed the proposaland enactment of the President's deficit reduction plan.The Council, the Department of the Treasury, and the OMB—theeconomic "Troika"—produced the economic forecasts that underliethe Administration's budget projections. Dr. Blinder, in collaborationwith Dr. Tyson and Council senior economists, led this forecastingeffort. Two official forecasts are released each year. Thefirst is published early in the year and is relied upon for the President'sbudget calculations. An update is then published in the summeras part of the Administration's mid-session budget review. Inpreparing its forecasts, the Troika took particular care to presenteconomic assumptions that were not unduly optimistic so as tomaintain the credibility of the Administration's budget projectionsand its economic plan. Leading private sector forecasters visitedthe Council before the forecasting rounds to share their views onthe economic outlook.The Council worked to improve the public's understanding of economicissues and the quality of economic information through regularbriefings with the White House financial and general presscorps, periodic discussions with distinguished outside economists,and meetings with leading business executives. The Chair and theother Members made numerous presentations to outside organizationsto explain the Administration's economic strategy and policies.Dr. Tyson, Dr. Blinder, and Dr. Stiglitz regularly exchangedinformation and met with the Chairman and Members of the Boardof Governors of the Federal Reserve System to discuss the economicoutlook and monetary policy.Finally, the Council worked to improve the quality of governmenteconomic statistics. The Council urged increased funding for economicand demographic statistics in interagency discussions and indeliberations over Federal budget priorities.INTERNATIONAL ECONOMIC POLICIESInternational economic issues were a high priority for the Councilin 1993. All three Members continued the Council's active rolein the Organization of Economic Cooperation and Development(OECD). Dr. Tyson attended the OECD's Economic Policy Committeemeeting in Paris in May and served as its Acting Chair in November.Dr. Blinder led the U.S. delegation to the OECD to assessU.S. economic policy and was a member of the U.S. delegation toOECD Working Party 3 on macroeconomic policy coordination.Dr. Stiglitz headed the U.S. delegation to OECD Working Party 1meetings on microeconomic and structural issues. Senior staff255

members represented the Council at the semiannual Short-TermEconomic Projections meetings at the OECD in Paris, and at theannual Asia-Pacific Economic Experts Meeting in Sydney. The goalof these meetings was to support the coordination of macroeconomicpolicies to promote economic growth. The Chair and theother Members helped formulate Administration policies thatbrought to completion two major trade agreements, the NorthAmerican Free Trade Agreement and the Uruguay Round of GATT,and provided economic analyses of the implications of those agreementsfor the U.S. economy. The Council also participated in formulatingother Administration policies in the international arena,including such important initiatives as the National Export Strategy,and the ongoing evaluation of the economic relationship betweenthe United States and the People's Republic of China.Dr. Tyson and Dr. Blinder were deeply involved in the negotiationsof the United States-Japan Framework for a New EconomicPartnership, with Dr. Blinder making two trips to Japan as partof the negotiations. The Council also engaged in discussions withJapan's Economic Planning Agency on the current account imbalancesand other macroeconomic issues. The Council was involvedthroughout the year in Administration policies for advancing economicreform in the former Soviet Union. Dr. Stiglitz traveled toRussia and Ukraine and established an official relationship withthe Russian Government's Working Center for Economic Reform.The Council provided the President with regular briefings oninternational developments and was particularly active in the preparationsfor the Asia-Pacific Economic Cooperation (APEC) Ministerialmeeting and the first-ever APEC leaders' meeting hosted bythe President in Seattle.MICROECONOMIC POLICIESThe Council was an active participant in a broad range of Administrationmicroeconomic initiatives in 1993. Dr. Tyson and theSecretary of Transportation jointly led the Administration's WorkingGroup on Aviation, which developed the Administration's CivilAviation Initiative. At the request of the President, Dr. Tyson alsoserved on the National Commission for a Strong, Competitive AirlineIndustry. The Council also assisted in the development of theAdministration's Domestic Natural Gas and Oil Initiative, issuedby the Department of Energy.Dr. Stiglitz played an important role in the development of twoExecutive Orders—one on regulatory planning and review and anotheron the Nation's infrastructure. Each order directs executivebranch agencies to rely upon cost-benefit analysis when identifyingappropriate regulatory approaches and when determining which infrastructureprojects should be undertaken. Dr. Stiglitz also servesas co-chair of a committee of the Administration's Regulatory256

Working Group studying cost-benefit analysis methodology and heparticipated in a number of working groups on financial marketsand economic development. Dr. Tyson and Dr. Stiglitz are alsoworking closely with the Vice President and other Administrationofficials in developing legislative proposals for telecommunicationsregulation. In addition, Dr. Tyson and the other Members are involvedin analyzing various proposals for bank regulatory agencyconsolidation.Dr. Tyson was a member of the Health Care Task Force headedby the First Lady and the Council was deeply involved with thehealth care reform effort over the past year, especially in analyzingthe economic effects of reform options. The Council also helped developthe tax, empowerment zone, and enterprise communities provisionsof the 1993 Omnibus Budget Reconciliation Act (OBRA). Dr.Tyson is a member of the President's Community EnterpriseBoard. In addition, the Council participated in the development ofthe Administration's work force security and welfare reform initiativesand in the design of the Administration's defense reinvestmentinitiative. Dr. Tyson was appointed a member of the President'sNational Science and Technology Council and was appointedthe Administration's representative on the Competitiveness PolicyCouncil. Dr. Tyson and Dr. Stiglitz both served on the Administration'sWelfare Reform Task Force.Dr. Stiglitz was particularly active in the Administration's environmentalpolicymaking efforts. He chaired the Subcommittee onEconomics Research on Natural Resources and Environment, createdto identify key research areas in economics common to manyenvironmental quality and natural resource management issues.He has also been actively involved in developing the Administration'sproposals for Superfund reauthorization, Clean Water Act reauthorization,and the President's Climate Change Action Plan.WEEKLY ECONOMIC BRIEFINGSDr. Tyson conducts a weekly economic briefing for the President,the Vice President, and the President's other senior economic andpolicy advisers. Dr. Blinder and Dr. Stiglitz also attend. The Council,in cooperation with the Office of the Vice President, preparesa written Weekly Economic Briefing of the President, which servesas the basis for the oral briefing. The briefing includes analysis ofcurrent economic developments, more extended treatments of awide range of economic issues and problems, and summaries ofnews on different regions and sectors of the economy.The Staff of the Council of Economic AdvisersThe professional staff of the Council consists of the Chief of Staff,the Senior Statistician, fourteen senior economists, six staff econo-257

mists, and two research assistants. The professional staff and theirareas of concentration at the end of 1993 were:Jonathan B. BakerDavid M. CutlerRobert E. CumbyWilliam T. DickensConstance R. DunhamWarren E. FarbSally M. KaneAlan J. KrupnickErik R. LichtenbergMark J. MazurMarcus NolandMatthew D. ShapiroJay S. StowskyRobert F. WescottKevin C. MurdockKimberly J. O'NeillPeter R. OrszagJeremy B. RuddElizabeth A. SchneirovDarryl S. WillsChief of StaffThomas P. O'DonnellSenior EconomistsRegulation, Industrial Organization, andLawHealthInternational EconomicsLabor, Welfare, and EducationFinancial Markets and Foreign AssistanceBusiness and Regional AnalysisClimate Change and Natural ResourcesEnvironment and Natural ResourcesAgriculture, International Trade, andNatural ResourcesPublic FinanceInternational EconomicsMacroeconomics and the Weekly EconomicBriefing of the PresidentTechnology, Defense Conversion, andRegional Economic DevelopmentMacroeconomics and ForecastingSenior StatisticianCatherine H. FurlongStaff EconomistsTechnology and FinanceHealth and Public FinanceInternational EconomicsMacroeconomics and ForecastingRegulation, Industrial Organization, andEnvironmentLabor, Welfare, and AgricultureResearch AssistantsD. W. Clark DeesJames C. HritzStatistical OfficeMrs. Furlong manages the Statistical Office. The Statistical Officemaintains and updates the Council's statistical information,258

prepares the Economic Indicators and the statistical appendix tothe Economic Report, and verifies statistics in Presidential andCouncil memoranda, testimony, and speeches.Susan P. ClementsStatisticianLinda A. ReillyStatistical AssistantBrian A. AmorosiResearch AssistantMargaret L. Snyder SecretaryThe Administrative OfficeElizabeth A. KaminskiCatherine FibichAdministrative OfficerAdministrative AssistantOffice of the ChairAlice H. WilliamsSandra F. DaigleLisa D. BranchFrancine P. ObermillerExecutive Assistant to the ChairExecutive Assistant to the Chair andAssistant to the Chief of StaffExecutive Assistant to Dr. BlinderExecutive Assistant to Dr. StiglitzStaff SecretariesMary E. JonesRosalind V. RasinMary A. ThomasMrs. Thomas also served as Executive Assistant for the WeeklyEconomic Briefing of the President.Michael Treadway provided editorial assistance in the preparationof the 1994 Economic Report.Sherman Robinson, University of California, Berkeley, servedduring the summer and early fall of 1993 as a senior economistspecializing in the North American Free Trade Agreement. Omri S.Dahan, Michelle R. Dorman, Mark H. Fithian, Ian B. Goldberg,and Jennifer Howard served as student assistants during the year.Suzanne M. Tudor returned to serve as Dr. Blinder's Executive Assistantduring Lisa Branch's leave of absence. Volunteers duringthe year were Diana Billik, William P. Cowin, Matthew T.Henshon, John D. Levin, and Megan R. Sweeney.DEPARTURESJames D. Foster, who served as Special Assistant to the Chairman,resigned in January 1993 to accept a position with the TaxFoundation. Shelley A. Slomowitz, Staff Assistant to the Chairman,also resigned in January 1993.The Council's senior economists, in most cases, are on leave ofabsence from faculty positions at academic institutions or from259

other government agencies or research institutions. Their tenurewith the Council is usually limited to 1 or 2 years. Most of the senioreconomists who resigned during the year returned to their previousaffiliations. They are Kwok-Chiu Fung (University of California,Santa Cruz), Sherry Glied (Columbia University), Andrew S.Joskow (Department of Justice), Steven B. Kamin (Board of Governorsof the Federal Reserve System), Michael M. Knetter (DartmouthCollege), Howard D. Leathers (University of Maryland),Deborah J. Lucas (Northwestern University), Andrew B. Lyon(University of Maryland), and Raymond L. Squitieri (Departmentof the Treasury). John H. Kitchen went on to a new position at theDepartment of the Treasury. Jonathan B. Wiener accepted a positionon the faculty of the Duke University Law School.Kevin Berner, staff economist, accepted a position with McKinseyand Company, Inc., Cleveland, Ohio. Junior staff economists (nowdesignated staff economists) are generally graduate students whospend 1 year with the Council and then return to complete theirdissertations. Those who returned to their graduate studies in 1993are: Christopher J. Acito (University of Chicago), Lucy P. Allen(Yale University), Sherif Lotfi (Columbia University), and NatalieJ. Tawil (Massachusetts Institute of Technology). Joshua B. Michaelaccepted a position with The Eiger Development Corporation,Seattle, Washington. Bret M. Dickey, research assistant, begangraduate studies at Stanford University. Janet J. Twyman, staffsecretary, resigned in 1993.Public InformationThe Council's Annual Report is the principal medium throughwhich the Council informs the public of its work and its views. Itis an important vehicle for presenting the Administration's domesticand international economic policies. Annual distribution of theReport in recent years has averaged about 45,000 copies. The Councilalso has primary responsibility for compiling the monthly EconomicIndicators, which is issued by the Joint Economic Committeeof the Congress and has a distribution of approximately 10,000.260

Appendix BSTATISTICAL TABLES RELATING TO INCOME,EMPLOYMENT, AND PRODUCTION

CONTENTSNATIONAL INCOME OR EXPENDITURE:PageB-l. Gross domestic product, 1959-93 268B-2. Gross domestic product in 1987 dollars, 1959-93 270B-3. Implicit price deflators for gross domestic product, 1959-93 272B-4. Fixed-weighted price indexes for gross domestic product, 1987weights, 1959-93 274B-5. Changes in gross domestic product and personal consumption expenditures,and related implicit price deflators and fixedweightedprice indexes, 1960-93 276B-6. Selected per capita product and income series in current and1987 dollars, 1959-93 277B-7. Gross domestic product by major type of product, 1959-93 278B-8. Gross domestic product by major type of product in 1987 dollars,1959-93 279B-9. Gross domestic product by sector, 1959-93 280B-10. Gross domestic product by sector in 1987 dollars, 1959-93 281B-ll. Gross domestic product by industry, 1947-91 282B-12. Gross domestic product by industry in 1987 dollars, fixed 1987weights, 1977-91 283B-13. Gross domestic product of nonfinancial corporate business, 1959-B-14.93 284Output, costs, and profits of nonfinancial corporate business,1959-93 285B-15. Personal consumption expenditures, 1959-93 286B-16. Personal consumption expenditures in 1987 dollars, 1959-93 287B-l7. Gross and net private domestic investment, 1959-93 288B-18. Gross and net private domestic investment in 1987 dollars, 1959-93 289B-19. Inventories and final sales of domestic business, 1959-93 290B-20.B-21.B-22.B-23.Inventories and final sales of domestic business in 1987 dollars,1959-93 291Foreign transactions in the national income and product accounts,1959-93 292Exports and imports of goods and services and receipts and paymentsof factor income in 1987 dollars, 1959-93 293Relation of gross domestic product, gross national product, netnational product, and national income, 1959-93 294B-24. Relation of national income and personal income, 1959-93 295B-25. National income by type of income, 1959-93 296B-26. Sources of personal income, 1959-93 298B-27. Disposition of personal income, 1959-93 300B-28. Total and per capita disposable personal income and personalconsumption expenditures in current and 1987 dollars, 1959-93 301B-29. Gross saving and investment, 1959-93 302B-30. Personal saving, flow of funds accounts, 1946-93 303B-31. Median money income (in 1992 dollars) and poverty status offamilies and persons, by race, selected years, 1971-92 304263

POPULATION, EMPLOYMENT, WAGES, AND PRODUCTIVITY:PageB-32. Population by age group, 1929-93 305B-33. Population and the labor force, 1929-93 306B-34. Civilian employment and unemployment by sex and age, 1947-93 308B-35. Civilian employment by demographic characteristic, 1954-93 309B-36. Unemployment by demographic characteristics, 1954-93 310B-37. Civilian labor force participation rate and employment/populationratio, 1948-93 311B-38. Civilian labor force participation rate by demographic characteristic,1954-93 312B-39. Civilian employment/population ratio by demographic characteristic,1954-93 313B-40. Civilian unemployment rate, 1948-93 314B-41. Civilian unemployment rate by demographic characteristic,1950-93 315B-42. Unemployment by duration and reason, 1950-93 316B-43. Unemployment insurance programs, selected data, 1962-93 317B-44. Employees on nonagricultural payrolls, by major industry, 1946-93 318B-45. Hours and earnings in private nonagricultural industries, 1959-93 320B-46. Employment cost index, private industry, 1979-93 321B-47. Productivity and related data, business sector, 1947-93 322B-48. Changes in productivity and related data, business sector, 1948-93 323PRODUCTION AND BUSINESS ACTIVITY:B-49. Industrial production indexes, major industry divisions, 1947-93 .. 324B-50. Industrial production indexes, market groupings, 1947-93 325B-51. Industrial production indexes, selected manufactures, 1947-93 326B-52. Capacity utilization rates, 1948-93 327B-53. New construction activity, 1929-93 328B-54. New housing units started and authorized, 1959-93 330B-55. Business expenditures for new plant and equipment, 1947-94 331B-56. Manufacturing and trade sales and inventories, 1950-93 332B-57. Manufacturers' shipments and inventories, 1950-93 333B-58. Manufacturers' new and unfilled orders, 1950-93 334PRICES:B-59. Consumer price indexes for major expenditure classes, 1950-93 335B-60. Consumer price indexes for selected expenditure classes, 1950-93. 336B-61. Consumer price indexes for commodities, services, and specialgroups, 1950-93 338B-62. Changes in special consumer price indexes, 1958-93 339B-63. Changes in consumer price indexes for commodities and services,1929-93 340B-64. Producer price indexes by stage of processing, 1947-93 341B-65. Producer price indexes by stage of processing, special groups,1974-93 343B-66. Producer price indexes for major commodity groups, 1950-93 344B-67. Changes in producer price indexes for finished goods, 1955-93 346264

MONEY STOCK, CREDIT, AND FINANCE:PageB-68. Money stock, liquid assets, and debt measures, 1959-93 347B-69. Components of money stock measures and liquid assets, 1959-93.. 348B-70. Aggregate reserves of depository institutions and monetary base,1959-93 350B-71. Commercial bank loans and securities, 1972-93 351B-72. Bond yields and interest rates, 1929-93 352B-73. Total funds raised in credit markets by nonflnancial sectors,1984-93 354B-74. Mortgage debt outstanding by type of property and of financing,1940-93 356B-75. Mortgage debt outstanding by holder, 1940-93 357B-76. Consumer credit outstanding, 1952-93 358GOVERNMENT FINANCE:B-77. Federal receipts, outlays, surplus or deficit, and debt, selectedfiscal years, 1929-95 359B-78. Federal receipts, outlays, and debt, fiscal years, 1982-95 360B-79. Federal budget receipts, outlays, surplus or deficit, and debt, aspercentages of gross domestic product, 1934-95 362B-80. Federal and State and local government receipts and expenditures,national income and product accounts, 1959-93 363B-81. Federal and State and local government receipts and expenditures,national income and product accounts, by major type,1959-93 364B-82. Federal Government receipts and expenditures, national incomeand product accounts, 1976-93 365B-83. State and local government receipts and expenditures, nationalincome and product accounts, 1959-93 366B-84. State and local.government revenues and expenditures, selectedfiscal years, 1927-91 367B-85. Interest-bearing public debt securities by kind of obligation,1967-93 368B-86. Maturity distribution and average length of marketable interestbearingpublic debt securities held by private investors, 1967-93 369B-87. Estimated ownership of public debt securities by private investors,1976-93 370CORPORATE PROFITS AND FINANCE:B-88. Corporate profits with inventory valuation and capital consumptionadjustments, 1959-93 371B-89. Corporate profits by industry, 1959-93 372B-90. Corporate profits of manufacturing industries, 1959-93 373B-91. Sales, profits, and stockholders' equity, all manufacturing corporations,1952-93 374B-92. Relation of profits after taxes to stockholders' equity and toB-93.sales, all manufacturing corporations, 1947-93 375Sources and uses of funds, nonfarm nonfinancial corporate business,1947-93 376B-94. Common stock prices and yields, 1955-93 377B-95. Business formation and business failures, 1950-93 378265

AGRICULTURE:PageB-96. Farm income, 1940-93 379B-97. Farm output and productivity indexes, 1948-91 380B-98. Farm input use, selected inputs, 1948-92 381B-99. Indexes of prices received and prices paid by farmers, 1950-93 382B-100. U.S. exports and imports of agricultural commodities, 1940-93 383B-101. Farm business balance sheet, 1950-92 384INTERNATIONAL STATISTICS:B-102. International investment position of the United States at yearend,1984-92 385B-103. U.S. international transactions, 1946-93 386B-104. U.S. merchandise exports and imports by principal end-use category,1965-93 388B-105. U.S. merchandise exports and imports by area, 1984-93 389B-106. U.S. merchandise exports, imports, and trade balance, 1972-93 390B-107. International reserves, selected years, 1952-93 391B-108. Industrial production and consumer prices, major industrialcountries, 1967-93 392B-109. Civilian unemployment rate, and hourly compensation, major industrialcountries, 1967-93 393B-110. Foreign exchange rates, 1969-93 394B-lll. Growth rates in real gross domestic product, 1975-93 395NATIONAL WEALTH:B-112. National wealth, 1946-92 396B-113. National wealth in 1987 dollars, 1946-92 397SUPPLEMENTARY TABLE:B-114. Selected historical series on gross domestic product and relatedseries, 1929-58 398266

General NotesDetail in these tables may not add to totals because of rounding.Unless otherwise noted, all dollar figures are in current dollars.Symbols used:p Preliminary.Not available (also, not applicable).Data in these tables reflect revisions made by the source agencies fromJanuary 1993 through early February 1994.267

NATIONAL INCOME OR EXPENDITURETABLE B-l.—Gross domestic product, 1959-93[Billions of dollars, except as noted; quarterly data at seasonally adjusted annual rates]Year or quarterGrossdomesticproductPersonal consumption expendituresTotalDurablegoodsNondurablegoodsServicesGross private domestic investmentTotalFixed investmentTotalNonresidentialTotalStructuresProducers'durableequipmentResidentialChangeinbusinessinventories19591960196119621963196419651966196719681969197019711972197319741975197619771978197919801981198219831984198519861987198819891990199119921993 "1982: IV..1983: IV..1984: IV..1985: IV..1986: IV..1987: IV..1988: IV..1989: IV..1990:1 IIIV1991:1.IIIllIV1992:1 IIIllIV1993:1 IIIllIV "...494.2513.3531.8571.6603.1648.0702.7769.8814.3889.3959.51,010.71,097.21,207.01,349.61,458.61,585.91,768.41,974.12,232.72,488.62,708.03,030.63,149.63,405.03,777.24,038.74,268.64,539.94,900.45,250.85,546.15,722.96,038.56,374.03,195.13,547.33,869.14,140.54,336.64,683.05,044.65,344.85,461.95,540.95,583.85,597.95,631.75,697.75,758.65,803.75,908.75,991.46,059.56,194.46,261.66,327.66,395.96,510.8318.1332.4343.5364.4384.2412.5444.6481.6509.3559.1603.7646.5700.3767.8848.1927.71,024.91,143.11,271.51,421.21,583.71,748.11,926.22,059.22.257.52,460.32,667.42,850.63,052.23,296.13,523.13,761.23,906.44,139.94,390.62,128.72,346.82,526.42,739.82,923.13,124.63,398.23,599.13,679.33,727.03,801.73,836.63,843.63,887.83,929.83,964.14,046.54,099.94,157.14,256.24,296.24,359.94,419.14,487.442.843.541.947.051.856.863.568.570.681.086.285.397.2110.7124.1123.0134.3160.0182.6202.3214.2212.5228.5236.5275.0317.9352.9389.6403.7437.1459.4468.2457.8497.3537.7246.9297.7328.2354.4406.8408.8452.9458.3479.8466.0467.3459.5448.9452.0465.1465.2484.0487.8500.9516.6515.3531.6541.9561.9148.5153.1157.4163.8169.4179.7191.9208.5216.9235.0252.2270.4283.3305.2339.6380.8416.0451.8490.4541.5613.3682.9744.2772.3817.8873.0919.4952.21,011.11,073.81,149.51,229.21,257.91,300.91,350.2787.3839.8887.8939.5963.71,029.41,105.81,173.51,201.71,213.61,241.01,260.71,252.31,259.21,260.01,260.01,278.21,288.21,305.71,331.71,335.31,344.81,352.41,368.4126.8135.9144.1153.6163.1175.9189.2204.6221.7243.1265.3290.8319.8351.9384.5423.9474.5531.2598.4677.4756.2852.7953.51,050.41,164.71,269.41,395.11,508.81,637.41,785.21,914.22,063.82,190.72,341.62,502.71,094.61,209.31,310.41,446.01,552.61,686.41,839.51,967.31,997.82,047.52,093.42,116.42,142.42,176.62,204.82,239.02,284.42,323.82,350.52,407.92,445.52,483.42,524.82,557.278.878.777.987.993.4101.7118.0130.4128.0139.9155.2150.3175.5205.6243.1245.8226.0286.4358.3434.0480.2467.6558.0503.4546.7718.9714.5717.6749.3793.6832.3808.9736.9796.5892.0464.2614.8722.8737.0697.1800.2814.8825.2828.9837.8812.5756.4729.1721.5744.5752.4750.8799.7802.2833.3874.1874.1884.0935.874.675.575.081.887.796.7108.3116.7117.6130.8145.5148.1167.5195.7225.4231.5231.7269.6333.5406.1467.5477.1532.5519.3552.2647.8689.9709.0723.0777.4798.9802.0745.5789.1875.2510.5594.6671.8704.4715.9740.9797.5795.0819.3804.5804.1780.3749.0744.5745.0743.5755.9786.8792.5821.3839.5861.0876.3924.146.549.248.652.855.662.474.184.485.292.1102.9106.7111.7126.1150.0165.6169.0187.2223.2274.5326.4353.8410.0413.7400.2468.9504.0492.4497.8545.4568.1586.7555.9565.5622.9397.7426.9491.5511.3491.7514.3560.2568.8586.2582.1594.1584.4566.8561.0552.6543.3547.0566.3569.2579.5594.7619.1624.9653.018.119.619.720.821.223.728.331.331.533.637.740.342.747.255.061.261.465.974.693.9118.4137.5169.1178.8153.1175.6193.4174.0171.3182.0193.3201.6182.6172.6178.6168.9154.6184.1195.4168.4180.0186.8198.0203.6203.2203.8195.7192.2188.4178.0171.7173.9174.5170.8171.1172.4177.6179.1185.228.329.728.932.134.438.745.853.053.758.565.266.469.178.995.1104.3107.6121.2148.7180.6208.1216.4240.9234.9247.1293.3310.6318.4326.5363.4374.8385.1373.3392.9444.4228.8272.3307.3315.9323.3334.3373.4370.8382.5378.9390.3388.7374.6372.6374.6371.5373.1391.7398.4408.3422.2441.6445.8467.828.126.326.429.032.134.334.232.332.438.742.641.455.869.775.366.062.782.5110.3131.6141.0123.3122.5105.7152.0178.9185.9216.6225.2232.0230.9215.3189.6223.6252.3112.8167.7180.4193.1224.2226.5237.3226.2233.2222.4209.9195.8182.2183.6192.4200.3208.9220.6223.3241.8244.9241.9251.3271.14.23.22.96.15.75.09.713.810.59.19.72.38.09.917.714.3-5.716.724.727.912.8-9.525.4-15.9-5.571.124.68.626.316.233.36.9-8.67.316.8-46.320.251.032.6-18.859.317.330.29.633.38.4-23.9-19.9-23.0-.58.9-5.112.99.712.034.613.17.711.7See next page for continuation of table.268

TABLE B-l.—Gross domestic product. 1959-93—Continued[Billions of dollars, except as noted; quarterly data at seasonally adjusted annual rates]Year orquarter19591960196119621963196419651966196719681969197019711972197319741975197619771978 ,.197919801981198219831984198519861987198819891990199119921993 p1982: IV....1983: IV....1984: IV....1985: IV....1986: IV....1987: IV....1988: IV...1989: IV...1990: I II....III...IV...1991:1 II....III...IV...1992:1 II....III...IV...1993:1 II....III...IVNet exports of goods andservicesNetexports-1.72.43.42.43.35.53.91.91.4-1.3-1.21.2-3.0-8.0.6-3.113.6-2.3-23.7-26.1-23.8-14.7-14.7-20.6-51.4-102.7-115.6-132.5-143.1-108.0-79.7-71.4-19.6-29.6-65.7-29.5-71.8-107.1-135.5-133.2-143.2-106.0-73.9-73.9-61.3-78.7-71.6-34.0-11.5-19.8-13.0-7.0-33.9-38.8-38.8-48.3-65.1-71.9-77.7Exports20.625.326.027.429.433.635.438.941.445.349.357.059.366.291.8124.3136.3148.9158.8186.1228.9279.2303.0282.6276.7302.4302.1319.2364.0444.2508.0557.1601.5640.5660.1265.6286.2308.7304.7333.9392.4467.0523.8542.0553.5555.3577.6576.5600.7603.0625.7633.7632.4641.1654.7651.3660.0653.2675.8Imports22.322.822.725.026.128.131.537.139.946.650.555.862.374.291.2127.5122.7151.1182.4212.3252.7293.9317.7303.2328.1405.1417.6451.7507.1552.2587.7628.5621.1670.1725.8295.1358.0415.7440.2467.1535.6573.1597.7615.9614.8634.0649.2610.6612.2622.8638.8640.7666.3679.9693.5699.6725.0725.1753.5Total99.099.8107.0116.8122.3128.3136.3155.9175.6191.5201.8212.7224.3241.5257.7288.3321.4341.3368.0403.6448.5507.1561.1607.6652.3700.8772.3833.0881.5918.7975.21,047.41,099.31,131.81,157.1631.6657.6727.0799.2849.7901.4937.6994.51,027.71,037.31,048.31,076.51,093.01,099.91,104.01,100.21,118.51,125.81,139.11,143.81,139.71,158.61,164.81,165.3GovernmentpurchasesFederalTotal57.155.358.665.466.467.569.581.392.899.2100.5100.1100.0106.9108.5117.6129.4135.8147.9162.2179.3209.1240.8266.6292.0310.9344.3367.8384.9387.0401.6426.5445.9448.8443.4281.4289.7324.7356.9373.1392.5392.0405.1422.7423.6423.2436.5450.2449.4446.8437.4445.5444.6452.8452.4442.7447.5443.6439.7Nationaldefense46.445.347.952.151.550.451.062.073.479.178.976.874.177.477.582.689.693.4100.9108.9121.9142.7167.5193.8214.4233.1258.6276.7292.1295.6299.9314.0322.5313.8303.6205.5222.8242.9268.6278.6295.8296.8302.5312.1312.5309.1322.5331.4326.3321.2311.2312.3310.4316.7315.7304.8307.6301.9300.0Nondefense10.810.010.613.314.917.018.519.319.420.021.623.325.929.431.135.039.842.447.053.357.566.473.372.777.577.885.791.192.991.4101.7112.5123.4135.0139.875.966.981.988.394.596.795.2102.6110.6111.2114.1114.0118.7123.0125.6126.2133.1134.2136.1136.7137.9140.0141.7139.7Stateandlocal41.844.548.451.455.860.966.874.682.792.3101.3112.6124.3134.7149.2170.7192.0205.5220.1241.4269.2298.0320.3341.1360.3389.9428.1465.3496.6531.7573.6620.9653.4683.0713.7350.3367.9402.2442.4476.6509.0545.7589.3605.0613.7625.1640.0642.9650.5657.3662.8673.0681.2686.2691.4697.0711.1721.2725.6Finalsales ofdomesticproduct490.0510.1528.9565.5597.5643.0693.0756.0803.8880.2949.81,008.41,089.21,197.11,331.91,444.41,591.51,751.71,949.42,204.82,475.92,717.53,005.23,165.53,410.63.706.14,014.14,260.04,513.74,884.25,217.55,539.35,731.66,031.26,357.23,241.43,527.13,818.14,107.94,355.44,623.75,027.35,314.65,452.45,507.65,575.35,621.85,651.65,720.85,759.15,794.85,913.95,978.66,049.96.182.56,227.16,314.56,388.26,499.0Grossdomesticpurchases'495.8510.9528.4569.1599.8642.5698.8767.9812.9890.6960.71.009.51,100.21,215.01,349.01,461.81,572.31,770.71,997.82,258.82,512.52,722.83,045.33,170.23,456.53,879.94,154.34,401.24,683.05,008.45,330.55,617.55,742.56,068.26,439.73,224.63,619.13,976.24,276.04,469.84,826.25,150.75,418.75,535.95,602.25,662.45,669.55,665.85,709.25,778.45,816.75,915.86,025.36,098.36,233.26,309.96,392.76,467.86,588.5Addendum:Grossnationalproduct2497.0516.6535.4575.8607.7653.0708.1774.9819.8895.5965.61,017.11,104.91,215.71,362.31,474.31,599.11,785.51,994.62,254.52,520.82,742.13,063.83,179.83,434.43,801.54,053.64,277.74,544.54,908.25,266.85,567.85,737.16,045.83,222.63,578.43,890.24,156.24,340.54,690.55,054.35,365.05,482.15,559.35,599.95,630.05,656.15,710.65,766.25,815.55,927.65,996.36,067.36,191.96,262.16,327.16,402.3Percent changefrom precedingperiodGrossdomesticproduct8.73.93.67.55.57.48.49.55.89.27.95.38.610.011.88.18.711.511.613.111.58.811.93.98.110.96.95.76.47.97.25.63.25.55.69.15.93.11.02.44.84.33.27.45.74.69.24.44.34.47.4Grossdomesticpurchases'9.13.03.47.75.47.18.89.95.99.67.95.19.010.411.08.47.612.612.813.111.28.411.84.19.012.27.15.96.46.96.45.42.25.76.18.94.94.4.5-.33.14.92.77.07.64.99.15.05.44.87.71 Gross domestic product (GDP) less exports of goods and services plus imports of goods and services.2 GDP plus net receipts of factor income from rest of the world.Source-. Department of Commerce, Bureau of Economic Analysis.269

TABLE B-2.—Gross domestic product in 1987 dollars, 1959-93[Billions of 1987 dollars, except as noted; quarterly data at seasonally adjusted annual rates]Year orquarterGrossdomesticproductPersonal consumptionexpendituresTotalDurablegoodsNondurablegoodsServicesGross private domestic investmentTotalFixed investmentTotalNonresidentialTotalStructuresProducers'durableequipmentResidentialChangeinbusinessinventories19591960196119621963196419651966196719681969197019711972197319741975197619771978197919801981198219831984198519861987198819891990199119921993 p .1982: IV1983: IV1984: IV1985: IV1986: IV1987:IV1988: IV1989: IV1990: I IIIllIV1991: I IIIllIV1992: IIIIV1993: III1,928.81,970.82,023.82,128.12,215.62,340.62,470.52,616.22,685.22,796.92,873.02,873.92,955.93,107.13,268.63,248.13,221.73,380.83,533.33,703.53,796.83,776.33,843.13,760.33,906.64,148.54,279.84,404.54,539.94,718.64,838.04,897.34,861.44,986.35,132.73,759.64,012.14,194.24,333.54,427.14,625.54,779.74,856.74,892.34,917.14,906.54,867.24,837.84,855.64,872.64,879.64,922.04,956.54,998.25,068.35,078.25,102.15,138.35,212.11,178.91,210.81,238.41,293.31,341.91,417.21,497.01,573.81,622.41,707.51,771.21,813.51,873.71,978.42,066.72,053.82,097.52,207.32,296.62,391.82,448.42,447.12,476.92,503.72,619.42,746.12,865.82,969.13,052.23,162.43,223.33,272.63,258.63,341.83,452.52,539.32,678.22,784.82,895.33,012.53,074.73,202.93,242.03,264.43,271.63,288.43,265.93,242.73,256.93,267.13,267.53,302.33,316.83,350.93,397.23,403.83,432.73,469.63,503.9114.4115.4109.4120.2130.3140.7156.2166.0167.2184.5190.8183.7201.4225.2246.6227.2226.8256.4280.0292.9289.0262.7264.6262.5297.7338.5370.1402.0403.7428.7440.7443.1426.6456.6489.7272.3319.1347.7369.6415.7404.7439.2436.8454.8441.8442.4433.2420.3422.0432.6431.5446.6447.5459.0473.4471.9484.2493.1509.9518.5526.9537.7553.0563.6588.2616.7647.6659.0686.0703.2717.2725.6755.8777.9759.8767.1801.3819.8844.8862.8860.5867.9872.2900.3934.6958.7991.01,011.11,035.11,051.61,060.71,048.21,062.91,088.1880.7915.2942.9968.71,000.91,014.61,046.81,058.91,059.81,060.61,065.01,057.51,048.21,051.11,049.31,044.01,052.01,055.01,062.91,081.81,076.01,083.11,093.01,100.1546.0568.5591.3620.0648.0688.3724.1760.2796.2837.0877.2912.5946.7997.41,042.21,066.81,103.61,149.51,196.81,254.11,296.51,323.91,344.41,368.91,421.41,473.01,537.01,576.11,637.41,698.51,731.01,768.81,783.81,822.31,874.71,386.21,443.91,494.21,557.11,595.81,655.51,716.91,746.31,749.81,769.21,781.11,775.21,774.21,783.81,785.21,792.01,803.71,814.31,829.01,842.01,855.91,865.41,883.51,893.9296.4290.8289.4321.2343.3371.8413.0438.0418.6440.1461.3429.7475.7532.2591.7543.0437.6520.6600.4664.6669.7594.4631.1540.5599.5757.5745.9735.1749.3773.4784.0746.8675.7732.9820.9503.5669.5756.4763.1705.9793.8785.0769.5766.5773.9751.0695.7667.8659.8682.8692.3691.7737.0739.6763.0803.0803.6813.4863.6282.8282.7282.2305.6327.3356.2387.9401.3391.0416.5436.5423.8454.9509.6554.0512.0451.5495.1566.2627.4656.1602.7606.5558.0595.1689.6723.8726.5723.0753.4754.2741.1684.1726.4805.5548.4640.2708.4732.9725.9733.9764.1744.6761.8745.8740.1716.6685.2682.1683.8685.2696.7724.4730.0754.3773.7790.6806.9851.0165.2173.3172.1185.0192.3214.0250.6276.7270.8280.1296.4292.0286.8311.6357.4356.5316.8328.7364.3412.9448.8437.8455.0433.9420.8490.2521.8500.3497.8530.8540.0546.5514.5529.2591.3417.2449.6509.6525.5495.5510.6538.8536.7550.2544.5551.2540.2521.4517.8512.8506.1510.5528.8533.8543.7562.3584.3594.8623.874.480.882.386.186.995.9111.5119.1116.0117.4123.5123.3121.2124.8134.9132.3118.0120.5126.1144.1163.3170.2182.9181.3160.3182.8197.4176.6171.3174.0177.6179.5160.2150.6151.4173.2162.6189.5198.3170.4177.9175.7179.8182.9181.6180.9172.8169.0165.2155.6151.0152.8152.9148.8148.0148.2151.1151.2155.190.892.589.898.9105.4118.1139.1157.6154.8162.7172.9168.7165.6186.8222.4224.2198.8208.2238.2268.8285.5267.6272.0252.6260.5307.4324.4323.7326.5356.8362.5367.0354.3378.6439.9244.0287.0320.1327.2325.0332.7363.1356.9367.3363.0370.3367.4352.5352.6357.2355.2357.7375.9385.1395.7414.1433.2443.6468.7117.6109.4110.1120.6135.0142.1137.3124.5120.2136.4140.1131.8168.1198.0196.6155.6134.7166.4201.9214.5207.4164.8151.6124.1174.2199.3202.0226.2225.2222.7214.2194.5169.5197.1214.2131.2190.6198.8207.4230.5223.3225.3208.0211.6201.2189.0176.3163.8164.3171.0179.1186.2195.6196.2210.6211.4206.2212.1227.213.68.17.215.616.015.725.136.727.623.624.85.920.822.537.730.9-13.925.534.337.213.6-8.324.6-17.54.467.922.18.526.319.929.85.7-8.46.515.4-44.929.347.930.2-20.159.920.924.94.728.110.9-20.9-17.4-22.3-.97.1-5.012.69.68.729.313.06.512.7See next page for continuation of table.270

TABLE B-2.—Gross domestic product in 1987 dollars, 1959-93—Continued[Billions of 1987 dollars, except as noted; quarterly data at seasonally adjusted annual rates]Year orquarterNet exports of goods andservicesGovernmentpurchasesFederalNetexports Exports Imports NationalTotalTotaldefenseNondefenseStateandlocalFinalsales ofdomesticproductGrossdomesticpurchases1Addendum:Grossnationalproduct2Percent changefrom precedingperiodGrossdomesticproductGrossdomesticpurchases*1959..I960..1961..1962..1963..1964..1965..1966..1967..1968..1969..197019711972197319741975197619771978197919801981198219831984198519861987198819891990199119921993 ".1982: IV..1983: IV..1984: IV..1985: IV..1986: IV..1987: IV..1988: IV..1989: IV..1990: IIIIII...IV...1991: IIIIII..IV..1992: III1993: IIIIV "-21.8-7.6-5.5-10.5-5.82.5-6.4-18.0-23.7-37.5-41.5-35.2-45.9-56.5-34.1-4.123.1-6.4-27.8-29.9-10.630.722.0-7.4-56.1-122.0-145.3-155.1-143.1-104.0-73.7-54.7-19.1-33.6-79.3-19.0-83.7-131.4-155.4-156.0-136.0-102.7-67.4-60.8-58.9-62.2-36.8-21.6-13.3-25.0-16.4-15.2-38.0-42.5-38.8-59.9-75.2-86.3-95.673.889.995.0101.8115.4118.1125.7130.0140.2147.8161.3161.9173.7210.3234.4232.9243.4246.9270.2293.5320.5326.1296.7285.9305.7309.2329.6364.0421.6471.8510.5543.4578.0596.4280.4291.5312.8312.0342.9386.1438.2487.7501.8511.1508.6520.4519.4542.9546.9564.2571.0570.2579.3591.6588.0593.2591.9612.595.696.195.3105.5107.7112.9124.5143.7153.7177.7189.2196.4207.8230.2244.4238.4209.8249.7274.7300.1304.1289.9304.1304.1342.1427.7454.6484.7507.1525.7545.4565.1562.5611.6675.7299.4375.1444.2467.4498.9522.1540.9555.0562.6570.0570.7557.2541.0556.2571.9580.7586.2608.2621.8630.3647.9668.4678.2708.1475.3476.9501.5524.2536.3549.1566.9622.4667.9686.8682.0665.8652.4653.0644.2655.4663.5659.2664.1677.0689.3704.2713.2723.6743.8766.9813.4855.4881.5886.8904.4932.6946.3945.2938.6735.9748.1784.3830.5864.8893.0894.5912.6928.1930.6929.2942.4948.9952.3947.6936.2943.1940.7950.2946.9931.3941.1941.7940.1265.7259.0270.1287.3285.7281.8282.1319.3350.9353.1340.1315.0290.8284.4265.3262.6262.7258.2263.1268.6271.7284.8295.8306.0320.8331.0355.2373.0384.9377.3376.1384.1386.5373.0355.1316.0322.2341.7363.7377.5391.6378.4376.1385.4384.7379.6386.5393.8393.6386.6372.1372.1369.2377.0373.7357.6359.4353.7349.8209.6191.3185.8184.9179.9181.6182.1185.1194.2206.4221.4234.2245.8265.6280.6292.1287.0281.4283.6281.3261.2242.7229.4242.9254.3272.1282.2295.0285.7281.5285.3285.0278.5285.7292.0288.7279.4264.9261.2257.9264.4261.3246.0246.4240.1238.274.874.176.877.878.381.486.586.690.689.484.786.685.189.592.492.990.294.8100.4105.3111.8112.586.679.387.491.695.396.692.794.7100.199.8101.1100.8101.8104.9107.2107.2110.9111.3112.5112.4111.5113.0113.7111.6209.6217.9231.4236.9250.6267.3284.8303.1317.0333.7341.9350.9361.6368.6378.9392.9400.8401.1401.0408.4417.6419.4417.4417.6423.0436.0458.2482.4496.6509.6528.3548.5559.7572.2583.4419.9425.9442.6466.7487.3501.4516.1536.5542.8545.9549.6555.8555.1558.7561.0564.1571.0571.5573.2573.2573.7581.6588.0590.41,915.21,962.72,016.62,112.52,199.62,324.92,445.42,579.52,657.52,773.22,848.22,868.02,935.23,084.53,230.93,217.23,235.63,355.33,499.03,666.33,783.23,784.63,818.63,777.83,902.24,080.64,257.64,395.94,513.74,698.64,808.34,891.64,869.84,979.85,117.33,804.53,982.84,146.24,303.34,447.24,565.64,758.74,831.84,893.64,889.04,895.64,888.04,855.24,878.04,873.54,872.54,926.94,943.84,988.65,059.65,048.95,089.15,131.85,199.41,950.61,978.52,029.32,138.62,221.42,338.12,476.92,634.22,708.92,834.42,914.52,909.13,001.83,163.63,302.73,252.23,198.63,387.13,561.13,733.33,807.43,745.73,821.23,767.73,962.84,270.54,425.14,559.64,683.04,822.64,911.74,951.94,880.55,019.95,211.93,778.64,095.84,325.54,488.94,583.14,761.54,882.44,924.14,959.14,976.04,968.64,904.04,859.44,869.04,897.64,896.04,937.14,994.55,040.75,107.15,138.15,177.45,224.65,307.71 Gross domestic product (GDP) less exports of goods and services plus imports of goods and services.2 GDP plus net receipts of factor income from rest of the world.Source: Department of Commerce, Bureau of Economic Analysis.1,939.61,982.82,037.12,143.32,231.82,358.12,488.92,633.22,702.62,815.62,890.92,891.52,975.93,128.83,298.63,282.43,247.63,412.23,569.03,739.03,845.33,823.43,884.43,796.13,939.64,174.54,295.04,413.54,544.54,726.34,852.74,916.54,874.54,994.03,791.74,046.64,216.44,349.54,430.84,633.04,789.04,875.14,916.44,933.44,920.94,895.44,859.34,867.54,880.34,890.94,939.04,962.25,006.45,068.45,080.75,104.15,145.85.52.22.75.24.15.65.55.92.64.22.7.02.95.15.2-.64.94.54.82.5-.51.8-2.23.96.23.22.93.13.92.51.2-.72.62.93.51.5-.9-3.2-2.41.51.4.63.52.83.45.75.81.42.65.43.95.35.96.42.84.62.8-.23.25.44.4-1.5-1.65.95.14.82.0-1.62.0-1.45.27.83.63.02.73.01.8-1.42.93.82.91.4-.6-5.1-3.6.82.4-.13.44.73.85.42.53.13.76.5271

TABLE B-3.—Implicit price deflators for gross domestic product, 1959-93[Index numbers, 1987 = 100, except as noted; quarterly data seasonally adjusted]Year or quarterGrossdomesticproductPersonal consumptionexpendituresTotalDurablegoodsNondurablegoodsServicesGross private domestic investment:Fixed investmentTotalNonresidentialTotalStructuresProducers'durableequipmentResidential19591960196119621963196419651966196719681969197019711972197319741975197619771978197919801981198219831984198519861987198819891990199119921993 P1982.1V1983: IV1984: IV....1985: IV1986: IV1987: IV....1988: IV1989: IV1990:1IIIII....IV....1991:1IIIllIV1992:1IIIII....IV....1993:1IIIII....IV..25.626.026.326.927.227.728.429.430.331.833.435.237.138.841.344.949.252.355.960.365.571.778.983.887.291.094.496.9100.0103.9108.5113.3117.7121.1124.285.088.492.395.598.0101.2105.5110.1111.5112.7113.8115.0116.4117.3118.2118.9120.0120.9121.2122.2123.3124.0124.5124.927.027.527.728.228.629.129.730.631.432.734.135.637.438.841.045.248.951.855.459.464.771.477.882.286.289.693.196.0100.0104.2109.3114.9119.9123.9127.283.887.690.794.697.0101.6106.1111.0112.7113.9115.6117.5118.5119.4120.3121.3122.5123.6124.1125.3126.2127.0127.4128.137.437.738.339.139.740.440.641.342.343.945.246.448.349.250.354.159.262.465.269.174.180.986.490.192.493.995.496.9100.0102.0104.2105.7107.3108.9109.890.693.394.495.997.8101.0103.1104.9105.5105.5105.6106.1106.8107.1107.5107.8108.4109.0109.1109.1109.2109.8109.9110.228.629.129.329.630.130.531.132.232.934.335.937.739.040.443.750.154.256.459.864.171.179.485.788.690.893.495.996.1100.0103.7109.3115.9120.0122.4124.189.491.894.297.096.3101.5105.6110.8113.4114.4116.5119.2119.5119.8120.1120.7121.5122.1122.8123.1124.1124.2123.7124.423.223.924.424.825.225.626.126.927.829.030.231.933.835.336.939.743.046.250.054.058.364.470.976.781.986.290.895.7100.0105.1110.6116.7122.8128.5133.579.083.787.792.997.3101.9107.1112.7114.2115.7117.5119.2120.8122.0123.5124.9126.6128.1128.5130.7131.8133.1134.0135.026.426.726.626.826.827.127.929.130.131.433.334.936.838.440.745.251.354.558.964.771.279.287.893.192.893.995.397.6100.0103.2105.9108.2109.0108.6108.793.192.994.896.198.6101.0104.4106.8107.6107.9108.6108.9109.3109.2109.0108.5108.5108.6108.6108.9108.5108.9108.6108.628.128.428.228.628.929.229.630.531.532.934.736.539.040.542.046.453.356.961.366.572.790.195.395.195.796.698.4100.0102.8105.2107.3108.0106.9105.395.395.096.497.399.2100.7104.0106.0106.5106.9107.8108.2108.7108.3107.8107.3107.1107.1106.6106.6105.7106.0105.1104.724.424.224.024.124.424.725.426.327.228.630.532.735.237.840.746.352.054.759.265.272.580.892.598.695.596.198.098.5100.0104.6108.9112.3114.0114.6117.997.595.197.298.598.8101.2106.3110.1111.3111.9112.7113.3113.8114.0114.4113.8113.8114.2114.8115.7116.3117.5118.5119.431.232.132.232.432.632.832.933.634.736.037.739.441.742.242.746.554.158.262.467.272.980.988.593.094.895.495.798.4100.0101.9103.4104.9105.4103.8101.093.894.996.096.599.5100.5102.8103.9104.2104.4105.4105.8106.3105.7104.9104.6104.3104.2103.5103.2102.0101.9100.599.823.924.024.024.023.824.124.925.926.928.430.431.433.235.238.342.446.649.654.661.368.074.880.985.287.389.792.095.8100.0104.2107.8110.7111.8113.4117.886.088.090.793.197.3101.5105.3108.8110.2110.5111.1111.1111.3111.7112.5111.8112.2112.8113.8114.9115.8117.3118.5119.3See next page for continuation of table.272

TABLE B-3.—Implicit price deflators for gross domestic product,[Index numbers, 1987=100, except as noted; quarterly data seasonally adjusted]1959-93—ContinuedYear or quarterExports andimports of goodsand servicesExportsImportsTotalGovernment purchasesof goodsand servicesTotalFederalNationaldefenseNondefenseStateandlocalFinalsales ofdomesticproductGrossdomesticpurchases'Percentchangefromprecedperiod,GDPimplicitpricedeflator21959..28.023.420.821.519.925.625.42.81960..1961..1962..1963..1964..28.629.028.928.929.123.823.823.724.324.920.921.322.322.823.421.321.722.823.323.920.420.921.722.322.826.026.226.827.227.725.826.026.627.027.51.61.22.31.11.81965..1966..1967..1968..1969..30.031.031.832.333.325.325.826.026.226.724.025.026.327.929.624.625.526.528.129.623.524.626.127.729.628.329.330.231.733.328.229.230.031.433.02.53.53.15.05.01970197119721973197435.336.638.143.653.028.430.032.237.353.531.934.437.040.044.031.834.437.640.944.836.940.544.539.341.945.532.134.436.539.443.535.237.138.841.244.934.736.738.440.844.95.45.44.66.48.71975197619771978197958.561.264.368.978.058.560.566.470.783.148.451.855.459.665.149.352.656.260.466.048.551.955.659.865.851.254.157.761.766.447.951.254.959.164.549.252.255.760.165.449.252.356.160.566.09.66.36.97.98.61980198119821983198487.192.995.296.898.9101.4104.599.795.994.772.078.784.087.791.473.481.487.191.093.973.581.187.691.694.873.382.185.989.591.371.176.781.785.289.471.878.783.887.490.872.779.784.187.290.99.510.06.24.14.41985....1986....1987....1988....1989....97.796.9100.0105.3107.791.993.2100.0105.1107.895.097.4100.0103.6107.896.998.6100.0102.6106.897.398.6100.0103.0106.695.798.6100.0101.4107.393.496.4100.0104.3108.694.396.9100.0103.9108.593.996.5100.0103.9108.53.72.63.23.94.41990199119921993"1982: IV..1983: IV..1984: IV..1985: IV..1986: IV..1987: IV..1988: IV..1989: IV..109.1110.7110.8110.794.798.298.797.797.4101.6106.6107.4111.2110.4109.6107.498.595.493.694.293.6102.6106.0107.7112.3116.2119.7123.385.887.992.796.298.3100.9104.8109.0111.0115.4120.3124.889.089.995.098.198.8100.2103.6107.7110.7114.7120.1125.189.691.795.598.798.7100.3103.9107.5112.0117.2120.8124.387.784.393.796.499.2100.1102.6108.4113.2116.7119.4122.383.486.490.994.897.8101.5105.7109.9113.2117.7121.1124.285.288.692.195.597.9101.3105.6110.0113.4117.7120.9123.685.388.491.995.397.5101.4105.5110.04.43.92.92.51990: I ....II...IV108.0108.3109.2111.0109.5107.9111.1116.5110.7111.5112.8114.2109.7110.1111.5112.9109.4109.6111.0112.9110.5111.4112.8113.1111.5112.4113.7115.2111.4112.7113.9115.0111.6112.6114.0115.65.24.44.04.31991:1111.0110.6110.2110.9112.9110.1108.9110.0115.2115.5116.5117.5114.3114.2115.6117.5113.5113.0114.9117.5116.7117.3117.2117.8115.8116.4117.2117.5116.4117.3118.2118.9116.6117.3118.0118.85.03.13.12.41992: I ..111.0110.9110.7110.7109.3109.6109.3110.0118.6119.7119.9120.8119.7120.4120.1121.1119.6120.3119.8120.8120.0120.6121.0121.6117.9119.2119.7120.6120.0120.9121.3122.2119.8120.6121.0122.13.83.01.03.31993: I ..IIIllIV P....110.8111.3110.4110.3108.0108.5106.9106.4122.4123.1123.7123.9123.8124.5125.4125.7123.9124.8125.7126.0123.6123.9124.6125.1121.5122.3122.7122.9123.3124.1124.5125.0122.8123.5123.8124.13.62.31.51.41 Gross domestic product (GDP) less exports of goods and services plus imports of goods and services.2 Quarterly changes are at annual rates.Note.—Separate deflators are not calculated for gross private domestic investment, change in business inventories, and net exportsof goods and services.Source: Department of Commerce, Bureau of Economic Analysis.273

TABLE B-4.—Fixed-weighted price indexes for gross domestic product, 1987 weights, 1959-93[Index numbers, 1987 = 100, except as noted; quarterly data seasonally adjusted]Year or quarterGrossdomesticproductPersonal consumptionexpendituresTotalDurablegoodsNondurablegoodsServicesGross private domestic investment:Fixed investmentTotalNonresidentialTotalStructuresProducers'durableequipmentResidential19591960196119621963196419651966196719681969197019711972197319741975197619771978197919801981198219831984198519861987198819891990199119921993"1982: IV..1983: IV..1984: IV..1985: IV..1986: IV..1987: IV..1988: IV..1989: IV..1990: I....IV1991:1..IV...1992:1IV..1993:1IIIllIV84.888.191.194.397.0100.0104.0108.6113.6118.2122.1125.986.389.392.395.598.0101.3105.6110.2111.7112.9114.3115.3116.8117.8118.7119.5120.8121.8122.5123.5124.8125.6126.3127.030.430.831.131.331.631.932.232.833.735.036.337.939.540.842.746.750.553.356.760.765.872.678.983.286.789.993.396.1100.0104.3109.5115.2120.5124.9128.784.788.291.094.897.1101.6106.2111.2113.0114.2115.9117.9119.0119.9121.0122.0123.4124.5125.5126.5127.5128.4128.9129.754.454.153.853.453.153.152.151.351.853.154.255.156.757.157.861.066.069.171.775.280.084.789.592.493.794.996.097.1100.0102.0104.5106.3109.1111.5113.892.694.595.296.397.9101.0103.3105.2105.9106.0106.3106.9108.1108.7109.6110.0110.7111.5111.8112.1112.6113.5114.1114.931.431.832.032.132.532.833.334.335.136.538.139.941.142.445.351.355.357.560.864.771.379.686.088.891.193.796.296.1100.0103.8109.5116.2120.5123.0124.989.792.094.497.296.3101.5105.7111.0113.8114.6116.8119.7119.9120.3120.5121.2122.0122.7123.4123.8124.9125.0124.5125.223.924.525.025.325.726.126.727.428.329.630.732.434.335.937.440.343.746.950.554.659.065.371.977.482.486.490.995.8100.0105.1110.7116.8123.3129.5134.679.684.287.992.997.3101.9107.2112.8114.3115.9117.8119.5121.2122.5124.0125.5127.3128.8130.1131.6132.8134.2135.2136.224.124.124.024.224.524.925.626.627.528.830.732.835.237.940.846.351.553.757.863.771.395.694.894.795.797.9100.0103.3106.3109.1110.8112.0114.795.494.695.196.498.8101.0104.5107.3108.3108.7109.5110.0110.5110.6111.0110.9111.2111.7112.4112.8113.5114.4115.2115.7100.398.396.897.398.8100.0102.8105.6108.4110.2111.4113.399.697.697.097.999.5100.7104.0106.6107.4107.9108.7109.4110.1110.1110.3110.4110.7111.2111.7112.0112.4113.1113.6114.078.587.392.992.594.196.998.5100.0104.6109.0112.4113.9114.6117.893.592.495.397.899.0101.2106.2110.3111.4112.0112.8113.3113.7114.0114.4113.7113.8114.2114.8115.6116.3117.4118.4119.3104.2101.398.397.599.0100.0101.9103.9106.2108.3109.7110.9102.8100.397.997.999.8100.5102.9104.7105.3105.7106.6107.4108.1108.0108.2108.7109.1109.6110.1110.1110.4110.9111.2111.225.025.125.125.024.724.925.526.427.228.630.631.733.535.538.642.746.749.754.761.468.275.381.385.387.389.892.195.8100.0104.3107.8110.7111.9113.4117.786.288.090.893.197.3101.5105.4108.8110.2110.5111.1111.1111.4111.8112.6112.0112.3112.8113.8114.8115.8117.2118.5119.3See next page for continuation of table.274

TABLE B-4.—Fixed-weighted price indexes for gross domestic product, 1987 weights,[Index numbers, 1987=100, except as noted; quarterly data seasonally adjusted]1959-93—ContinuedYear or quarterExports andimports of goodsand servicesExportsTotalGovernment purchasesof goodsand servicesTotalFederalImportsNationaldefenseNondefenseStateandlocalFinalsalesofdomesticproductGrossdomesticpurchasesJPercentchangefromprecedingperiod,GDPfixedweightedpriceindex 21959196019611962196319641965196619671968196919701971 .1972 ...197319741975197619771978197919801981198219831984198519861987 . . .198819891990199119921993".. .. .1982: IV1983- IV1984- IV1985- IV1986: IV1987- IV1988: IV1989- IV1990:1IllIV1991-1 .IIIllIV1992-1 IIIllIV1993-1IIIII100.499.799.998.297.3100.0105.7108.2110.0112.4113.7115.599.4100.399.397.997.6101.7107.0108.1108.8109.2110.3111.9112.4112.2112.1112.91131113.7113.9114.3114.7115 5115.7116.0101.297.796.894.693.8100.0105.4108.5112.4113.8115.1114.999.497.396.096.093.7102.8106.5108.6110.3108.81120118.3115.4113.1112.6114.11139114.5116.3115.9114.51156114.8114.924625125.526326 827.327 929030.231.833.736238.641.143.746.951.454.457 761.766.873.379.685 088.592.295.497.6100.0103.7107.9112.6116.7120.6124.286.789.393.996.998.3101.0104.8109.1111.0111.81131114.4115.5116.1117.0118.01193120.3121.0121.7123.21240124.8124.828629029330030631.332032833.935.637.440242.946.048.450.254.657.360464.168.975.282.388592.295.697.999.0100.0102.8107.0111.8116.5121.8126.190.492.797.799.499.0100.2103.7108.2110.3111.0112.4113.5115.2115.6116.7118.61206121.41222122.8125.11258126.8126.646.249.051.255.157.860764.569.676.383.389793.596.998.899.5100.0103.1107.1112.1116.5122.3127.191.493.999.3100.599.3100.3103.9108.3110.6111.3112.7114.0115.1115.3116.7118.91210121.8122.8123.5125.91268127.9127.745.246.447.452.955.859462.866.671.979.184788.491.494.997.5100.0102.0106.7110.8116.5120.2122.987.188.792.695.998.3100.1102.9107.8109.5110.2111.4112.0115.5116.3116.8117.5119.6119.9120.3120.9122.5122.5123.4123.221 522122.523 423 824 224 826 027 428.930.833135.337.340.144.348.952.155 759.965.171.977.682 385.589.693.596.5100.0104.3108.6113.2116.8119.6122.883.886.791.194.997.8101.5105.8109.9111.5112.4113.7115.1115.8116.4117.2117.7118.2119.5120.0120.9121.8122.7123.2123.484 988.291.294.497.0100.0104.0108.6113.6118.3122.2126.086.389.492.395.698.0101.3105.7110.2111.8113.0114.3115.4116.8117.8118.8119.6120.8121.8122.6123.6124.9125.7126.4127.185.488.391.094.096.6100.0104.0108.6113.7118.2122.0125.586.789.392.195.497.6101.4105.6110.2111.8112.8114.3115.9117.0117.7118.6119.5120.6121.6122.5123.4124.4125.3125.9126.53.93.43.52.83.14.04.54.64.13.33.15.84.44.73.85.13.43.42.74.23.42.53.14.32.82.12.21 Gross domestic product (GDP) less exports of goods and services plus imports of goods and services.* Quarterly changes are at annual rates.Note.—Separate deflators are not calculated for gross private domestic investment, change in business inventories, and net exportsof goods and services.Source.- Department of Commerce, Bureau of Economic Analysis.275

TABLE B-5.—Changes in gross domestic product and personal consumption expenditures, and relatedimplicit price deflators and fixed-weighted price indexes, 1960-93[Percent change from preceding period; quarterly data at seasonally adjusted annual rates]Gross domestic productPersonal consumption expendituresYear or quarterCurrentdollarsConstant(1987)dollarsImplicitpricedeflatorFixedweightedpriceindex(1987weights)CurrentdollarsConstant(1987)dollarsImplicitpricedeflatorFixedweightedpriceindex(1987weights)196019611962196319641965. .196619671968196919701971197219731974197519761977 . . .197819791980198119821983. ..1984198519861987198819891990 .199119921993".1987-1II111IV..1988:1IIIllIV3.93.67.55.57.4849.5589.27.95.38.610.011.88.18.711.511.613.111.58.81193.98.110.96.95.76.47.97.256325.55.6688 17.29.96.19.17.68.12.22.75.24.15.6555.9264.22.7.02.95.15.2-.6-.84.94.54.82.5-.518-2.23.96.23.22.93.13.92.512_ 72.62.93.0514.05.92.64.32.53.91.61.22.31.11.8253.53 15.05.05.45.44.66.48.79.66.36.97.98.69.510 06.24.14.43.72.63.23.94.444392.92.633293.33.63.64.45.13.93.93.43.52.83.14.04.5464 13.33.134283.33.73.74.55.43.74.53.36.15.47.4788.3589.88.07.18.39.610.59.410.511.511.211.811.410.410 26.99.69.08.46.97.18.06.968396.06.15.5948.34.49.97.98.48.92.72.34.43.85.6565.1315.23.72.43.35.64.5-.62.15.24.04.12.4-.11.21.14.64.84.43.62.83.61.91.5-.42.63.3_.l4.83.97.12.52.94.11.9.71.81.41.7213.0264.14.34.45.13.75.710.28.25.96.97.28.910.49.05.74.93.93.93.14.24.24.95.14.43.32.75.9454.14.52.85.25.14.71.3.8.6.91.1101.8263.83.84.44.43.34.69.38.15.66.47.08.510.38.65.44.33.73.83.04.14.35.05.34.53.73.05.6444.34.52.75.25.34.61989:1II .IllIV1990:1 ..IIIIIIV1991:1II111IV1992:1 ...IIIIIIV.1993:1..IIIII..IV8.6633.8519.1593.11.02.4484.3327.4574.69.24.4434.47.43.21801.53.5159-3.2-2.41.51.4.63.5283.45.7.81.92.95.95.4463.8375.2444.04.35.0313.1243.8301.03.33.6231.61.35.0483.8375.8444.73.85.13.43.42.74.2342.53.14.3282.12.25.1706.35.39.2538.33.7.74.74.43.58.6545.79.93.8615.56.3.11.12.9.82.8 92.1-2.7-2.81.81.3.04.31.84.25.6.8344.44.05.0573.34.46.3436.16.73.43.13.03.44.03.61.63.92.9261.32.25.25.93.54.46.6426.37.03.93.23.43.54.53.63.43.13.4291.42.7Source: Department of Commerce, Bureau of Economic Analysis.276

TABLE B-6.—Selected per capita product and income series in current and 1987 dollars, 1959-93[Quarterly data at seasonally adjusted annual rates, except as noted]Year orquarterCurrent dollarsGrossdomesticproductPersonalincomeDisposablepersonalincomePersonal consumptionexpendituresTotalDurablegoodsNondurablegoodsServ-Constant (1987) dollarsGrossdomesticproductDisposablepersonalincomePersonal consumptionexpendituresTotalDurablegoodsNondurablegoodsServ-Population(thousands)'19591960196119621963196419651966196719681969197019711972197319741975197619771978197919801981198219831984198519861987198819891990199119921993 "1982: IV1983: IV1984: IV1985: IV1986: IV1987: IV1988.1V1989: IV1990:1II1991:1 IIIllIV1992:1 IIIllIV1993:1 IIIllIV "...2,7912,8402,8943,0633,1863,3763,6163,9154,0974,4304,7334,9285,2835,7506,3686,8197,3438,1098,96110,02911,05511,89213,17713,56414,53115,97816,93317,73518,69419,99421,22422,18922,64723,63724,68113,70915,08516,31017,29617,95319,21320,50621,51921,94222,20322,30922,29922,37822,58222,75722,86923,22723,48723,68524,14324,34624,53824,73225,1052,2092,2642,3212,4302,5162,6612,8453,0613,2533,5363,8164,0524,3024,6715,1845,6376,0536,6327,2698,1219,0329,94811,02111,58912,21613,34514,17014,91715,65516,63017,70618,69919,19620,13920,86111,78612,61313,66814,44015,10216,07617,05317,99518,42118,62818,78618,95819,01019,15619,20119,41719,72519,96920,09020,76720,43020,83720,93021,2451,9581,9942,0482,1372,2102,3692,5272,6992,8613,0773,2743,5213,7794,0424,5214,8935,3295,7966,3167,0427,7878,5769,4559,98910,64211,67312,33913,01013,54514,47715,30716,20516,74117,61518,22210,18911,03311,92512,56513,12113,90714,85015,55815,96316,11416,27516,46716,56016,71216,75216,93917,24517,48117,57718,15317,87618,19618,26518,5491,7961,8391,8691,9532,0302,1492,2872,4502,5622,7852,9783,1523,3723,6584,0024,3374,7455,2415,7726,3847,0357,6778,3758,8689,63410,40811,18411,84312,56813,44814,24115,04815,45916,20517,0019,1349,98010,64911,44512,10112,81913.81414,49114,78114,93515,18915,28315,27315,40915,53015,62115,90616,07216,24916,58916,70416,90717,08817,3032422402282522732963273483554044254164685285855756227348299099529339941,0181,1731,3451,4801,6191,6621,7831,8571,8731,8121,9472,0821,0591,2661,3831,4801,6841,6771,8411,8451,9281,8671,8671,8311,7841,7921,8381,8331,9021,9121,9582,0132,0042,0622,0952,1668478578788959369871,0601,0911,1711,2441,3181,3641,4541,6021,7801,9262,0722,2262,4322,7252,9993,2363,3263,4903,6933,8553,9564,1634,3814,6474,9184,9785,0925,2283,3783,5723,7423,9243,9904,2234,4954,7254,8284,8634,9585,0224,9764,9914,9794,9655,0245,0505,1045,1905,1925,2155,2295,2767167527848238619179741,0411,1161,2111,3081,4181,5401,6761,8141,9822,1972,4362,7173,0433,3593,7454,1464,5234,9715,3705,8496,2696,7427,2847,7378,2578,6699,1669,6914,6965,1435,5246,0406,4286,9197,4777,9218,0258,2058,3648,4318,5138,6268,7138,8238,9809,1109,1879,3859,5089,6319,7639,86010,89210,90311,01411,40511,70412,19512,71213,30713,51013,93214,17114,01314,23214,80115,42215,18514,91715,50216,03916,63516,86716,58416,71016,19416,67217,54917,94418,29918,69419,25219,55619,59319,23819,51819,87416,13217,06217,68018,10218,32818,97719,42919,55419,67819,70419,60319,38819,22419,24519,25619,22819,34819,43019,53719,75419,74419,78619,86920,0977,2567,2647,3827,5837,7188,1408,5088,8229,1149,3999,6069,87510,11110,41411,01310,83210,90611,19211,40611,85112,03912,00512,15612,14612,34913,02913,25813,55213,54513,89014,00514,10113,96514,21914,32912,15412,59113,14513,27813,52213,68513,99614,01514,16314,14414,07814,01813,97114,00013,92713,96314,07314,14214,16914,49014,16314,32614,34114,4846,6586,6986,7406,9317,0897,3847,7038,0058,1638,5068,7378,8429,0229,4259,7529,6029,71110,12110,42510,74410,87610,74610,77010,78211,17911,61712,01512,33612,56812,90313,02913,09312,89513,08113,36910,89511,39011,73912,09512,47212,61513,02013,05313,11413,11013,13813,01012,88512,90812,91112,87612,98113,00213,09813,24113,23413,31213,41613,5116466385956446887338038448419199418969701,0731,1641,0621,0501,1761,2711,3161,2841,1541,1501,1311,2701,4321,5521,6701,6621,7491,7811,7731,6881,7871,8961,1691,3571,4661,5441,7211,6601,7851,7591,8271,7701,7671,7261,6701,6721,7091,7001,7561,7541,7941,8451,8351,8781,9071,9662,9282,9152,9262,9642,9773,0653,1733,2943,3163,4173,4693,4973,4943,6013,6703,5523,5523,6743,7223,7953,8333,7793,7743,7563,8423,9534,0194,1184,1634,2234,2514,2444,1484,1614,2133,7793,8923,9754,0464,1444,1624,2554,2634,2584,2504,2554,2124,1654,1664,1474,1144,1354,1364,1544,2164,1844,2004,2264,2423,0833,1453,2183,3233,4233,5863,7263,8674,0064,1694,3274,4494,5584,7514,9174,9885,1105,2715,4335,6335,7605,8145,8455,8956,0666,2316,4446,5486,7426,9306,9977,0777,0597,1337,2595,9486,1416,2986,5056,6076,7926,9797,0317,0297,0897,1167,0727,0507,0707,0557,0617,0907,1127,1497,1797,2167,2347,2837,303177,073180,760183,742186,590189,300191,927194,347196,599198,752200,745202,736205,089207,692209,924211,939213,898215,981218,086220,289222,629225,106227,715229,989232,201234,326236,393238,510240,691242,860245,093247,397249,951252,699255,472258,256233,060235,146237,231239,387241,550243,745246,004248,372248,927249,552250,291251,035251,659252,312253,048253,776254,392255,090255,836256,569257,197257,872258,612259,3431 Population of the United States including Armed Forces overseas-, includes Alaska and Hawaii beginning 1960. Annual data areaverages of quarterly data. Quarterly data are averages for the period.Source-. Department of Commerce (Bureau of Economic Analysis and Bureau of the Census).277

TABLE B-7.—Cross domestic product by major type of product, 1959-93[Billions of dollars; quarterly data at seasonally adjusted annual rates]Year orquarter19591960196119621963196419651966196719681969197019711972197319741975197619771978197919801981198219831984198519861987198819891990199119921993"1982: IV1983: IV1984: IV1985: IV1986: IV1987: IV1988: IV1989: IV1990:1 IIIllIV1991:1 IIIllIV1992:1IIIllIV1993:1 IIIllIVGrossdomesticproduct494.2513.3531.8571.6603.1648.0702.7769.8814.3889.3959.51,010.71,097.21,207.01,349.61,458.61,585.91,768.41 974.12,232.72,488.62,708.03,030.63,149.63,405.03,777.24,038.74,268.64,539.94,900.45,250.85,546.15,722.96,038.56,374.03,195.13,547.33,869.14,140.54,336.64,683.05,044.65,344.85,461.95,540.95,583.85,597.95,631.75,697.75,758.65,803.75,908.75,991.46,059.56,194.46,261.66,327.66,395.96,510.8Finalsales ofdomesticproduct490.0510.1528.9565.5597.5643.0693.0756.0803.8880.2949.81,008.41,089.21,197.11,331.91,444.41,591.51,751.71,949.42,204.82,475.92,717.53,005.23,165.53,410.63,706.14,014.14,260.04,513.74,884.25,217.55,539.35,731.66,031.26,357.23,241.43,527.13,818.14,107.94,355.44,623.75,027.35,314.65,452.45,507.65,575.35,621.85,651.65,720.85,759.15,794.85,913.95,978.66,049.96,182.56,227.16,314.56,388.26,499.0Changeinbusinessinventories4.23.22.96.15.75.09.713.810.59.19.72.38.09.917.714.3-5.716.724.727.912.8-9.525.4-15.9-5.571.124.68.626.316.233.36.9-8.67.316.8-46.320.251.032.6-18.859.317.330.29.633.38.4-23.9-19.9-23.0-.58.9-5.112.99.712.034.613.17.711.7Goods 1TotalTotal250.8257.1260.4281.5293.2313.5342.9380.1395.1427.4456.6467.8493.0537.4616.6662.8715.1798.8880.4989.11,100.21,176.21,324.61,315.01,407.31,591.91,652.61,705.31,794.51,942.02,097.02,185.22,218.42,312.82,419.91,302.21,483.01,617.51,673.71,714.51,865.42,007.02,115.92,164.32,193.42,194.22,189.02,197.82,208.92,229.32,237.62,264.12,291.22,318.32,377.62,397.42,408.12,409.42,464.7Finalsales246.6253.9257.4275.4287.5308.5333.2366.3384.6418.3446.8465.6485.0527.5598.9648.5720.8782.0855.7961.21,087.51,185.71,299.21,330.91,412.81,520.81,628.01,696.71,768.21,925.72,063.62,178.42,227.02,305.52,403.11,348.51,462.81,566.51,641.11 733 31,806.11,989.72,085.72,154.72,160.12,185.82,212.92,217.72,231.92,229.82,228.72,269.32,278.42,308.62,365.62,362.92,395.02,401.72,452.9Changeinbusinessinventories4.23.22.96.15.75.09.713.810.59.19.72.38.09.917.714.3-5.716.724.727.912.8-9.525.4-15.9-5.571.124.68.626.316.233.36.9-8.67.316.8-46.320.251.032.6-18.859.317.330.29.633.38.4-23.9-19.9-23.0-.58.9-5.112.99.712.034.613.17.711.7Durable goodsFinalsales91.193.893.1103.4110.0119.6132.4147.9154.5169.1180.1182.1189.4209.7242.0257.1288.8323.6368.3416.9474.5502.1544.2541.6579.4647.0704.8730.2753.5835.6891.2933.5934.3975.81,034.6550.6620.5676.3705.7751.5769.3861.0893.9944.6926.3932.3931.0921.9940.8938.8935.7953.4963.2978.41,008.31,003.51,037.81,032.91,064.3Changeinbusinessinventories3.11.6-.13.42.74.06.710.25.54.76.4-.12.87.215.011.2-7.010.39.720.39.6-2.66.2-16.05.544.98.61.621.624.325.2-2.1-12.92.013.0-41.125.538.510.9-11.937.135.333.0-4.110.09.8-24.1-32.1-21.03.0-1.5-13.016.75.7-1.215.02.714.819.5Nondurable goodsFinalsales155.5160.1164.3172.0177.5188.9200.8218.5230.2249.1266.8283.5295.5317.8356.9391.4432.0458.4487.4544.3613.0683.6755.0789.3833.4873.8923.2966.51,014.71,090.11,172.51,244.81,292.71,329.61,368.5798.0842.3890.2935.4981.81,036.91,128.71,191.81,210.11,233.81,253.51,281.91,295.91,291.11,291.01,293.01,315.91,315.11,330.21,357.31,359.31,357.11,368.81,388.6Changeinbusinessinventories1.11.63.02.73.01.03.03.65.04.43.32.35.22.72.83.11.36.415.07.63.1-6.819.2.1-11.026.216.07.14.7-8.18.19.04.35.33.8-5.2-5.312.521.7-7.022.2-18.0-2.813.723.3-1.4 .312.2-2.0-3.510.47.9-3.84.013.219.510.4-7.2-7.7Services1181.7195.1208.6223.0238.1256.9276.0302.8330.7363.0395.8434.3477.0523.6571.0631.3706.9782.2870.4975.51,079.61,215.41,357.41,494.21,636.31,770.71,939.02,097.32,267.22,460.92,642.12,849.43,032.73,221.13,409.51,553.31,686.11,824.72,008.92,154.12,327.62,528.52,715.22,767.72,829.02,880.62,920.52,964.83,018.53,057.03,090.43,152.73,196.23,239.33,296.13,341.83,388.13,437.83,470.3Structures61.761.162.867.071.977.683.886.988.598.9107.1108.6127.2145.9161.9164.5163.8187.5223.3268.1308.8316.4348.6340.4361.5414.7447.1466.0478.2497.5511.7511.5471.9504.6544.6339.5378.2426.9457.9468.1490.1509.1513.7530.0518.5509.0488.4469.0470.4472.3475.7491.9504.0501.9520.8522.4531.5548.7575.8Autooutput19.421.317.822.425.125.931.130.227.835.034.728.538.941.445.938.840.355.164.267.966.259.268.365.388.3104.2115.8120.4118.9129.1135.1129.2121.1133.2142.163.2101.9110.4115.1122.5120.9136.1131.0128.4132.1137.6118.8114.2118.7127.8123.5125.6137.9133.0136.4142.8145.9134.6145.11 Exports and imports of certain goods, primarily military equipment purchased and sold by the Federal Government, are included inservices.Source: Department of Commerce, Bureau of Economic Analysis.278

TABLE B-8.—Cross domestic product by major type of product in 1987 dollars, 1959-93[Billions of 1987 dollars; quarterly data at seasonally adjusted annual rates]Year orquarter19591960196119621963196419651966196719681969197019711972197319741975197619771978197919801981198219831984198519861987198819891990199119921993"1982: IV1983: IV1984:IV1985: IV1986: IV1987: IV1988: IV1989: IV1990:1IIIllIV1991:1IIIllIV1992:1IIIllIV1993:1IIIllIVGrossdomesticproduct1,928.81,970.82,023.82,128.12,215.62,340.62,470.52,616.22,685.22,796.92,873.02,873.92,955.93,107.13,268.63,248.13,221.73,380.83,533.33,703.53,796.83,776.33,843.13,760.33,906.64,148.54,279.84,404.54,539.94,718.64,838.04,897.34,861.44,986.35,132.73,759.64,012.14,194.24,333.54,427.14,625.54,779.74,856.74,898.34,917.14,906.54,867.24,837.84,855.64,872.64,879.64,922.04,956.54,998.25,068.35,078.25,102.15,138.35,212.1Finalsales ofdomesticproduct1,915.21,962.72,016.62,112.52,199.62,324.92,445.42,579.52,657.52,773.22,848.22,868.02,935.23,084.53,230.93,217.23,235.63,355.33,499.03,666.33,783.23,784.63,818.63,777.83,902.24,080.64,257.64,395.94,513.74,698.64,808.34,891.64,869.84,979.85,117.33,804.53,982.84,146.24,303.34,447.24,565.64,758.74,831.84,893.64,889.04,895.64,888.04,855.24,878.04,873.54,872.54,926.94,943.84,988.65,059.65,048.95,089.15,131.85,199.4Changeinbusinessinventories13.68.17.215.616.015.725.136.727.623.624.85.920.822.537.730.9-13.925.534.337.213.6-8.324.6-17.54.467.922.18.526.319.929.85.7-8.46.515.4-44.929.347.930.2-20.159.920.924.94.728.110.9-20.9-17.4-22.3-.97.1-5.012.69.68.729.313.06.512.7Goods lTotalTotal825.2835.3840.9889.6914.9967.61,033.01,113.31,129.41,168.91,193.91,173.01,182.01,251.01,349.81,328.21,291.81,372.71,436.91,507.31,537.11,509.51,547.41,468.71,531.71,667.71,695.01,740.11,794.51,892.51,961.71,973.21,946.52,005.72,081.31,447.71,597.81,680.91,708.11,741.81,850.81,926.01,956.91,978.01,985.71,975.81,953.51,939.11,937.51,953.31,956.31,967.61,986.62,011.02,057.72,060.22,069.12,074.92,121.0Finalsales811.6827.1833.7874.0898.9952.01,007.91,076.61,101.71,145.31,169.11,167.11,161.31,228.41,312.11,297.31,305.71,347.21,402.61,470.11,523.51,517.71,522.91,486.21,527.31,599.81,672.91,731.61,768.21,872.61,932.01,967.51,954.91,999.22,065.91,492.61,568.51,633.01,677.91,761.81,790.91,905.01,932.01,973.31,957.61,964.91,974.31,956.51,959.81,954.21,949.21,972.61,973.92,001.42,049.02,030.92,056.12,068.52,108.3Changeinbusinessinventories13.68.17.215.616.015.725.136.727.623.624.85.920.822.537.730.9-13.925.534.337.213.6-8.324.6-17.54.467.922.18.526.319.929.85.7-8.46.515.4-44.929.347.930.2-20.159.920.924.94.728.110.9-20.9-17.4-22.3-.97.1-5.012.69.68.729.313.06.512.7Durable goodsFinalsales273.8277.8273.5296.5310.4334.3364.1399.4413.7430.4438.4428.0419.2458.4528.0524.6521.6540.6583.6623.7654.1626.4619.4578.9601.5655.1703.4731.5753.5833.1868.1893.1878.9911.7968.1580.9639.4677.6703.1750.4769.4852.9862.3907.5889.9889.2885.7871.8885.6881.1877.1891.3897.6915.2942.6938.2964.9968.71,000.7Changeinbusinessinventories8.64.6-.38.67.511.318.327.114.512.815.7-.98.916.231.219.6-11.517.015.628.711.7-4.36.3-16.06.345.79.31.921.623.323.8-1.9-12.02.412.3-41.926.739.711.9-11.936.933.531.0-3.99.89.1-22.4-28.5-19.72.3-2.0-11.615.66.3-.813.03.913.918.3Nondurable goodsFinalsales537.8549.3560.2577.5588.5617.6643.8677.2688.0714.9730.7739.1742.1770.0784.1772.7784.1806.6819.0846.4869.3891.4903.4907.3925.8944.7969.51,000.11,014.71,039.51,063.91,074.51,076.01,087.61,097.8911.6929.1955.3974.91,011.41,021.51,052.21,069.61,065.81,067.71,075.71,088.61,084.61,074.21,073.11,072.11,081.31,076.31,086.21,106.41,092.71,091.11,099.81,107.6Changeinbusinessinventories5.03.57.57.08.64.46.99.613.110.99.16.911.96.46.511.3-2.58.518.78.51.9-4.018.3-1.5-1.822.312.96.74.7-3.46.07.53.64.13.1-3.02.68.318.3-8.223.0-12.5-6.18.618.31.81.511.1-2.6-3.29.06.6-2.93.39.616.39.1-7.4-5.6Services1843.7877.3916.7956.8999.91,052.61,102.11,168.41,226.61,277.81,324.61,362.01,401.81,454.11,508.31,553.91,602.21,649.11,701.21,770.61,821.71,864.31,895.71,922.81,976.82,033.12,115.32,185.02,267.22,349.72,403.92,464.52,495.92,534.72,586.21,942.11,998.32,058.12,148.82,208.22,290.92,372.42,430.02,441.12,464.42,475.12,477.32,481.22,500.92,502.02,499.42,515.12,522.32,544.82,556.52,565.32,577.52,596.72,605.5Structures259.9258.2266.1281.7300.8-320.4335.4334.5329.3350.1354.5338.9372.1401.9410.4366.1327.7359.0395.2425.6438.0402.5400.0368.8398.1447.7469.4479.3478.2476.4472.5459.6419.0445.8465.1369.8416.0455.1476.5477.2483.8481.3469.8479.2467.1455.6436.5417.6417.2417.3423.9439.3447.7442.3454.2452.7455.5466.6485.6Autooutput59.563.853.163.368.969.583.280.472.486.682.965.485.389.998.779.074.896.8106.0104.294.879.186 879.2101.7115.8125.0124.4118.9127.3128.0121.4109.5117.4120.375.3113.7122.4122.4124.1120.3134.6123.8121.4123.9129.9110.3104.5109.0115.1109.5110.9121.8116.8120.1122.5123.4113.5123.71 Exports and imports of certain goods, primarily military equipment purchased and sold by the Federal Government, are included inservices.Source: Department of Commerce, Bureau of Economic Analysis.279

TABLE B-9.—Gross domestic product by sector, 1959-93[Billions of dollars; quarterly data at seasonally adjusted annual rates]Year or quarterGrossdomesticproductBusiness 1Total » Nonfarm 1 FarmStatisticaldiscrepancyHouseholdsandinstitutionsGeneral government 2TotalFederalStateandlocal195919601961196219631964196519661967196819691970197119721973197419751976197719781979198019811982198319841985.19861987198819891990199119921993".1982: IV1983: IV1984: IV1985-.IV1986: IV1987: IV1988-.IV1989: IV1990:1 IIIllIV1991:1 IIIllIV1992:1 IIIllIV1993:1 IIIllIV494.2513.3531.8571.6603.1648.0702.7769.8814.3889.3959.51,010.71,097.21,207.01,349.61,458.61,585.91,768.41,974.12,232.72,488.62,708.03,030.63,149.63,405.03,777.24,038.74,268.64,539.94,900.45,250.85,546.15,722.96,038.56,374.03,195.13,547.33,869.14,140.54,336.64,683.05,044.65,344.85,461.95,540.95,583.85,597.95,631.75,697.75,758.65,803.75,908.75,991.46,059.56,194.46,261.66,327.66,395.96,510.8436.9451.4465.7500.5527.1565.7614.1670.1703.5765.4822.5858.7931.21,025.31,151.51,242.71,346.11,507.41,691.11,921.12,147.92,328.92,611.72,692.12,914.83,251.13,473.53,665.73,890.84,201.04,495.94,725.94,848.55,114.45,400.62,724.03,046.63,330.33,561.23,718.34,016.64,327.34,569.84,664.84,726.24,756.14,756.54,770.74,827.34,880.74,915.35,001.95,071.25,130.25,254.45,303.05,359.05,416.65,523.7419.8434.7447.9481.4508.7547.2592.9644.4680.5742.8799.9832.5900.0991.71,102.21,193.91,291.41,450.61,633.01,858.72,069.72,259.22,530.92,634.42,855.53,191.63,420.33,601.53,849.54,161.84,413.74,633.04,760.15,006.45,301.02,674.12,986.93,283.23,501.53,656.03,970.94,291.94,476.64,564.74,641.04,656.44,670.14,691.24,739.94,774.74,834.64,894.04,964.25,028.85,138.75,184.75,263.75,330.15,425.418.919.820.120.220.419.321.922.922.222.725.226.228.132.649.847.448.846.447.254.764.556.169.965.149.268.567.162.966.067.681.185.178.884.481.360.045.867.565.764.370.660.886.987.184.881.579.283.078.774.584.883.485.883.683.883.373.285.0-1.8-3.1-2.2-1.0-2.0-.7-.72.8.8-.1-2.6.03.11.1-.51.46.010.410.97.613.813.610.9-7.410.2-9.0-13.91.2-24.8-28.41.17.89.623.618.2-10.113.8-20.5-5.9-2.0-24.9-25.412.813.1-1.814.94.9.24.527.36.223.123.615.732.134.412.013.313.312.413.914.515.616.717.919.321.323.426.129.532.435.639.043.047.252.057.162.471.078.989.3100.5111.6121.3132.0141.7153.3170.5187.6206.1227.5245.3267.0286.3115.5125.1135.6145.6157.8177.6194.3213.3218.9225.1230.9235.0238.0242.7247.6252.7258.7264.0269.6275.7280.3284.7288.1292.344.948.151.655.559.364.469.378.487.497.8107.5119.5130.4142.6155.1168.8187.7203.9220.6240.7261.9289.8318.4345.8368.9394.1423.6449.6478.7511.7548.8592.8629.1657.1687.1355.6375.6403.2433.6460.5488.8523.0561.7578.2589.6596.8606.4623.0627.7630.2635.6648.0656.3659.8664.3678.4683.9691.2694.721.722.623.725.226.528.530.034.337.941.944.948.551.154.957.261.166.671.075.681.887.196.3107.7117.3125.0132.2140.3143.7151.4159.8169.1180.1192.7199.8207.0121.1126.2134.1142.4144.9153.2161.3170.6177.9180.4179.7182.3193.2192.7192.1192.7200.0200.6200.0198.7206.2206.2208.3207.123.125.527.930.232.935.939.344.149.555.962.671.179.387.797.9107.6121.1132.9145.0158.9174.8193.5210.7228.5243.9261.9283.2305.9327.3351.9379.8412.7436.5457.3480.1234.5249.4269.2291.2315.6335.6361.7391.2400.4409.2417.1424.1429.8435.1438.1442.9448.0455.7459.7465.6472.1477.7483.0487.61 Includes compensation of employees in government enterprises.2 Compensation of government employees.Source: Department of Commerce, Bureau of Economic Analysis.280

TABLE B-10.—Gross domestic product by sector in 1987 dollars, 1959-93[Billions of 1987 dollars; quarterly data at seasonally adjusted annual rates]Year or quarterGrossdomesticproductBusiness'Total l Nonfarm' FarmStatisticaldiscrepancyHouseholdsandinstitutionsGeneral government 2TotalFederalStateandlocal1959...1960...1961...1962...1963...1964...1965...1966...1967...1968...1969...197019711972197319741975197619771978197919801981198219831984198519861987198819891990199119921993".1982: IV1983:IV1984: IV1985: IV ,1986: IV1987: IV1988: IV1989: IV1990:1IV1991:1..IIIII....IV....1992: IIIllIV1993: f....IV..1,928.81,970.82,023.82,128.12,215.62,340.62,470.52,616.22,685.22,796.92,873.02,873.92,955.93,107.13,268.63,248.13,221.73,380.83,533.33,703.53,796.83,776.33,843.13,760.33,906.64,148.54,279.84,404.54,539.94,718.64,838.04,897.34,861.44,986.35,132.73,759.64,012.14,194.24,333.54,427.14,625.54,779.74,856.74,898.34,917.14,906.54,867.24,837.84,855.64,872.64,879.64,922.04,956.54,998.25,068.35,078.25,102.15,138.35,212.11,582.11,609.51,650.71,740.81,818.81,930.42,045.32,162.62,208.02,303.02,366.22,368.42,447.42,594.82,749.72,719.62,684.62,840.12,987.83,144.23,226.03,193.43,253.63,167.33,308.23,541.73,658.13,768.33,890.84,050.64,150.54,190.84,144.84,267.64,404.33,166.33,411.53,583.03,706.13,786.73,969.94,104.24,161.94,199.44,211.94,197.74,154.34,119.44,137.04,157.64,165.04,206.74,239.84,277.94,346.24,353.94,374.14,408.44,480.81,543.41,574.31,611.61,698.01,778.61,886.82,001.72,109.12,158.82,258.02,326.72,318.92,388.62,541.32,702.02,666.02,619.62,768.12,914.63,083.83,155.03,123.43,179.23,115.83,243.13,496.43,608.63,702.83,849.54,014.84,083.44,112.44,066.24,168.44,315.53,116.93,349.03,548.93,646.83,724.43,925.54,074.54,085.04,118.74,141.74,112.54,076.54,047.74,062.24,065.04,090.04,110.04,141.04,182.64,240.04,247.44,288.14,330.14,396.445.246.446.946.347.146.046.144.546.545.146.849.550.550.748.650.753.152.553.848.250.451.060.860.253.755.164.264.366.063.266.271.670.479.673.961.147.056.165.564.469.053.865.269.071.872.173.571.671.069.269.777.279.182.279.778.276.267.573.6-6.5-11.2-7.8-3.6-6.8-2.4-2.59.02.6-.1-7.2.08.32.8-1.03.011.919.519.412.220.619.013.6-8.711.5-9.8-14.71.3-24.8-27.4 .96.98.119.714.9-11.715.5-22.0-6.2-2.1-24.6-24.111.711.8-1.613.14.2.23.823.35.319.419.713.126.528.39.810.810.886.587.591.193.696.5100.4104.7108.3111.8115.5114.1116.7120.0123.2124.3128.0128.6129.8135.1138.3142.6145.6148.9151.0154.9159.9166.3170.5180.6190.5196.9202.4209.1217.0149.6151.7156.8162.3166.9173.2184.7193.2193.8196.2198.5199.2200.0201.9202.9204.7206.5207.4210.3212.4213.5216.8218.4219.5266.5274.8285.6296.2303.2313.7324.8348.9368.9382.1391.3391.4391.8392.2395.7404.1409.1412.0415.6424.2432.5440.3443.9444.2447.4451.9461.8469.9478.7487.4497.0509.5514.3509.5511.3443.8448.9454.4465.1473.5482.3490.7501.7505.0509.1510.2513.6518.4516.7512.2509.9508.8509.3510.0509.8510.8511.3511.5511.8130.5132.1135.3141.6140.9141.7142.3155.4168.1170.7171.2161.6152.4143.7138.0137.9137.1137.0137.0138.4137.5139.2140.9142.4144.8146.4148.6149.0151.4153.5154.2156.2157.3150.5147.4143.2145.2147.1148.7149.8152.8154.0154.8155.2156.5155.6157.4161.3158.8155.6153.3152.0151.0150.1148.8148.8147.8146.9146.0136.0142.7150.3154.7162.3172.0182.5193.5200.8211.4220.1229.8239.5248.6257.7266.2272.0275.0278.6285.8295.0301.1303.0301.8302.6305.4313.2320.8327.3333.9342.7353.3357.0359.0363.9300.6303.7307.3316.5323.7329.5336.7346.9349.9352.6354.6356.2357.1357.8356.6356.5356.8358.3360.0361.0362.0363.4364.5365.81 Includes compensation of employees in government enterprises.2 Compensation of government employees.Source: Department of Commerce, Bureau of Economic Analysis.281

TABLE B-ll.—Gross domestic product by industry, 1947-91[Billions of dollars]YearGrossdomesticproduct234.3260.3259.3287.0331.6349.7370.0370.9404.3426.2448.6454.7494.2513.3531.8571.6603.1648.0702.7769.8814.3889.3959.51,010.71,097.21,207.01,349.61,458.61,585.91,768.41,974.12,232.72,488.62,708.03,030.63,149.63,405.03,777.24,038.74,268.64,539.94,539.94,900.45,250.85,546.15,722.9Agriculture,forestry,andfisheries20.824.019.420.723.823.221.120.719.819.719.621.920.321.321.722.122.321.424.225.424.925.728.529.832.137.355.053.254.953.854.463.374.666.781.177.062.783.784.381.788.588.590.8104.8112.0108.6Mining6.89.48.19.310.210.210.811.012.513.613.712.712.512.913.013.213.513.914.014.715.216.317.118.718.919.623.837.042.847.554.161.471.2112.6148.1146.1127.9137.1130.682.783.083.087.984.2103.191.8Construction9.111.511.513.215.616.917.517.719.021.222.121.823.724.225.227.028.931.534.637.739.543.348.451.156.162.569.873.775.285.193.9110.7124.8128.7129.4129.4137.9161.2179.2201.9213.0213.0227.6235.9240.1223.4ManufacturingTotal66.274.772.384.199.1103.4112.4106.8121.4127.4132.0124.6142.2144.8145.3159.1168.6180.5199.1218.2223.7244.3257.8253.1266.7294.3327.6341.2358.8409.6466.8521.9575.7588.3653.0647.5693.3773.9798.5829.3878.4877.8961.01,004.61,024.71,026.2Durablegoods33.538.237.245.955.659.066.161.070.874.078.070.181.782.681.792.198.3105.9118.8131.1134.1146.4154.4146.2154.2172.6195.8202.2207.1239.9277.7317.5343.8348.9385.3372.9396.0461.2471.5480.0503.2501.9541.1562.6563.7551.4Nondurablegoods32.736.635.138.243.544.346.445.850.553.554.054.560.562.263.667.170.474.680.387.189.697.9103.4106.9112.5121.7131.8139.0151.7169.7189.1204.5231.9239.4267.7274.6297.3312.7327.0349.3375.2375.9419.9442.0461.0474.8Transportationandpublicutilities21.023.723.926.630.132.134.133.736.739.541.541.744.947.148.751.754.658.162.267.170.376.182.588.097.1108.3119.1129.9142.3161.2179.2202.2219.1242.2273.3292.1326.7358.8378.0393.8419.9419.8442.1463.3481.2506.0Wholesaletrade16.618.317.619.822.522.723.223.526.629.030.531.134.235.336.438.840.543.647.251.554.860.265.168.674.383.293.5107.1117.0124.8137.9157.1178.6191.6212.7216.5223.6258.4276.6290.9302.6293.1331.0351.6363.0375.1Retailtrade27.530.130.331.734.336.337.238.140.542.444.645.349.150.451.755.457.963.568.072.778.286.694.2100.2109.2118.9131.0136.9153.0172.4190.4214.9233.2244.7269.3286.6321.1361.3390.9418.7440.1441.8471.7502.5515.7532.1Finance,insurance,andrealestate24.027.229.432.335.839.443.747.551.455.059.263.968.973.578.082.487.192.999.9108.0117.3126.8136.4146.3163.1176.5193.1208.9226.7250.1283.6328.6370.8418.4469.6503.9565.3619.0681.8743.5809.9809.7866.3926.5982.41,039.7Services20.221.922.624.226.428.230.231.635.238.741.844.148.451.655.059.363.469.174.782.690.899.4110.7120.5130.3144.9163.2179.4199.3224.1255.7294.6333.0377.0425.1469.8521.3586.9650.9712.8784.0782.5865.5948.81,040.01,089.8Government20.220.923.124.230.935.636.837.940.042.545.448.951.755.459.163.568.474.179.589.198.8110.7121.4134.2146.2160.4173.9189.9209.8229.3247.1270.5293.9324.2358.1388.0415.0445.9481.8512.1545.3545.3584.8627.6676.3720.6StatisticaldiscrepancylBased on 1972 SIC:19471948194919501951195219531954195519561957195819591960196119621963196419651966196719681969197019711972197319741975197619771978197919801981198219831984198519861987Based on 1987 SIC:198719881989199019911.8-1.21.01.02.91.82.82.41.2-2.8-1.9-1.1-1.8-3.1-2.2-1.0-2.0-.7-.72.8.8-.1-2.6.03.11.1-.51.46.010.410.97.613.813.610.9-7.410.2-9.0-13.91.2-24.8-24.8-28.41.17.89.61 Equals gross domestic product (GDP) measured as the sum of expenditures less gross domestic income—that is, GDP measured asthe costs incurred and profits earned in domestic production.Source: Department of Commerce, Bureau of Economic Analysis.282

TABLE B-12.—Gross domestic product by industry in 1987 dollars, fixed 1987 weights, 1977-91[Billions of dollars]YearGrossdomesticproductTotalManufacturingAgriculture,forestry,andfisheriesMiningConstructionDurablegoodsNondurablegoodsTransportationandpublicutilitiesWholesaletradeRetailtradeFinance,insurance,andrealestateServicesGovernmentStatisticaldiscrepancyxResidual2Based on1972 SIC:19771978197919801981198219831984198519861987Based on1987 SIC:198719881989199019913,533.33,703.53,796.83,776.33,843.13,760.33,906.64,148.54,279.84,404.54,539.94,539.94,718.64,838.04,897.34,861.463.759.262.463.272.773.368.471.581.984.588.588.585.188.095.897.483.585.071.979.974.273.171.382.083.383.083.083.094.283.391.891.5190.8198.8200.3185.4174.7164.9170.0190.9209.0209.1213.0213.0211.7213.1210.2194.5741.6773.1777.1725.4746.7711.1733.8791.4810.5819.1878.4877.8923.5932.2928.5908.0440.9460.9458.0424.3429.7392.4402.5458.4468.1471.5503.2501.9536.4543.2537.0525.5300.7312.2319.2301.1317.1318.7331.3333.0342.4347.7375.2375.9387.2389.1391.5382.5314.3325.1335.5336.3337.1331.3351.7377.6381.8386.9419.9419.8437.1449.4462.6478.1170.1185.8195.8190.5207.5218.2224.2259.5273.0307.1302.6303.1311.3324.5319.5326.4318.0338.1334.8320.1330.6336.8365.1397.7421.4453.2440.1441.8469.7483.9478.1474.1596.5631.0667.4692.8704.7708.4727.9762.1776.4776.6809.9809.7846.5865.5868.3878.4538.9573.5592.8609.0624.4629.2649.5687.8722.0751.7784.0782.5812.8845.7869.4866.7475.7488.3498.6508.9511.6507.1512.5516.9527.5 -14.7536.4 1.3545.3 -24.8545.3555.9567.0581.5586.519.412.220.619.013.6-8.711.5-9.8-24.8-27.4.920.833.439.645.745.315.620.821.07.7-4.4.0.01.8-15.56.9 -15.38.1 -48.41 Equals the current-dollar statistical discrepancy deflated by the implicit price deflator for gross domestic business product.2 Equals cross domestic product (GDP) in constant dollars measured as the sum of expenditures less the statistical discrepancy inconstant dollars and GDP in constant dollars measured as the sum of gross product originating by industry.Note.—Constant-dollar values are equal to fixed-weighted quantity indexes with 1987 weights divided by 100 and multiplied by the1987 value of current-dollar GDP.Source: Department of Commerce, Bureau of Economic Analysis.283

TABLE B-13.—Gross domestic product of nonfinancial corporate business, 1959-93[Billions of dollars; quarterly data at seasonally adjusted annual rates]Year orquarterTotalGrossdomesticCon-product sump-tion ofnonfinancialfixedofcorporatitalcap-businessIndirectbusinesstaxes*TotalTotalNet domestic productDomestic incomeCorporate profits with inventory valuation and capitalconsumption adjustmentsProfitsbeforetaxProfitstaxliabilityProfitsTotalProfits after taxCompensationofemployeesDividendsUndistributedprofitsInventoryvaluationadjustmentCapitalconsumptionadjustmentNetinterest1959196019611962196319641965 .196619671968196919701971197219731974197519761977197819791980198119821983,1984198519861987198819891990199119921993 "1982: IV1983: IV1984: IV1985: IV1986: IV1987: IV1988: IV1989: IV1990: IIIillIV1991: IIIIllIV1992: IIIIllIV1993: IIIIllIV P267.5278.1285.5311.7331.8358.1393.5431.0453.4500 5543.35614606.4673 3754.5814.6881.2994.61124.71,279.41,423.71,546.51,748.61802 81,936.12,166.52,293.62 386 32!547.32 764 82,913.53,045.53 082.13,243.41,806.32,037.22,228.22,338.82,422.82,627.62,843.22,951.53,007.73,064.13,057.83,052.53,048.b3,063.43,086.83,129.53,159.83,218.13,264.23,331.63,331.73,395.93,432.224.225.226.026.928.129.531534.337.541445.349 754.661066.277.593.3103.8116.2132.3153.0174.8207.0229 4242.1248.1258.02714281.4297 5317.4329.33415352 7362.3238.8261.5258.9263.4275.8286.1304.5326.5322.6326.6332.0336.1339.4340.4342.3343.9345.1347.8366.1351.7356.8359.0367.0366.3243.2252.9259.6284.8303.7328.6362 0396.7415.94591498.05116551.7612 4688.3737.1788.0890.81,008.51,147.21,270.71,371.71,541.51573 41,694.01,918.32,035.52 114 92,265.92 467 32,596.22,716.22 740 62,890.71,567.51,775.71,969.42,075.42,147.12,341.42,538.82,625.02,685.12,737.52,725.82,716.42,709.22,722.92,744.52,785.62,814.62,870.32,898.22,979.92,975.03,036.83,065.126.028.329.532.034.036.639.240.543.149 754.758 864.569 276.381.487.495.1104.1114.6123.3139.4167.9169 4185.8206.9220.32314241.02571274.2290.43115327 7345.5172.6194.0212.4223 8233.6245.4263.1279.0285.3285.8294.0296.6304.2307.1315.3319.5321.8323.9329.1336.0333.0344.0347.0357.9217.2224.6230.1252.8269.7292.0322.8356.2372.8409 3443.3452 84873543 2612.0655.7700.6795.7904.41,032.61,147.41,232.41,373.61404 01,508.21,711.41,815.31883 62,024.92 210 22,322.02,425.82,429.02,563.11,394.91,581.71,756.91,851.61,913.52,096.02,275.72,346.02,399.82,451.72,431.82,419.82,405.02,415.82,429.22,466.12,492.92,546.42,569.02,643.92,642.02,692.82,718.1171.5181.2185.3200.1211.1226.7246.5274.0292.3323 2358.8378 7402.0447 1505.9556.8580.3656.7741.8850.2964.21,053.51,164.81209 91,271.61,409.21,503.21 581 5l!675.01 814 2l!920.22,020.92,053.82 149 52,255.41,213.91,327.61,449.71,540.11,611.41,730.11,868.81,954.61,987.42,019.42,037.52,039.32,028.32,040.12,061.62,085.32,103.82,135.42,162.72,195.92,215.02,244.72,267.12,294.942.640.040.848.253.860.070.374.971.876 071.357 167.277 083.670.691.5111.5132.0146.1138.1120.7136.91115159.9214.3221.4203.8244.2274.4255.2256.4233.9278 3314.8101.5175.2211.4221.4198.6256.8278.5240.7263.9282.9246.5232.4232.8235.5227.0240.4252.3273.9272.7314.1292.1315.0318.243.640.340.145.049.856.066.271.467.574 070.858167.178 698.6109.2109.9137.3158.6183.5195.5181.6181.0132 9155.9189.0165.5149.1212.0256.6232.9232.1214.82551286.8116.5168.1169.0168.4168.5224.8271.4215.9223.3233.8244.6226.7207.8209.9218.2223.3235.1260.2251.8273.2268.4291.2281.820.719.219.520.622.824.027.229.527.833 633.327 229.933 840.242.241.553.059.967.169.667.063.946 359.473.769.975.693.5101.799.593.982.798.2114.940.664.462.671.186.599.6107.991.189.695.098.892.079.781.184.385.990.8100.895.3105.8106.4117.6112.51 Indirect business tax and nontax liability plus business transfer payments less subsidies.Source: Department of Commerce, Bureau of Economic Analysis.22.921.120.724.327.032.139.041.939.740 437.531037.144 858.467.068.484 498.7116.4125.9114.6117.186 796.4115.495.673.5118.5154 9133.3138.3132.1156 9171.875.9103.7106.497.282.0125.1163.5124.8133.7138.8145.8134.8128.2128.8133.9137.4144.3159.4156.5167.4162.0173.6169.310.010.610.611.412.613.715 616.817.519119.118 518.520121.121.724.827.832 037.239.345.553.456 466.569.574.576.377.982 0101.9118.194.0105 2125.359.067.468.774.775.284.084.3102.3118.0117.4120.0117.2103.192.989.090.993.9100.3105.9120.7127.4125.4124.012.910.610.113.014.418.423 425.122.221 318.412 518.724 737.345.243.656.666 879.186.769.163.730 229.945.921.1-2.840.672 931.520.138.151746.516.936.337.722.56.841.279.222.515.821.425.817.525.135.944.946.550.559.150.546.734.648.245.3-0.3-.2.3.0.1-.5-1.2-2.1-1.6-37-5.9-66-4.6-66-20.0-39.5-11.0-14.9-16.6-25.0-41.6-43.0-25.7-99-8.5-4.1.29.7-14.5-27 3-17.5-11.04.9-5.3-7.8-8.6-7.63.5-3.8-10.7-17.8-31.7-13.5-2.08.9-31.5-19.58.212.7-3.01.9-4.6-13.7-7.84.9-12.7-12.21.0-7.2-0.7-.2.33.23.94.55.35.65.8566.3554.7505.0.9-7.4-10.9-10.0-12.3-15.9-17.8-18.4-11512.529.455.644.946.745.039.935.314.228.535.9-6.414.738.956.940.849.838.838.342.640.133.425.216.812.811.815.221.827.428.836.036.436.035.435.73.13.54.04.54.85.36.17.48.810113.217 118.119 222.528.328.727.530.636.345.158.271.982 576.787.990.798.3105.8121.6146.6148.5141.3135.379.678.995.890.0103.5109.2128.4150.7148.5149.5147.9148.2143.9140.2140.6140.5136.8137.1133.6133.9134.9133.1132.8284

TABLE B-14.—Output, costs, and profits oj nonfinancial corporate business, 1959-93[Quarterly data at seasonally adjusted annual rates]Year or quarterGross domesticproduct ofnonfinancialcorporatebusiness(billions ofdollars)Current 1987dollars dollarsTotalcostandprofit 2Current-dollar cost and profit per unit of output (dollars)»ConsumptionoffixedcapitalIndirectbusinesstaxes 3Compensationofsmploy-Corporate profits withinventory valuation andcapital consumptionadjustmentsTotalProfitstaxliabilityProfitsaftertax 4NetinterestOutputper hourof allemployees(1987dollars)Compensationper hourof allemployees(dollars)195919601961196219631964.,19651966196719681969197019711972197319741975197619771978197919801981198219831984198519861987198819891990199119921982: IV..1983: IV..1984: IV..1985: IV..1986: IV..1987: IV...1988: IV..1989: IV..267.5278.1285.5311.7331.8358.1393.5431.0453.4500.5543.3561.4606.4673.3754.5814.6881.2994.61,124.71,279.41,423.71,546.51,748.61,802.81,936.12,166.52,293.62,386.32,547.32,764.82,913.53,045.53,082.13,243.41,806.32,037.22,228.22,338.82,422.82,627.62,843.22,951.5928.7955.6978.21,047.51,104.81,179.31,262.21,336.01,367.41,444.31,492.51,473.41,525.91,629.51,706.91,669.71,625.61,748.51,866.71,967.11,995.71,980.92,035.12,001.32,112.32,284.12,364.32,439.32,547.32,684.82,718.92,747.42,710.02,822.31,999.62,204.22,328.42,396.92,463.32,604.02,719.02,722.70.288.291.292.298.300.304.312.323.332.347.364.381,397.413.442.488.542.569.603.650.713.781.859.901.917.949.970.9781.0001.0301.0721.1091.1371.149.903.924.957.976.9841.0091.0461.0840.026.026.027.026.025.025.025.026.027.029.030.034.036.037.039.046.057.059.062.067.077.088.102.115.115.109.109.111.110.111.117.120.126.125.119.119.111.110.112.110.112.1200.028.030.030.031.031.031.031.030.032.034.037.040.042.042.045.049.054.054.056.058.062.070.082.085.088.091.093.095.095.096.101.106.115.116.086.088.091.093.095.094.097.1020.185.190.189.191.191.192.195.205.214.224.240.257.263.274.296.333.357.376.397.432.483.532.572.605.602.617.636.648.658.676.706.736.758.762.607.602.623.643.654.664.687.7180.046.042.042.046.049.051.056.056.052.053.048.039.044.047.049.042.056.064.071.074.069.061.067.056.076.094.094.084.096.102.094.093.086.099.051.079.091.092.081.099.1020.022.020.020.020.021.020.022.022.020.023.022.018.020.021.024.025.026.030.032.034.035.034.031.023.028.032.030.031.037.038.037.034.031.035.020.029.027.030.035.038.040.0330.024.022.022.026.028.031.034.034.032.029.025.020.024.027.025.017.031.033.039.040.034.027.036.033.048.062.064.053.059.064.057.059.056.064.030.050.064.063.045.060.063.0550.003.004.004.004.004.005.005.006.006.007.009.012.012.012.013.017.018.016.016.018.023.029.035.041.036.038.038.040.042.045.054.054.052.048.040.036.041.038.042.042.047.05515.44315.66116.18216.67517.20417.85518.07418.14318.36218.85818.75018.77619.48719.79319.76219.23019.76320.36520.76620.71120.22220.26520.53820.80321.59621.92622.15022.73523.12923.57223.18923.44623.86524.83621.07021.89322.05422.34722.89223.35823.52423.1472.8512.9693.0663.1863.2873.4323.5293.7203.9254.2204.5084.8255.1345.4305.8586.4137.0567.6488.2528.9519.77010.77711.75512.57713.00213.52714.08314.74115.20815.83316.37717.24618.08718.91512.79113.18713.73214.35914.97515.51816.07116.6181990:1IIIllIV3,007.73,064.13,057.83,052.52,742.92,771.42,750.52,725.01.097.106.112.120.118.118.121.123.104.103.107.109.725.729.741.748.096.102.090.085.033.034.036.034.064.068.054.052.054.054.054.05423.23123.53723.46823.54916.83217.15017.38517.6231991:1IIIllIV3,048.63,063.43,086.83,129.52,694.12,692.42,708.52,745.0.132.138.1401.140.126.126.126.125.113.114.116.116.753.758.761.760.086.087.084.088.030.030.031.031.057.057.053.056.053.052.052.05123.63423.73823.88924.24617.79417.98818.18318.4191992:1IIIllIV3,159.83,218.13,264.23,331.62,759.52,802.62,839.82,887.41.1451.1481.1491.154.125.124.129.122.117.116.116.116.762.762.762.761.091.098.096.109.033.036.034.037.059.062.062.072.050.049.047.04624.39424.67825.03125.31018.59718.80319.06219.2491993:1II3,331.73,395.93,432.22,867.52,916.62,948.91.1621.1641.164.124.123.124.116.118.118.772.770.769.102.108.108.037.040.038.065.068.070.047.046.04525.05325.29625.51219.35319.46819.6291 Output is measured by gross domestic product of nonfinancial corporate business in 1987 dollars.2 This is equal to the deflator for gross domestic product of nonfinancial corporate business with the decimal point shifted twoplaces 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).151-444 0 - 9 4 - 1 0285

TABLE B-15.—Personal consumption expenditures. 1959-93[Billions of dollars; quarterly data at seasonally adjusted annual rates]Year orquarterPersonalconsumptionexpendituresTotal»Durable goodsMotorvehiclesandpartsFurnitureandhouseholdequipmentNondurable goodsTotal !FoodClothingandshoesGasolineandoilFueloilandcoalServicesTotal l Hous- TotalHouseholdoperationEjectricityandgasTransportationMedicalcare19591960196119621963196419651966196719681969197019711972197319741975197619771978197919801981198219831984198519861987198819891990199119921993 "....1982: IV.1983: IV.1984:1V.1985: IV.1986: IV.1987: IV.1988:1V.1989: IV.1990:1...IV1991:1..IIIllIV1992:1 IIIllIV1993:1 IIIllIV "....318.1332.4343.5364.4384.2412.5444.6481.6509.3559.1603.7646.5700.3767.8848.1927.71,024.91,143.11,271.51,421.21,583.71,748.11,926.22,059.22,257.52,460.32,667.42,850.63,052.23,296.13,523.13,761.23,906.44,139.94,390.62,128.72,346.82,526.42,739.82,923.13,124.63,398.23,599.13,679.33,727.03,801.73,836.63,843.63,887.83,929.83,964.14,046.54,099.94,157.14,256.24,296.24,359.94,419.14,487.442.843.541.947.051.856.863.568.570.681.086.285.397.2110.7124.1123.0134.3160.0182.6202.3214.2212.5228.5236.5275.0317.9352.9389.6403.7437.1459.4468.2457.8497.3537.7246.9297.7328.2354.4406.8408.8452.9458.3479.8466.0467.3459.5448.9452.0465.1465.2484.0487.8500.9516.6515.3531.6541.9561.918.919.717.821.524.426.029.930.330.036.138.435.544.551.156.149.554.871.383.592.291.584.091.697.7120.6144.6167.4184.9183.5197.8205.4202.9185.5204.3222.4105.1134.8149.3162.9188.2186.3203.4198.1213.9202.2202.8192.9182.0180.0190.0190.2199.4200.6203.4213.7211.7220.8221.7235.418.118.018.319.320.723.225.128.230.032.934.735.737.842.447.951.554.560.267.174.082.386.091.392.5104.4115.3123.4135.5144.0156.7167.9174.2180.6194.5211.795.6109.7118.7128.1140.6145.9162.5170.8175.1173.6173.6174.5176.1181.2182.9182.4188.7190.2196.5202.7203.3208.6214.0220.9148.5153.1157.4163.8169.4179.7191.9208.5216.9235.0252.2270.4283.3305.2339.6380.8416.0451.8490.4541.5613.3682.9744.2772.3817.8873.0919.4952.21,011.11,073.81,149.51,229.21,257.91,300.91,350.2787.3839.8887.8939.5963.71,029.41,105.81,173.51,201.71,213.61,241.01,260.71,252.31,259.21,260.01,260.01,278.21,288.21,305.71,331.71,335.31,344.81,352.41,368.480.782.684.887.189.594.6101.0109.0112.3121.6130.5142.1147.5158.5176.1198.1218.5236.0255.9280.6313.0341.8367.3386.0406.2430.2451.1476.8500.7533.6565.1604.8621.4633.7658.3394.9413.9436.8460.7486.7507.4549.5575.3591.0601.3611.4615.6617.1623.1622.1623.2628.8626.6631.7647.6648.2654.1660.0671.126.427.027.629.029.832.434.137.439.243.246.547.851.756.462.566.070.876.684.194.3101.2107.3117.2120.5130.8142.5152.2163.2174.5186.4200.4207.3213.0228.2237.1122.7136.7145.7156.2165.8177.6194.4205.4206.2206.8208.5207.6208.9214.3215.5213.4221.4224.5230.7236.1233.1235.2238.2241.911.312.012.012.613.013.614.816.017.118.620.521.923.224.428.136.139.743.046.950.166.286.797.994.193.394.596.979.784.786.996.2108.4102.9103.4103.693.094.994.997.673.087.888.595.9102.299.7108.7123.0107.4102.7101.1100.399.9102.9105.8105.2106.0103.6102.4102.54.03.83.83.84.04.14.44.74.84.74.64.44.65.16.37.88.410.111.111.514.415.415.814.513.814.214.112.012.012.112.013.213.013.815.114.014.113.814.311.312.211.713.212.312.314.113.913.512.413.312.712.814.713.913.915.114.915.415.0126.8135.9144.1153.6163.1175.9189.2204.6221.7243.1265.3290.8319.8351.9384.5423.9474.5531.2598.4677.4756.2852.7953.51,050.41,164.71,269.41,395.11,508.81,637.41,785.21,914.22,063.82,190.72,341.62,502.71,094.61,209.31,310.41,446.01,552.61,686.41,839.51,967.31,997.82,047.52,093.42,116.42,142.42,176.62,204.82,239.02,284.42,323.82,350.52,407.92,445.52,483.42,524.82,557.245.048.251.254.758.061.465.469.574.179.786.894.0102.7112.1122.7134.1147.0161.5179.5201.7226.6255.2287.1311.1334.6362.3392.5421.8452.5484.2514.4547.5574.4600.0627.7320.2344.6373.8404.6432.7466.6496.0526.6534.5543.2553.6558.6564.5571.4577.5584.2591.2596.9602.5609.2617.6625.1631.1636.918.720.321.222.423.625.026.528.230.232.335.137.841.045.349.855.563.772.481.991.2100.0113.0126.0141.4153.6165.5176.2181.1187.8199.5209.8215.6227.1234.4251.0145.8159.3168.8180.7182.5189.7203.8217.7208.1216.2219.1219.1220.8229.7230.3227.8228.0234.5230.3245.0245.7246.7255.2256.37.68.38.89.49.910.410.911.512.213.014.015.216.618.420.023.528.532.537.642.146.856.363.472.680.784.688.787.188.493.498.097.4104.3105.8113.274.984.885.990.186.888.695.3103.792.498.199.799.6100.5107.1105.9103.7101.3104.7106.0111.0111.1109.8116.4115.610.511.211.712.212.713.414.515.917.318.920.923.727.129.831.233.335.741.349.253.659.465.169.471.678.989.199.0105.8116.6128.5135.6142.5146.2155.4170.273.682.992.5101.5109.0121.3132.7137.6139.9141.7143.1145.4144.0145.0147.0148.8152.5153.7153.0162.4166.3169.1170.9174.416.317.418.620.722.425.727.730.533.739.044.450.156.563.571.280.193.0106.2122.4139.7157.8181.3213.6240.5265.7290.6319.3346.4384.7427.7471.9526.2577.1628.4680.6250.9274.8299.9333.0358.4398.5444.4489.2504.4519.0534.8546.6558.3569.9582.4597.6609.1622.6634.9646.9662.2675.4686.9698.01 Includes other items not shown separately.2 Includes imputed rental value of owner-occupied housing.Source: Department of Commerce, Bureau of Economic Analysis.286

TABLE B-16.—Personal consumption expenditures in 1987 dollars, 1959-93[Billions of 1987 dollars; quarterly data at seasonally adjusted annual rates]Year orquarter19591960196119621963196419651966196719681969197019711972197319741975197619771978197919701981198219831984198519861987198819891990199119921993 '.1982: IV1983: IV1984: IV1985: IV1986: IV1987: IV1988: IV1989: IV1990:1 IIIll ..IV1991:1 IIIllIV1992:1IIIllIV1993:1IIIllIV....Personalconsumptionexpenditures1178 91,210.81,238.41,293.31,341.91,417 21,497.01,573.81,622.41,707.51,771.21,813.51,873.71,978.42,066.72,053.82,097.52,207.32,296.62,391.82,448.42,447.12,476.92,503.72,619.42,746.12,865.82,969.13,052.23,162.43,223.33,272.63,258.63,341.83,452.52,539.32,678.22,784.82,895.33,012.53,074.73,202.93,242.03,264.43,271.63,288.43,265.93,242.73,256.93,267.13,267.53,302.33,316.83,350.93,397.23,403.83,432.73,469.63,503.9Durable goodsTotal»114 4115.4109.4120.2130.3140 7156.2166.0167.2184.5190.8183.7201.4225.2246.6227.2226.8256.4280.0292.9289.0262.7264.6262.5297.7338.5370.1402.0403.7428.7440.7443.1426.6456.6489.7272.3319.1347.7369.6415.7404.7439.2436.8454^8441.8442.4433.2420.3422.0432.6431.5446.6447.5459.0473.4471.9484.2493.1509.9Motorvehiclesandparts59 761.354.962.268.471281.281.880.391.895.185.6100.8114.3123.4102.2102.9124.6137.3141.5130.5111.4113.5115.6138.1160.3180.2193.3183.5194.8196.4192.7170.5182.3191.7123.7151.6164.3173.9193.6183.6197.7188.3203.0192.8193.0182.1169.4165.9173.7173.0180.6179.5180.6188.6185.7191.3189.9199.9Furnitureandhouseholdequipment38 237.738.140.443.148 352.157.659.562.964.364.466.873.681.581.979.184.291.496.6101398.597.794.2104.3115.3123.8136.3144.0155.4165.8171.6180.0194.8216.396.4109.3118.7128.6141.4145.9160.3167.9172.0171.0171.0172.3174.3180.0182.7182.9188.2189.8197.1204.2206.5212.4219.4227.0Nondurable goodsTotal J518 5526.9537.7553.0563.6588 2616.7647.6659.0686.0703.2717.2725.6755.8777.9759.8767.1801.3819.8844.8862 8860.5867.9872.2900.3934.6958.7991.01,011.11,035.11,051.61,060.71,048.21,062.91,088.1880.7915.2942.9968.71,000.91,014.61,046.81,058.91,059.81,060.61,065.01,057.51,048.21,051.11,049.31,044.01,052.01,055.01,062.91,081.81,076.01,083.11,093.01,100.1Food3019305.8312.1316.3319.23310346.5359.1364.5380.7389.7397.5399.2411.9412.6404.7413.2431.9441.5442.8448.0448.8446.6451.4463.4472.3483.0494.1500.7513.4515.0523.9518.7520.5531.2458.3467.1475.1488.2496.9502.4518.0515.6519.0524.1526.5525.8518.7519.0518.8518.2518.8515.7518.2529.3526.7528.6532.6536.9Clothingandshoes58 258.759.862.463.668 571.576.376.980.281.981.084.690.496.995.498.5103.2108.7119.01241126.0132.8133.7142.4153.1158.8170.3174.5178.9187.8186.2184.7193.7199.2135.7147.7154.7161.7171.9174.5182.8190.9188.5185.4186.4184.5182.9187.0185.9183.1188.3191.1195.4200.0194.8197.8200.6203.7Gasolineandoil38 139.439.841.542.845147.350.251.855.559.262.965.968.672.168.670.673.475.777.476.472.073.273.975.777.979.282.984.786.187.386.483.183.984.973.476.979.079.584.685.487.588.687.986.786.584.682.783.783.482.582.783.784.784.483.984.186.285.3Fueloilandcoal22 621.720.620.621.622 523.524.224.223.021.820.219.521.523.318.418.120.319.619.518.114.011.810.911.111.211.512.112.012.011.410.510.711.913.010.511.411.111.412.411.912.012.010.011.011.69.510.310.611.410.611.112.811.711.912.912.613.213.2ServicesTotal»546 0568.5591.3620.0648.0688 3724.1760.2796.2837.0877.2912.5946.7997.41,042.21,066.81,103.61,149.51,196.81,254.11 296.51,323.91,344.41,368.91,421.41,473.01,537.01,576.11,637.41,698.51,731.01,768.81,783.81,822.31,874.71,386.21,443.91,494.21,557.11,595.81,655.51,716.91,746.31,749.81,769.21,781.11,775.21,774.21,783.81,785.21,792.01,803.71,814.31,829.01,842.01,855.91,865.41,883.51,893.9Housing2159 8168.1176.0185.8194.4203 5214.6224.4234.5246.0259.1269.3280.9295.9310.8326.9336.5346.7355.4372.9387 9399.4407.3409.6415.5426.8435.9442.1452.5461.8469.2474.6478.6484.2492.0411.0419.7431.3438.1444.8457.0465.6471.3473.3474.3475.0475.9476.3478.1479.4480.6481.7483.2485.1486.7488.8490.7493.3495.0HouseholdoperationTotal J75 078.581.285.288.492 696.8101.4106.2110.1115.3118.9120.8126.8132.0132.5138.1143.9151.0158.0162 9167.1165.6166.7169.4173.7179.1180.8187.8196.9202.6204.3208.2211.7218.7166.2173.3174.8182.6182.8189.3198.6208.5197.9205.1208.0206.0203.8211.3210.6207.3205.9210.7213.6216.6217.9215.6220.8220.8Electricityandgas34 536.338.340.942.845147.249.752.455.058.060.461.864.966.566.970.472.976.078.879.381.680.381.283.784.386.685.688.492.794.392.295.895.399.080.286.884.588.586.888.693.098.887793.294.493.892.598.997.394.492.495.195.398.599.196.2100.6100.1Transportation45 446.747.048.750.553.055.458.662.065.468.971.073.677.879.679.981.484.490.292.996.191.388.987.491.6100.0109.2112.6116.6122.5123.8124.0120.0122.7126.388.294.2103.5111.2113.4117.9124.2124.3124.9124.4124.0122.7120.2120.1119.7120.2120.4121.9125.0123.7124.5126.1126.5128.3Medicalcare95 098.4102.0110.2117.1129.8135.8142.3148.1159.5171.3180.7193.7207.0222.4231.1243.8255.5267.9279.2790 9302.1318.3323.7332.6341.9353.0366.2384.7399.4408 6424.6437.6449.2463.2327.8334.8344.9359.1372.0390.7403.0411.8418.0423.2427.7429.4432.6435.3438.8443.6445.3447.9450.4453.2458.0461.1465.1468.61 Includes other items not shown separately.2 Includes imputed rental value of owner-occupied housing.Source: Department of Commerce, Bureau of Economic Analysis.287

TABLE B-17.—Gross and net private domestic investment, 1959-93[Billions of dollars; quarterly data at seasonally adjusted annual rates]Year or quarterGrossprivatedomesticinvestmentLess:ConsumptionoffixedcapitalEquals: Net private domestic investmentTotalNet fixed investmentTotalNonresidentialTotalStructuresProducers'durableequipmentdentialChange inbusinessinventories1959..1960196119621963196419651966196719681969197019711972197319741975197619771978197919801981198219831984198519861987198819891990199119921993".1982: IV1983: IV1984: IV1985: IV1986: IV1987: IV1988: IV1989: IV1990:1 IIIllIV1991:1IV....1992:1 IIIllIV1993:178.878.777.987.993.4101.7118.0130.4128.0139.9155.2150.3175.5205.6243.1245.8226.0286.4358.3434.0480.2467.6558.0503.4546.7718.9714.5717.6749.3793.6832.3808.9736.9796.5892.0464.2614.8722.8737.0697.1800.2814.8825.2828.9837.8812.5756.4729.1721.5744.5752.4750.8799.7802.2833.3874.1874.1884.0935.844.646.347.749.351.353.957.362.167.473.981.597.6109.9120.4140.2165.2182.8205.2234.8272.4311.9362.4399.1418.4433.2454.5478.6502.2534.0580.4602.7626.1657.9671.2412.5439.7448.0465.6488.2512.1547.2600.8590.2597.9607.8614.8619.9622.3626.7635.4631.7637.2714.6648.0663.2663.3679.7678.734.232.430.338.642.047.860.768.360.666.073.761.578.095.7122.7105.560.9103.6153.1199.3207.8155.7195.6104.3128.2285.6260.0239.1247.1259.6251.9206.2110.8138.6220.851.7175.1274.8271.4208.9288.1267.6224.4238.7239.9204.7141.5109.399.2117.9117.0119.1162.587.6185.2210.8210.8204.3257.130.129.227.332.536.442.851.054.550.156.964.059.269.985.8105.091.366.586.8128.3171.3195.1165.2170.2120.3133.8214.6235.4230.4220.9243.4218.6199.3119.5131.2204.098.0154.9223.8238.8227.8228.8250.3194.2229.1206.6196.3165.4129.2122.3118.4108.1124.2149.677.9173.3176.3197.7196.6245.412.313.812.215.316.421.330.336.733.235.040.538.436.842.559.058.941.545.664.994.1117.3113.8127.199.169.1126.6146.1114.4103.0125.8117.1116.167.260.46.67.77.68.38.310.314.116.015.115.817.918.418.418.723.824.518.819.923.435.549.959.175.572.446.265.175.251.846.747.948.651.827.513.95.76.14.67.08.111.016.220.718.119.222.620.018.423.835.234.522.725.641.558.667.454.751.626.722.961.570.962.656.377.968.564.339.746.517.815.415.117.220.021.520.717.816.921.923.520.833.143.246.032.325.141.263.477.377.851.443.121.264.687.989.3116.0117.9117.6101.583.252.370.84.23.22.96.15.75.09.713.810.59.19.72.38.09.917.714.3-5.716.724.727.912.8-9.525.4-15.9-5.571.124.68.626.316.233.36.9-8.67.316.8-46.320.251.032.6-18.859.317.330.29.633.38.4-23.9-19.9-23.0-.58.9-5.112.99.712.034.613.17.711.7Source: Department of Commerce, Bureau of Economic Analysis.288

TABLE B-18.—Gross and net private domestic investment in 1987 dollars, 1959-93[Billions of 1987 dollars; quarterly data at seasonally adjusted annual rates]Year or quarterGrossprivatedomesticinvestmentLess:ConsumptionoffixedcapitalEquals.- Net private domestic investmentTotalNet fixed investmentTotalNonresidentialTotalStructuresProducers'durableequipmentResidentialChange inbusinessinventories19591960196119621963196419651966196719681969197019711972197319741975197619771978197919801981198219831984198519861987198819891990199119921993".1982: IV1983: IV1984: IV1985: IV1986: IV1987: IV1988: IV1989: IV1990:1IIIllIV1991:1 IIIllIV1992:1IIIllIV1993:1IIIllIV296.4290.8289.4321.2343.3371.8413.0438.0418.6440.1461.3429.7475.7532.2591.7543.0437.6520.6600.4664.6669.7594.4631.1540.5599.5757.5745.9735.1749.3773.4784.0746.8675.7732.9820.9503.5669.5756.4763.1705.9793.8785.0769.5766.5773.9751.0695.7667.8659.8682.8692.3691.7737.0739.6763.0803.0803.6813.4863.6168.8173.7178.6183.6189.6196.4205.0214.9225.2235.3246.7258.0269.1285.0296.4310.3322.8334.6348.4364.5384.5400.7417.8429.5447.4455.5471.5486.7502.2518.5545.5554.8569.2595.0598.6439.2468.5467.4480.1492.5508.1524.7559.6549.7553.1556.5559.9563.3566.5569.5577.6574.8577.6643.7584.0595.0592.5604.4602.6127.5117.1110.8137.6153.7175.4208.1223.0193.4204.7214.6171.7206.6247.2295.3232.6114.8186.1252.1300.0285.2193.7213.2111.0152.1302.0274.4248.4247.1254.9238.5192.0106.4137.8222.364.3201.0289.0283.0213.3285.7260.3209.9216.8220.7194.5135.8104.593.2113.4114.6116.9159.595.9179.0208.1211.1208.9261.0114.0109.0103.6122.0137.7159.7182.9186.3165.8181.1189.8165.8185.8224.6257.6201.7128.7160.6217.8262.8271.6201.9188.7128.5147.7234.0252.3239.9220.9235.0208.7186.3114.8131.3206.9109.2171.7241.1252.8233.4225.8239.3185.0212.1192.6183.7156.7121.9115.6114.3107.6121.9146.886.3170.3178.8198.1202.5248.339.244.139.949.552.869.799.9118.1103.9105.1112.298.785.098.9134.6122.372.074.599.0134.4154.1129.5131.6101.071.6134.3154.0118.3103.0122.6114.8111.168.269.025.430.530.632.932.139.553.058.353.052.256.053.549.049.257.953.436.736.839.855.270.173.382.075.350.369.379.454.946.746.745.947.325.913.413.813.79.416.620.730.246.959.850.952.956.245.236.049.776.768.935.337.759.279.284.056.149.625.721.465.074.663.356.375.968.963.842.355.574.864.863.772.584.990.083.068.261.976.077.667.1100.8125.7123.079.456.886.1118.8128.4117.572.557.127.576.099.898.3121.6117.9112.494.075.246.662.413.68.17.215.616.015.725.136.727.623.624.85.920.822.537.730.9-13.925.534.337.213.6-8.324.6-17.54.467.922.18.526.319.929.85.7-8.46.515.4-44.929.347.930.2-20.159.920.924.94.728.110.9-20.9-17.4-22.3-.97.1-5.012.69.68.729.313.06.512.7Source: Department of Commerce, Bureau of Economic Analysis.289

TABLE B-19.—Inventories and final sales of domestic business, 1959-93[Billions of dollars, except as noted; seasonally adjusted]QuarterTotal 2FarmTotal 2Inventories lNonfarmManufacturingWholesaletradeRetailtradeOtherFinalsales ofdomesticbusiness3Ratio of inventoriesto final sales ofdomestic businessTotalNonfarmFourth quarter:195919601961196219631964141.2145.2147.0153.4158.7164.231.633.033.734.834.933.3109.6112.2113.4118.6123.8130.955.256.257.260.362.265.921.021.321.822.423.925.226.227.527.028.329.631.07.27.27.47.58.08.836.537.739.641.944.647.53.873.853.713.663.563.463.002.972.862.832.782.7619651966196719681969178.4194.0206.0221.4242.537.436.336.538.741.9141.0157.8169.5182.6200.670.780.987.594.0103.426.930.332.734.637.933.736.236.940.744.59.810.412.413.314.952.555.659.165.069.03.403.493.483.413.512.692.842.872.812.9119701971197219731974249.4267.4296.6365.1435.240.145.055.378.074.3209.2222.4241.3287.1360.9105.8107.3113.6136.1177.041.745.250.059.475.645.852.357.766.474.616.017.619.925.233.772.779.288.397.2105.23.433.383.363.764.142.882.812.732.953.4319751976197719781979440.1475.3521.6605.3702.675.572.275.292.197.9364.5403.1446.4513.2604.7177.8194.9210.6238.0280.676.286.196.2111.7141.274.782.793.3107.5118.935.839.446.355.964.1117.5129.1144.3166.6185.43.743.683.613.633.793.103.123.093.083.26198019811982 i1983 11984 |784.1836.2817.0827.5898.9104.9101.4103.6103.2100.9679.3734.7713.5724.4797.9309.8331.9318.5319.2349.0174.2184.8174.7168.9187.2125.0137.0139.5153.7173.570.381.180.782.588.3203.5220.3230.9252.2273.33.853.803.543.283.293.343.343.092.872.92198519861987198819891990199119921993 P1990:1IllIV1991.1IIIllIV1992:1IIIllIV904.3887.9950.61,025.11,081.61,110.41,083.41,099.01,133.41,081.81,090.91,115.61,110.41,096.51,089.61,085.01,083.41,087.51,093.91,098.71,099.096.690.590.995.496.394.790.795.191.996.598.297.594.798.1101.596.690.794.894.394.995.1807.7797.3859.7929.6985.31,015.7992.71,003.91,041.5985.4992.71,018.21,015.7998.4988.1988.4992.7992.7999.61,003.81,003.9339.9328.1349.3383.2409.7423.7407.3400.9405.3411.5412.9424.7423.7419.1412.1409.1407.3404.6404.6406.8400.9184.9183.4196.3215.3224.8236.9239.7247.9255.3226.3229.5236.0236.9236.9233.7235.3239.7239.5243.4244.9247.9188.6193.4216.1229.9250.2257.2257.4269.5286.9246.1250.0258.4257.2248.6249.8254.3257.4259.8264.2266.4269.594.392.498.0101.2100.698.088.385.694.0101.5100.399.098.093.892.489.788.387.585.785.6294.1311.4329.8359.2378.3398.4408.9436.9459.3387.9391.1395.6398.4399.2404.2406.8408.9417.3421.5426.7436.93.082.852.882.852.862.792.652.522.472.792.792.822.792.752.702.672.652.612.602.572.522.752.562.612.592.602.552.432.302.272.542.542.572.552.502.442.432.432.382.372.352.301993:1IIIllIV1,119.51,119.61,119.21,133.499.195.495.191.91,020.41,024.21,024.11,041.5402.0402.4407.0405.3249.6251.3242.9255.3280.1281.2282.7286.988.789.391.594.0439.0445.5450.7459.32.552.512.482.472.322.302.272.271 Inventories at end of quarter. Quarter-to-quarter change calculated from this table is not the current-dollar change in businessinventories (CBI) component of GOP. The former is the difference between two inventory stocks, each valued at their respective end-ofquarterprices. The latter is the change in the physical volume of inventories valued at average prices of the quarter. In addition,changes calculated from this table are at quarterly rates, whereas CBI is stated at annual rates.2 Inventories of construction establishments are included in "other" nonfarm inventories.3 Quarterly totals at monthly rates. Final sales of domestic business equals final sales of domestic product less gross product ofhouseholds and institutions and general government and 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 1987 Standard IndustrialClassification (SIC) beginning 1987 and on the 1972 SIC for earlier years shown.Source: Department of Commerce, Bureau of Economic Analysis.290

TABLE B-20.—Inventories and final sales of domestic business in 1987 dollars, 1959-93[Billions of 1987 dollars, except as noted; seasonally adjusted]QuarterTotal 2FarmTotal 2Inventories lNonfarmManufacturingWholesaletradeRetailtradeOtherFinalsales ofdomesticbusiness3Ratio of inventoriesto final sales ofdomestic businessTotalNonfarmFourth quarter:1959388.679.6. 308.9152.461.267.627.8131.52.962.3519601961196219631964396.7403.9419.5435.6451.280.582.183.985.483.4316.2321.8335.7350.2367.8153.9157.9166.1171.6179.662.463.765.969.673.471.470.273.876.980.328.530.029.932.034.5134.3139.9145.3153.5161.12.952.892.892.842.802.352.302.312.282.2819651966196719681969476.4513.1540.7564.3589.284.683.584.586.986.9391.7429.6456.3477.5502.3190.2212.1227.6237.4246.777.686.592.094.7100.386.892.592.199.3105.937.238.444.646.149.4174.2177.3183.8192.6195.42.732.892.942.933.012.252.422.482.482.5719701971197219731974595.1615.8638.4676.1707.086.389.290.692.992.5508.8526.7547.7583.3614.5246.1243.9249.6264.9283.7106.9112.3116.3121.1130.8105.8117.8125.3134.5133.650.052.656.562.766.4197.6205.1220.4225.9220.93.013.002.902.993.202.572.572.492.582.7819751976197719781979693.1718.6752.9790.1803.792.990.893.693.095.7600.2627.8659.2697.1708.0277.2289.6297.1309.2320.1127.3135.3144.4155.8157.3127.6134.8144.5153.7153.568.068.173.378.377.1229.1238.3249.4264.6270.23.033.023.022.992.972.622.632.642.632.6219801981198219831984795.4820.0802.5806.9874.892.398.3101.493.194.8703.1721.7701.0713.8780.0319.9324.0311.3311.9339.4161.9164.8159.9159.3174.7146.7152.9151.7162.8181.474.680.078.179.884.5268.5266.5267.6281.8294.62.963.083.002.862.972.622.712.622.532.6519851986198719881989896.9905.5931.8951.7981.597.295.188.781.781.6799.8810.4843.1870.0899.9335.7333.6340.2355.3373.9178.7185.7192.7199.1202.5194.1196.7213.6219.7231.091.394.496.695.992.5306.3317.2325.8340.3344.72.932.852.862.802.852.612.552.592.562.611990199119921993 *987.2978.8985.31,000.684.184.388.182.2903.1894.5897.2918.4376.9370.6365.9368.0208.8212.3217.7220.8229.4230.5236.4247.688.081.077.181.9347.9346.5361.5372.32.842.822.732.692.602.582.482.471990:1IIIllIV982.6989.7992.4987.282.082.984.684.1900.7906.8907.8903.1376.0377.5378.8376.9203.7206.0208.4208.8227.4230.6231.0229.493.692.889.588.0349.6348.6348.9347.92.812.842.842.842.582.602.602.601991:1IIIllIV982.8977.2977.0978.884.485.385.184.3898.4891.9891.9894.5377.9374.6372.4370.6209.9207.3208.5212.3224.8225.3228.5230.585.884.782.581.0344.7346.6346.5346.52.852.822.822.822.612.572.572.581992:1IIIllIV977.5980.7983.1985.385.586.987.888.1892.1893.8895.3897.2368.7367.2369.0365.9211.3214.2215.1217.7230.8232.9234.0236.481.379.577.277.1351.0352.3355.7361.52.792.782.762.732.542.542.522.481993:1II992.6995.9997.51,000.688.187.183.982.2904.5908.8913.6918.4365.7366.9367.7368.0217.9219.6221.2220.8242.4243.2244.4247.678.579.180.381.9360.4363.4366.8372.32.752.742.722.692.512.502.492.471 Inventories at end of quarter. Quarter-to-quarter changes calculated from this table are at quarterly rates, whereas the constantdollarchange in business inventories component of GDP is stated at annual rates.2 Inventories of construction establishments are included in "other" nonfarm inventories.3 Quarterly totals at monthly rates. Final sales of domestic business equals final sales of domestic product less gross product ofhouseholds and institutions and general government and 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 1987 Standard IndustrialClassification (SIC) beginning 1987 and on the 1972 SIC for earlier years shown.Source: Department of Commerce, Bureau of Economic Analysis.291

TABLE B-21.—Foreign transactions in the national income and product accounts, 1959-93[Billions of dollars; quarterly data at seasonally adjusted annual rates]Receipts from rest of the worldPayments to rest of the worldYear orquarterTotal»Exports of goods andservicesTotalMerchandise2Services2Receiptsof factorincome 3TotalImports of goods andservicesTotalchandise2Services2Paymentsoffactorincome4TotalTransfer payments (net)Frompersons(net)Fromgovernment(net)FrombusinessNetforeigninvestment19591960196119621963196419651966196719681969197019711972197319741975 ...197619771978197919801981198219831984198519861987198819891990199119921993"1982: IV....1983: IV....1984: IV....1985: IV....1986: IV....1987: IV....1988: IV....1989: IV....25.030.231.433.536.141.043.547.250.255.661270.874.283.4115.6152 6164.4181.6196.5233.3299.7360.9398.2379.9372.5410.5399.3415.2469.0572.9665.5725.7747.6769.7357.5388.3415.2402.9426.7506.8606.9683.120.625.326.027.429.433.635.438.941.445.349 357.059.366.291.8124 3136.3148.9158.8186.1228.9279.2303.0282.6276.7302.4302.1319.2364.0444.2508.0557.1601.5640.56601265.6286.2308.7304.7333.9392.4467.0523.816.520.520.921.723.326.727.830.732.235.338 344.545.651.873.91010109.6117.8123.7145.4184.2226.0239.3215.2207.5225.8222.4226.2257.7325.8371.6398.7426.4448.7459 5198.2218.2231.4222.6235.8283.3345.4380.74.24.85.15.76.16.97.68.29.210.011012.413.814.417.823 326.731.135.140.744.753.263.767.469.276.679.793.0106.2118.4136.4158.4175.1191.7200 667.467.977.382.198.1109.2121.6143.14.35.05.46.16.67.48.18.38.910.311913.014.116.423.830 328.232.837.747.169.780.694.197.395.8108.197.396.0105.1128.7157.5168.6146.1129.291.9102.1106.698.192.8114.4139.9159.325.030.231.433.536.141.043.547.250.255.661270.874.283.4115.6152 6164.4181.6196.5233.3299.7360.9398.2379.9372.5410.5399.3415.2469.0572.9665.5725.7747.6769.7357.5388.3415.2402.9426.7506.8606.9683.122.322.822.725.026.128.131.537.139.946.650 555.862.374.291.2127 5122.7151.1182.4212.3252.7293.9317.7303.2328.1405.1417.6451.7507.1552.2587.7628.5621.1670.1725 8295.1358.0415.7440.2467.1535.6573.1597.715.315.215.116.917.719.422.226.327.833.936 840.946.656.971.8104 599.0124.6152.6177.4212.8248.6267.7250.6272.7336.3343.3370.0414.8452.1485.1509.0500.7544.5593 0241.6300.0344.1363.0382.4437.6470.1492.27.07.67.68.18.48.79.310.712.212.613 714.915.817.319.322 923.726.529.834.839.945.349.952.655.468.874.381.792.3100.1102.6119.5120.4125.6132 853.458.071.677.284.798.0103.0105.61.51.81.81.82.12.42.73.13.44.1586.66.47.711.114 614.915.717.225.337.546.560.967.166.583.882.486.9100.5120.8141.5146.9131.9121.964.471.085.582.488.9106.9130.2139.12.42.42.72.82.83.03.03.23.43.2323.64.14.34.6545.46.06.06.47.59.010.012.112.915.617.418.316.617.825.628.8-11.932.731.413.817.820.419.419.621.423.830.30.4.5.5.5.6.7.8.81.01.0111.21.31.31.4121.21.21.21.31.41.61.82.11.82.32.72.53.02.78.910.110.510.411.01.92.02.52.52.83.12.79.81.81.92.12.12.12.12.12.22.11.9182.02.42.52.5323.53.73.43.84.15.05.06.47.39.411.412.310.410.411.313.2-27.916.314.28.211.013.913.512.814.615.115.10.1.1.1.1.1.2.2.2.2.33.4.4.5.710.71.11.41.42.02.43.23.63.83.93.23.53.24.85.45.55.66.0613.74.84.03.44.03.85.95.4-1.23.24.33.95.07.56.23.93.51.71 84.91.3-2.98.75121.48.8-9.2-10.72.011.59.5-2.5-35.0-94.01181-141.7-155.1-118.0-89.3-78.56.4-55.1-15.8-58.5-106.3-139.1-149.0-157.1-120.1-84.01990: IIIIII....IV ..705.9718.9720.5757.4542.0553.5555.3577.6391.7399.0395.1409.0150.2154.6160.1168.6164.0165.4165.2179.7705.9718.9720.5757.4615.9614.8634.0649.2501.6498.1512.3523.9114.3116.7121.7125.4143.8147.0149.0147.726.530.929.628.29.910.110.310.211.615.313.412.45.05.45.85.6-80.3-73.8-92.1-67.71991:1II ...Ill .IV...738.9747.9742.1761.4576.5600.7603.0625.7414.3426.7424.6440.0162.3174.0178.3185.8162.4147.2139.1135.7738.9747.9742.1761.4610.6612.2622.8638.8489.8492.3504.3516.3120.8119.9118.5122.5138.0134.3131.5123.9-61.1-15.810.618.910.410.410.310.8-76.9-32.0-5.12.25.45.85.45.951.417.2-22.8-20.21992: III ..Ill .IV...768.0765.3768.4777.0633.7632.4641.1654.7442.6442.8447.5462.0191.0189.6193.6192.8134.4132.9127.3122.3768.0765.3768.4777.0640.7666.3679.9693.5515.4540.6557.3564.7125.3125.7122.6128.7115.6127.9119.5124.829.631.628.541.211.110.59.710.512.615.012.824.65.96.15.96.1-17.7-60.6-59.4-82.41993: III ..Ill .IV.774.1791.8788.3651.3660.0653.2675.8453.2458.6452.2473.7198.0201.3200.9202.1122.8131.9135.1774.1791.8788.3699.6725.0725.1753.5569.6592.6591.9618.1130.0132.4133.3135.3122.4132.3128.729.729.930.935.111.011.010.811.413.112.913.717.25.66.06.36.5-77.6-95.4-96.41 Includes capital grants received by the United States (net), not shown separately. See Table B-29 for data.2 Exports and imports of certain goods, primarily military equipment purchased and sold by the Federal Government, are included inservices.3 Consists largely of receipts by U.S. residents of interest and dividends and reinvested earnings of foreign affiliates of U.S.corporations.4 Consists largely of payments to foreign residents of interest and dividends and reinvested earnings of U.S. affiliates of foreigncorporations.Source: Department of Commerce, Bureau of Economic Analysis.292

TABLE B-22.—Experts and imports of goods and services and receipts and payments oj factor income in1987 dollars. 1959-93[Billions of 19S7 dollars; quarterly data at seasonally adjusted annual rates]Year or quarterTotalExports of goods and servicesTotaliMerchandiseDurablegoodsNondurablegoodsServices1Do«eceiptsoffactorincome2TotalImports of goods and servicesTotalMerchandiseDurablegoodsiNondura-blegoodsServices1Paymentsoffactorincome3195973.858.031.526.515.817.095.660.226.034.235.46.21960196119621963196488.489.995.0101.8115.471.271.574.880.391.439.239.441.243.650.232.032.133.536.741.217.218.420.321.524.019.120.622.524.426.696.195.3105.5107.7112.959.159.268.070.975.624.723.728.029.632.834.435.540.041.242.837.036.137.536.837.37.27.27.38.29.119651966196719681969118.1125.7130.0140.2147.892.198.4100.1108.8114.452.256.163.870.075.239.942.336.338.739.225.927.329.931.533.328.328.029.232.335.7124.5143.7153.7177.7189.286.5100.2105.2128.1137.040.550.653.168.774.146.049.652.159.462.837.943.548.649.652.39.911.011.813.517.819701971197219731974161.3161.9173.7210.3234.4125.2124.1136.5166.9183.480.479.387.1108.0123.544.744.949.558.959.936.137.837.243.451.036.837.942.257.567.5196.4207.8230.2244.4238.4142.1156.1177.5194.7189.375.484.495.7100.9101.366.771.781.793.987.954.451.752.849.749.219.217.920.527.633.219751976197719781979232.9243.4246.9270.2293.5178.5183.9183.9203.0225.7121.3121.8119.5132.1148.157.262.164.470.977.654.459.563.067.267.857.463.067.978.7107.1209.8249.7274.7300.1304.1163.3200.4223.2245.2248.782.1100.9112.9130.0132.181.299.5110.3115.3116.746.549.351.554.855.331.631.532.243.258.619801981198219831984320.5326.1296.7285.9305.7248.2244.0217.7208.3221.3161.0154.2130.5124.6133.887.389.787.283.887.572.382.279.077.684.4113.7120.7117.9111.0119.4289.9304.1304.1342.1427.7235.6246.1243.1276.5346.1133.6143.4143.0167.6219.9102.0102.7100.1108.9126.254.258.061.165.681.666.679.482.178.093.519851986198719881989309.2329.6364.0421.6471.8224.8234.3257.7307.4343.8139.3144.8163.0202.8230.985.689.694.7104.6112.984.495.3106.2114.2128.0103.499.2105.1123.8144.7454.6484.7507.1525.7545.4366.5398.0414.8'431.3450.4237.2254.6264.2274.7287.1129.3143.4150.6156.7163.388.186.792.394.395.088.290.2100.5116.1130.11990199119921993 "510.5543.4578.0596.4368.9396.7422.7438.2249.4269.2288.0304.9119.5127.4134.7133.3141.6146.7155.4158.2148.0123.1105.5565.1562.5611.6675.7461.4463.9511.9572.3292.5297.2332.5379.9168.9166.7179.4192.5103.798.599.7103.3128.8110.097.71982: IV1983.1V1984: IV1985: IV1986: IV1987: IV1988: IV1989: IV280.4291.5312.8312.0342.9386.1438.2487.7202.8215.5229.0226.4243.5278.0322.0354.8119.0131.0138.5139.6150.0180.1214.7237.883.784.590.586.893.597.8107.2116.977.675.983.885.599.4108.1116.2132.9109.7116.5116.1102.994.8112.9132.3144.3299.4375.1444.2467.4498.9522.1540.9555.0236.3306.6357.9380.0409.1427.4444.8458.5134.6191.1229.3243.5259.8273.8284.0290.4101.7115.5128.6136.5149.3153.7160.8168.163.168.686.387.489.894.696.196.577.682.093.986.891.2105.4123.0125.91990:1IIIllIV501.8511.1508.6520.4364.3370.4366.4374.6245.9252.3248.6250.9118.4118.1117.8123.8137.5140.7142.2145.8146.4146.0144.4155.4562.6570.0570.7557.2459.6466.5466.4453.1285.7293.5296.2294.4173.8173.0170.2158.8103.0103.5104.3104.1128.2129.8130.0127.11991:1IIIllIV519.4542.9546.9564.2381.6396.1398.2410.7254.5271.7271.7279.0127.2124.4126.5131.7137.8146.8148.7153.5138.5124.4116.7112.9541.0556.2571.9580.7442.1457.2474.6481.7284.2288.9304.7311.2158.0168.3169.9170.598.999.197.398.9117.0112.5109.0101.61992:1IIIllIV571.0570.2579.3591.6414.4415.9423.0437.3280.9283.6287.4300.0133.5132.4135.6137.3156.6154.2156.3154.3110.7108.7103.798.9586.2608.2621.8630.3486.8509.0521.6530.3315.1328.5338.4348.0171.7180.4183.2182.499.399.2100.1100.093.6103.095.598.81993:1IIIllIV P.588.0593.2591.9612.5430.2434.5434.1454.1296.5302.4302.2318.4133.7132.1131.9135.6157.8158.6157.8158.598.3105.0107.1647.9668.4678.2708.1545.9565.7574.9602.8360.5372.1381.0405.9185.5193.6193.9196.9102.0102.7103.3105.395.8103.099.61 Exports and imports of certain goods, primarily military equipment purchased and sold by the Federal Government, are included inservices.2 Consists largely of receipts by U.S. residents of interest and dividends and reinvested earnings of foreign affiliates of U.S.corporations.3 Consists largely of payments to foreign residents of interest and dividends and reinvested earnings of U.S. affiliates of foreigncorporations.Source: Department of Commerce, Bureau of Economic Analysis.293

TABLE B-23.—Relation of gross domestic product, gross national product, net national product, andnationaI income, 1959-93[Billions of dollars; quarterly data at seasonally adjusted annual rates]Year orquarterGrossdomesticproductPIUS:Receiptsof factorincomefrom restof theworld '19591960196119621963196419651966156719681969 .197019711972197319741975197619771978197919801981198219831984198519861987198819891990199119921993 p1982: IV1983: IV1984: IV1985: IV1986: IV1987: IV1988: IV1989: IV1990:1IIIllIV1991:1IIIllIV1992:1IIIllIV1993:1IIIllIV..494.2513.3531.8571.6603.1648 0702.7769.8814.3889.3959 51,010.71,097.21,207.01,349.61,458.61,585.91,768.41,974.12,232.72 488 62,708.03,030.63,149.63,405.03,777.24,038.74,268.64,539.94,900.45 250 85,546.15,722.96,038.56 374 03,195.13,547.33,869.14,140.54,336.64,683.05,044.65,344.85,461.95,540.95,583.85,597.95,631.75,697.75,758.65,803.75,908.75,991.46,059.56,194.46,261.66,327.66,395.96,510.84.35.05.46.16.6748.18.38.910.311913.014.116.423.830.328.232.837.747.169 780.694.197.395.8108.197.396.0105.1128.7157 5168.6146.1129.291.9102.1106.698.192.8114.4139.9159.3164.0165.4165.2179.7162.4147.2139.1135.7134.4132.9127.3122.3122.8131.9135.1Less:Paymentsof factorincome torest oftheworld 2 1.5Equals:GrossnationalproductLess:ConsumptionoffixedcapitalEquals:NetnationalproductIndirectbusinesstax andnontaxliabilityLess:BusinesstransferpaymentsStatisticaldiscrepancyPIUS:SubsidieslesscurrentsurplusofgovernmententerprisesEquals:Nationalincome1.81.81.82.1242.73.13.44.1586.66.47.711.114.614.915.717.225.337 546.560.967.166.583.882.486.9100.5120.8141 5146.9131.9121.964.471.085.582.488.9106.9130 2139.1143.8147.0149.0147.7138.0134.3131.5123.9115.6127.9119.5124.8122.4132.3128.7497 0516.6535.4575.8607.7653 0708.1774.9819.8895.5965 61,017.11,104.91,215.71,362.31,474.31,599.11,785.51,994.62,254.52 520 82,742.13,063.83,179.83,434.43,801.54,053.64,277.74,544.54,908.25 266 85,567.85,737.16,045.83,222.63,578.43,890.24,156.24,340.54,690.55,054 35,365.05,482.15,559.35,599.95,630.05,656.15,710.65,766.25,815.55,927.65,996.36,067.36,191.96,262.16,327.16,402.344 646.347.749.351.353 957.362.167.473.981588.897.6109.9120.4140.2165.2182.8205.2234.8272 4311.9362.4399.1418.4433.2454.5478.6502.2534.0580 4602.7626.1657.96712412.5439.7448.0465.6488.2512.1547 2600.8590.2597.9607.8614.8619.9622.3626.7635.4631.7637.2714.6648.0663.2663.3679.7678.7452.5470.2487.7526.5556.4599 2650.7712.8752.4821.5884 2928.31,007.31,105.71,241.91,334.11,433.91,602.71,789.42,019.82 248 42,430.22,701.42,780.83,016.03,368.33,599.13,799.24,042.44,374.24 686 44,965.15,111.05,387.92,810.13,138.73,442.23,690.73,852.34,178.54,507.24,764.24,891.94,961.44,992.25,015.15,036.25,088.35,139.65,180.05,295.95,359.15,352.85,543.95,598.85,663.95,722.641945.548.151.754.758 862.765.470.479.086 694.3103.6111.4121.0129.3140.0151.6165.5177.8188 7212.0249.3256.4280.1309.5329.9345.5365.0385.3414 7444.0476.6502.8530 5262.3291.7317.7335.1351.6372.3394.2424.4436.2437.2448.0454.8465.6470.5481.3488.9493.4497.3504.8515.7515.6526.2532.4547.91.41.41.51.61.8202.22.32.52.8313.23.43.94.55.05.26.57.38.29911.213.415.416.619.021.024.224.025.626 626.826.327.628 016.018.120.222.224.924.227.226.226.327.027.126.726.126.326.026.627.027.627.828.127.027.828.428.8-1.8-3.1-2.2-1.0-2.07-.72.8.8-.126.03.11.1-.51.46.010.410.97.613 813.610.9-7.410.2-9.0-13.91.2-24.8-28.4117.89.623.6-10.113.8-20.5-5.9-2.0-24.9-25.412.813.1-1.814.94.9.24.527.36.223.123.615.732.134.412.013.3-0.9-.8.2.3-.31.31.41.21.2152.62.43.42.6.42.61.43.33.6294.84.76.211.79.56.49.714.110.9544.57.7729.619.29.72.68.222.016.54.49.93.0-5.610.41.8.8-8.04.33.03.9-3.77.717.16.1-5.310.7410.1425.7440.5474.5501.55391586.9643.7679.9741.0798.6833,5899.5992.91,119.51,198.81,285.31,435.51,609.11,829.82,038 92,198.22,432.52,522.52,720.83,058.33,268.43,437.93,692.34,002.64 249 54,491.04,598.34,836.62,551.52,834.33,134.43,341.93,486.03,828.84,127.64,305.24,426.24,502.04,496.64,539.24,546.04,587.84,596.94,662.64,755.44,814.64,800.84,975.85,038.95,104.05,143.21 Consists largely of receipts by U.S. residents of interest and dividends and reinvested earnings of foreign affiliates of U.S.corporations.2 Consists largely of payments to foreign residents of interest and dividends and reinvested earnings of U.S. affiliates of foreigncorporations.Source: Department of Commerce, Bureau of Economic Analysis.294

TABLE B-24.—Relation of national income and personal income, 1959-93[Billions of dollars; quarterly data at seasonally adjusted annual rates]Year or quarter195919601961196219631964196519661967!19681969197019711972197319741975197619771978197919801981198219831984198519861987198819891990199119921993"1982 IV1983 IV1984 IV1985 IV1986 IV1987 IV1988 IV1989 IV1990 1 IIIIIIV1991 1 IIIIIIV1992 1 IIIIIIV1993 1 IIIIIIV PNationalincome410.1425.7440.5474.5501.5539.1586.9643.7679.9741.0798.6833.5899.5992.91,119.51,198.81,285.31,435.51,609.11,829.82,038.92,198.22,432.52,522.52,720.83,058.33,268.43,437.93,692.34,002.64,249.54,491.04,598.34,836.62,551.52,834.33,134.43,341.93,486.03,828.84,127.64,305.24,426.24,502.04,496.64,539.24,546.04,587.84,596.94,662.64,755.44,814.64,800.84,975.85,038.95,104.05,143.2Less:Corporateprofitswithinventoryvaluationandcapitalconsumptionadjustments52.350.751.659.665.172.182.988.686.092.689.677.590.3103.2116.4104.5121.9147.1175.7199.7202.5177.7182.0151.5212.7264.2280.8271.6319.8365.0362.8380.6369.5407.2150.3229.1261.3284.9264.6343.3378.3354.5382.6409.3367.5362.8369.3370.8359.0378.8409.9411.7367.5439.5432.1458.1468.5Netinterest10.211.213.114.616.118.221.124.328.130.433.640.045.449.356.571.880.085.1100.7120.5149.9191.2233.4262.4270.0307.9326.2350.2360.4387.7452.7463.7462.8442.0256.8281.8321.1331.9349.7368.6408.1459.8460.5459.5460.6474.4468.8466.3464.2451.9439.5440.8440.1447.7450.1443.2444.6Contributionsforsocialinsurance18.821.922.925.428.530.131.640.645.550.457.962.268.979.097.6110.5118.5134.5149.8171.8197.8216.6251.3269.6290.2325.0353.8379.8400.7442.3473.2503.1528.4555.6585.3272.8298.3332.2362.3388.7409.6453.5480.4495.9500.7506.4509.5520.7525.7531.5535.7548.5552.7556.6564.6568.9585.9590.5596.0Wageaccrualslessdisbursements0.0.0.0.0.0.0.0.0.0.0.0.0.6.0-.1-.5.1.1.1.3-.2.0,1.0- 4.2-.2 .0.0.0.0.1-.1-20.020.0.0.0.6.0.0-.2 .0.0.0.0.0.2.2-.4 .0.0.0.0.0-80.080.0.0.0.0Personalinterestincome22.725.026.929.332.436.140.344.949.554.660.869.275.781.894.1112.4123.0134.6155.7184.5223.2274.0336.1376.8397.5461.9498.1531.7548.1583.2668.2698.2715.6694.3695.8373.6418.7485.4507.5532.6562.3608.9681.2686.9692.8702.8710.3715.4720.0717.3709.6694.4696.0692.2694.5695.4693.1695.7699.2Personaldividendincome12.713.414.015.016.118.020.220.922.124.525.123.523.525.527.729.629.234.739.444.250.457.166.967.177.878.887.9104.7100.4108.4126.5144.4127.9140.4158.369.480.679.392.7105.6100.1113.8132.9141.2145.6146.6144.4136.6126.7123.9124.3128.2136.0144.9152.3157.0157.8159.0159.4>IUS:Governmenttransferpaymentstopersons25.727.531.532.634.536.039.143.652.360.667.581.897.0108.4124.1147.4185.7202.8217.5234.8262.8312.6355.7396.3426.1437.8468.1497.1521.3555.9603.8666.3749.2836.8889.7419.9428.0442.3474.8505.8528.1563.5624.0649.0656.1669.2690.9724.2740.9754.8776.8816.6830.9844.3855.4873.0883.7896.4905.6Businesstransferpaymentstopersons1.31.31.41.51.71.82.02.12.32.52.82.83.03.43.84.04.55.55.96.87.98.810.211.812.815.117.820.720.820.821.121.320.721.621.912.313.216.218.820.920.421.320.821.321.521.321.120.820.520.620.821.121.521.822.021.421.822.122.3Equals:Personalincome391.2409.2426.5453.4476.4510.7552.9601.7646.5709.9773.7831.0893.5980.51,098.71,205.71,307.31,446.31,601.31,807.92,033.12,265.42,534.72,690.92,862.53,154.63,379.83,590.43,802.04,075.94,380.34,673.84,850.95,144.95,387.62,746.82,965.33,242.53,456.73,647.83,918.54,195.24,469.44,585.64,648.64,701.94,759.14,783.94,833.44,858.84,927.55,017.85,093.85,139.85,328.35,254.75,373.25,412.75,509.8Source: Department of Commerce, Bureau of Economic Analysis.295

TABLE B-25.—National income by type of income, 1959-93[Billions of dollars; quarterly data at seasonally adjusted annual rates]Compensationof employeesProprietors' income with inventory valuation andcapital consumption adjustmentsYear or quarterNationalincome 1TotalWagesandSupplementstowagesandsalaries2TotalTotalFarmProprietors'income*TotalCapitalconsumptionadjustmentProprietors'incomeNonfarm"tor?"valuationadjustmentCapitalconsumptionadjustment1959...1960...1961...1962...1963...1964...1965...1966...1967...1968...1969...1970...1971...1972...1973...1974...1975197619771978197919801981198219831984198519861987198819891990199119921993 '1982: IV1983: IV1984: IV1985: IV1986: IV1987: IV1988: IV1989: IV1990:11991: IIIIllIV1992:I..IIIllIV1993:1410.1425.7440.5474.5501.5539.1586.9643.7679.9741.0798.6833.5899.5992.91,119.51,198.81,285.31,435.51,609.11,829.82,038.92,198.22,432.52,522.52,720.83,058.33,268.43,437.93,692.34,002.64,249.54,491.04,598.34,836.62,551.52,834.33,134.43,341.93,486.03,828.84,127.64,305.24,426.24,502.04,496.64,539.24,546.04,587.84,596.94,662.64,755.44,814.64,800.84,975.85,038.95,104.05,143.2281.2296.7305.6327.4345.5371.0399.8443.0475.5524.7578.4618.3659.4726.2812.8891.3948.71.058.31.177.31.333.01,496.41.644.41,815.51,916.02.029.42,226.92,382.82,523.82,698.72,921.33,100.23,297.63,402.43,582.03,772.11,940.42,101.22,288.12,442.52,582.52,785.13,004.93,162.83,231.53,288.23,326.33,344.23,355.73,382.83,415.83,455.43,507.83,558.13,603.63,658.63,705.13,750.63,793.93,839.0259.8272.8280.5299.3314.8337.7363.7400.3428.9471.9518.3551.5584.5638.7708.6772.2814.7899.6994.01,120.91,255.31,376.61,515.61,593.31,684.21,850.01,986.32,105.42,261.22,443.02,586.42,745.02,814.92,953.13,100.41,611.81,747.31,903.92,039.12,153.92,336.72,510.62,637.92,689.22,739.12,770.62,781.32,782.22,800.62,823.42,853.62,892.22,933.62,970.73,015.83,054.33,082.73,115.43,149.221.423.825.128.130.733.236.142.746.652.860.166.874.987.6104.2119.1134.0158.7183.3212.1241.1267.8299.8322.7345.2376.9396.5418.4437.4478.3513.8552.5587.5629.0671.7328.6353.9384.2403.3428.6448.4494.3524.9542.3549.2555.7562.9573.4582.3592.4601.8615.7624.5632.9642.8650.7668.0678.5689.851.751.954.356.457.760.565.069.470.975.178.979.986.297.4116.5115.3121.2132.9146.4167.7181.8171.8180.8170.7186.7236.0259.9283.7310.2324.3347.3363.3376.4414.3442.1179.9200.1239.6268.7284.4325.0333.4349.7367.5361.4355.5368.9363.8379.7374.2387.7406.8411.1408.1431.2444.1439.4422.5462.410.711.211.911.911.810.612.914.012.712.714.414.615.219.132.225.523.718.317.121.524.711.521.213.52.421.321.522.331.330.940.241.936.843.745.010.26.321.917.823.642.430.938.449.942.531.643.837.242.629.837.645.644.936.847.655.747.024.852.411.612.112.712.712.511.313.714.813.513.615.615.916.620.934.328.227.522.521.827.031.219.430.223.112.130.830.531.039.638.848.349.844.451.252.120.015.831.226.732.150.638.846.457.550.239.651.745.150.237.445.052.952.244:954.862.854.132.159.4-0.9-.7-.7-.7-.9-1.1-1.3-1.4-1.8-2.0-2.8-3.8-4.2-4.8-5.5-6.4-7.9-9.0-9.7-9.7-9.4-9.0-8.7-8.3-8.0-8.1-7.8-7.6-7.5-7.1-9.8-9.5-9.3-8.9-8.6-8.2-7.9-8.0-7.6-7.8-8.0-7.9-7.8-7.6-7.6-7.4-7.3-7.2-8.2-7.2-7.1-7.1-7.3-7.041.140.642.444.545.949.852.155.358.262.464.565.370.978.384.389.897.5114.6129.4146.2157.0160.3159.6157.3184.3214.7238.4261.5279.0293.4307.0321.4339.5370.6397.1169.6193.8217.7250.9260.9282.6302.5311.4317.6318.9323.9325.1326.6337.1344.4350.1361.2366.2371.3383.6388.4392.4397.6410.140.239.841.843.945.249.251.955.458.363.065.066.072.079.386.594.2100.2117.6132.5150.2161.8165.8160.9157.8176.1197.1212.4230.6252.4266.8281.1305.6327.7358.0385.2168.0182.5196.6223.2230.0254.2274.9288.7290.4284.0329.5318.4312.8320.6340.1337.5350.4360.0359.4362.2376.4380.3385.4398.70.0.0.0.0.0-.1-.2-.2-.2-.4-.5-.5-.6-.7-2.0-3.8-1.2-1.3-1.3-2.1-2.9-3.0-1.4-.6-.5-.2-.1-.8-1.5-1.2-.4.0-L0.6-1.6.1-1.4.71.7-1.4-.76.417.6-19.8-5.62.34.9-7.5.3-2.1-7.0-.87.8-1.6-1.2-.4-.90.9.8.6.6.7.7.4.2.1-.2.0-.1-.2-.6-1.4-1.7-1.8-2.0-1.9-2.5.2.08.718.126.130.927.428.127.216.211.813.113.01.112.921.029.130.126.729.023.420.817.414.312.411.511.611.712.312.913.212.713.713.713.312.712.31 National income is the total net income earned in production. It differs from gross domestic 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-23.See next page for continuation of table.296

TABLE B-25.—National income by type of income, 1959-93—Continued[Billions of dollars; quarterly data at seasonally adjusted annual rates]Year or quarterRental income of personswith capital consumptionadjustmentTotalRentalincomeofpersonsCapitalconsumptionadjustmentCorporate profits with inventory valuation and capital consumption adjustmentsTotalProfits with inventory valuation adjustment and withoutcapital consumption adjustmentTotalProfitsProfitsbeforetaxProfitstaxliabilityProfits after taxTotalDividendsUndistributedprofitsInventoryvaluationadjustmentCapitalconsumptionadjustmentNetinterest19591960196119621963196419651966196719681969197019711972......197319741975197619771978197919801981198219831984198519861987198819891990199119921993 "...1982: IV1983: IV1984: IV1985: IV1986: IV1987: IV1988: IV1989: IV1990:1..1991: I ...II..1992:1993:IV1IIIllIV1II14.715.315.816.517.117.318.018.519.418.218.017.818.216.817.315.813.512.19.08.98.413.220.821.922.123.318.78.73.24.3-13.5-14.2-12.8-8.913.024.122.224.314.04.76.82.8-21.6-15.9-16.4-13.3-11.1-11.7-11.9-16.3-11.2-8.7-7.2-18.5-1.27.512.713.717.918.018.719.219.820.320.521.322.123.422.823.924.225.626.128.229.329.529.930.034.439.149.061.164.464.866.563.453.450.053.444.242.745.257.475.466.564.567.660.050.254.252.639.840.140.244.146.445.144.741.049.847.349.375.757.471.373.277.280.0-3.4-3.4-3.3-3.3-3.2-3.2-3.3-3.6-3.9-4.6-5.9-6.4-7.4-9.3-10.9-13.5-15.9-17.8-21.0-25.5-30.8-35.8-40.2-42.4-42.8-43.2-44.6-44.7-46.8-49.1-57.7-56.9-57.9-66.3-62.5-42.3-42.4-43.4-46.0-45.5-47.4-49.7-61.3-56.0-56.6-57.4-57.4-56.8-56.6-57.2-61.0-56.0-56.5-94.2-58.6-63.8-60.4-63.5-62.152.350.751.659.665.172.182.988.686.092.689.677.590.3103.2116.4104.5121.9147.1175.7199.7202.5177.7182.0151.5212.7264.2280.8271.6319.8365.0362.8380.6369.5407.253.151.051.356.461.267.577.683.080.386.983.271.885.597.9110.9103.4129.4158.8186.7212.8219.8197.8203.2166.4202.2236.4225.3227.6273.4320.3325.4354.7367.3390.153.451.151.056.461.268.078.885.181.890.689.078.490.1104.5130.9142.8140.4173.7203.3237.9261.4240.9228.9176.3210.7240.5225.0217.8287.9347.5342.9365.7362.323.622.722.824.026.228.030.933.732.739.439.734.437.741.949.351.850.964.273.083.588.084.881.163.177.294.096.5106.5127.1137.0141.3138.7129.829.728.428.232.434.940.047.951.449.251.249.444.052.462.681.691.089.5109.5130.3154.4173.4156.1147.8113.2133.5146.4128.5111.3160.8210.5201.6227.1232.5249.1150.3229.1261.3284.9264.6343.3378.3354.5382.6409.3367.5362.8369.3370.8359.0378.8409.9411.7367.5439.5432.1458.1468.5160.0216.2223.6228.0225.0293.4340.5320.6346.8377.9344.7349.3364.6370.1359.0375.4399.7395.7350.1414.8407.0433.4444.8168.6223.8220.1231.8235.7311.2372.2334.1348.8369.0376.2368.9356.5357.4362.0373.5404.3409.5357.9409.9419.8445.6443.858.782.283.897.6116.6135.2146.2134.2132.0139.8145.7137.0125.4128.0132.5133.4147.0153.0130.1155.0160.9173.3169.5109.9141.6136.3134.2119.2176.0226.0200.0216.8229.2230.5231.8231.1229.4229.5240.1257.3256.5227.8254.9258.9272.3274.312.713.414.015.016.118.020.220.922.124.625.223.723.725.828.130.430.135.640.745.952.459.069.270.081.282.792.4109.8106.2115.3134.6153.5137.4150.5169.072.584.283.497.4111.0106.3121.0141.3149.9154.6155.7153.7145.9136.2133.4133.9138.0146.1155.2162.9167.5168.5169.7170.417.015.014.317.418.822.027.830.527.126.624.120.328.636.953.560.659.473.989.5108.5121.097.178.643.252.363.836.11.654.695.267.173.695.298.637.557.452.936.98.269.7105.058.767.074.674.878.185.293.296.1106.1119.3110.472.792.091.4103.9104.6-0.3-.2.3.0.1_ 5-1.2-2.1-1.6-3.7-5.9-6.6-4.6-6.6-20.0-39.5-11.0-14.9-16.6-25.0-41.6-43.0-25.7-9.9-8.5-4.1.29.7-14.5-27.3-17.5-11.04.9-5.3-7.8-8.6-7.63.5-3.8-10.7-17.8-31.7-13.5-2.08.9-31.5-19.58.212.7-3.01.9-4.6-13.7-7.84.9-12.7-12.21.0-7.2-0.8-.3.33.23.94.65.35.65.75.66.45.64.85.35.51.2-7.6-11.7-11.0-13.1-17.3-20.2-21.2-14.910.427.855.544.146.444.737.425.92.217.124.3-9.612.937.756.939.649.937.933.935.831.422.813.54.73.510.216.017.424.725.124.723.823.610.211.213.114.616.118.221.124.328.130.433.640.045.449.356.571.880.085.1100.7120.5149.9191.2233.4262.4270.0307.9326.2350.2360.4387.7452.7463.7462.8442.0256.8281.8321.1331.9349.7368.6408.1459.8460.5459.5460.6474.4468.8466.3464.2451.9439.5440.8440.1447.7450.1443.2444.62 Consists mainly of employer contributions for social insurance and to private pension, health, and welfare funds.3 With inventory valuation adjustment.Source: Department of Commerce, Bureau of Economic Analysis.297

TABLE B-26.—Sources of personal income, 1959-93[Billions of dollars; quarterly data at seasonally adjusted annual rates]Year or quarterPersonalincomeTotalWage and salary disbursements *CommodityproducingindustriesTotalManufacturingDistributiveindustriesServiceindustriesGovernmentOtherlaborincome JProprietor' ' incomewith invcmuiyvaluation andcap talconsunlptionadjustr lentsFarmNonfarm1959391.2259.8109.986.965.138.846.010.610.741.119601961196219631964409.2426.5453.4476.4510.7272.8280.5299.3314.8337.7113.4114.0122.2127.4136.089.889.996.8100.7107.368.669.673.376.882.041.744.447.650.754.949.252.456.360.064.911.211.813.014.015.711.211.911.911.810.640.642.444.545.949.819651966196719681969552.9601.7646.5709.9773.7363.7400.3428.9471.9518.3146.6161.6169.0184.1200.4115.7128.2134.3146.0157.787.995.1101.6110.8121.759.465.372.080.490.669.978.386.496.6105.517.819.921.725.228.512.914.012.712.714.452.155.358.262.464.519701971197219731974831.0893.5980.51,098.71,205.7551.5583.9638.7708.7772.6203.7209.1228.2255.9276.5158.4160.5175.6196.6211.8131.2140.4153.3170.3186.899.4107.9119.7133.9148.6117.1126.5137.4148.7160.932.536.743.049.256.514.615.219.132.225.565.370.978.384.389.8197519761977197819791,307.31,446.31,601.31,807.92,033.1814.6899.5993.91,120.71,255.4277.1309.7346.1392.6442.1211.6238.0266.7300.1334.9198.1219.5242.7274.9308.4163.4181.6202.8233.7267.7176.0188.6202.3219.4237.365.979.794.7110.1124.323.718.317.121.524.797.5114.6129.4146.2157.0198019811982198319842,265.42,534.72,690.92,862.53,154.61,376.61,515.61,593.31,684.71,849.8471.9513.7513.5525.1580.8355.7386.9384.3397.7439.8336.4368.1385.8406.2445.4306.9348.1386.5427.4475.8261.4285.7307.5325.9347.8139.8153.0165.4174.6184.711.521.213.52.421.3160.3159.6157.3184.3214.7198519861987198819893,379.83,590.43,802.04,075.94,380.31,986.52,105.42,261.22,443.02,586.4612.2628.5651.8699.1724.2461.3473.8490.1524.5542.2475.9501.7536.9575.3607.0524.5579.5650.7719.6776.8373.9395.7421.8449.0478.5191.8200.7210.4230.5251.921.522.331.330.940.2238.4261.5279.0293.4307.01990199119921993 "4,673.84,850.95,144.95,387.62,745.02,815.02,973.13,080.4745.7738.1756.5763.6555.6557.2577.6577.2635.1648.0682.0706.4848.3883.5967.01,020.8515.9545.4567.5589.7274.3296.9322.7350.741.936.843.745.0321.4339.5370.6397.11982 IV1983 IV1984 IV1985 IV1986 IV1987 IV1988 IV1989 IV2,746 82,965.83,242.53,456.73P647.83,918.54,195.24,469.41,611.71,747.31,903.32,039.12,153.92,337.02,510.62,637.9503.9547.6594.5622.6635.3668.4715.3732.1378.0415.7450.5469.1478.5501.6537.5545.7391.2422.4458.4487.6512.5551.9589.9616.1400.9445.8494.4546.8602.1685.0746.8800.0315.6331.5356.1382.2404.0431.7458.5489.7169.2179.0187.7193.9205.3216.5240.3259.110.26.321.917.823.642.430.938.4169.6193.8217.7250.9260.9282.6302.5311.41990 1IIIIIIV4,585.64,648.64,701.94,759.12,689.12,739.12,770.62,781.1740.6748.2749.1744.8549.7557.5558.4556.9624.7634.4640.2641.0821.5843.5861.4866.8502.3513.0519.9528.5268.0271.5276.2281.349.942.531.643.8317.6318.9323.9325.11991 1IIIIIIV4,783.94,833.44,858.84,927.52,782.02,800.92,823.42,853.6735.3733.3739.3744.4551.0552.0559.3566.4639.8645.9651.0655.4866.1876.8886.9904.1540.8545.0546.2549.7287.1293.3300.1307.037.242.629.837.6326.6337.1344.4350.11992 1IIIIIIV5,017.85,093.85,139.85,328.32,892.22,933.62,970.73,095.8741.3750.0751.6783.3564.0571.2573.3602.0663.5672.2682.5709.9928.1944.6966.81,028.4559.3566.9569.7574.2313.4319.9326.0331.545.644.936.847.6361.2366.2371.3383.61993 1IIIIIIV5,254.75,373.25,412.75,509.82,974.33,082.73,115.43,149.2740.7765.1769.4779.0559.7580.3581.5587.5682.9709.1714.4719.2966.61,022.21,038.81,055.5584.1586.3592.8595.5338.5346.6354.7362.955.747.024.852.4388.4392.4397.6410.11 The total of wage and salary disbursements and other labor income differs from compensation of employees in Table B-25 in that itexcludes employer contributions for social insurance and the excess of wage accruals over wage disbursements.298

TABLE B-26.—Sources of personal income, 1959-93—Continued[Billions of dollars-, quarterly data at seasonally adjusted annual rates]Year or quarterRentalincomeofpersonswithcapitalconsumptionadjustmentPersonaldividendincomePersonalinterestincomeTotalOld-age,survivors,disability,andhealthinsurancebenefitsTransfer payments to personsGovernmentunemploymentinsurancebenefitsVeteransbenefitsGovernmentemployeesretirementbenefitsAid tofamilieswithdependentchildren(AFDC)OtherLess:PersonalcontributionsforsocialinsuranceNonfarmpersonalincome 219591960196119621963196419651966196719681969197019711972197319741975197619771978197919801981198219831984198519861987198819891990199119921993 »1982: IV1983: IV1984: IV1985: IV1986: IV1987: IV1988: IV1989: IV1990:1IIIllIV1991: IIIIllIV1992:IIIIllIV1993:L IIIllIV "...14.715.315.816.517.117.318.018.519.418.218.017.818.216.817.315.813.512.19.08.98.413.220.821.922.123.318.78.73.24.3-13.5-14.2-12.8-8.913.024.122.224.314.04.76.82.8-21.6-15.9-16.4-13.3-11.1-11.7-11.9-16.3-11.2-8.7-7.2-18.5-1.27.512.713.717.912.713.414.015.016.118.020.220.922.124.525.123.523.525.527.729.629.234.739.444.250.457.166.967.177.878.887.9104.7100.4108.4126.5144.4127.9140.4158.369.480.679.392.7105.6100.1113.8132.9141.2145.6146.6144.4136.6126.7123.9124.3128.2136.0144.9152.3157.0157.8159.0159.422.725.026.929.332.436.140.344.949.554.660.869.275.781.894.1112.4123.0134.6155.7184.5223.2274.0336.1376.8397.5461.9498.1531.7548.1583.2668.2698.2715.6694.3695.8373.6418.7485.4507.5532.6562.3608.9681.2686.9692.8702.8710.3715.4720.0717.3709.6694.4696.0692.2694.5695.4693.1695.7699.227.028.832.834.136.237.941.145.754.663.270.384.6100.1111.8127.9151.3190.2208.3223.3241.6270.7321.5365.9408.1438.9452.9485.9517.8542.2576.7625.0687.6769.9858.4911.6432.2441.3458.5493.6526.6548.5584.8644.8670.4677.7690.4712.0745.0761.4775.4797.6837.7852.4866.1877.4894.4905.5918.5927.910.211.112.614.315.216.018.120.825.530.232.938.544.549.660.470.181.492.9104.9116.2131.8154.2182.0204.5221.7235.7253.4269.2282.9300.4325.1352.0382.3413.9438.2216.4226.7241.3256.7273.3285.8303.8334.4348.1348.7352.7358.6374.5379.1384.3391.3406.3412.0416.6420.8433.1435.0439.4445.42.83.04.33.13.02.72.31.92.22.12.24.05.85.74.46.817.615.812.79.79.816.115.925.226.315.815.716.314.513.414.419.026.739.234.031.819.915.615.316.713.413.015.617.117.719.222.024.127.126.429.339.140.439.737.834.534.435.132.04.64.65.04.74.84.74.94.95.65.96.77.78.89.710.411.814.514.413.813.914.415.016.116.416.616.416.716.716.616.917.317.818.319.320.016.616.516.416.516.416.516.817.318.017.817.717.818.118.618.318.320.518.918.819.020.020.220.119.72.83.13.43.74.24.75.26.16.97.68.710.211.813.816.019.022.726.129.032.736.943.049.454.658.060.966.670.776.082.287.594.5102.0108.3115.456.159.558.068.072.477.783.089.392.893.794.996.5101.6101.2102.1103.1106.7107.7108.4110.2112.8114.6116.4117.90.91.01.11.31.41.51.71.92.32.83.54.86.26.97.27.99.210.110.610.711.012.413.013.314.214.815.416.416.717.318.019.822.023.323.913.614.514.815.716.716.717.518.419.119.620.020.521.121.822.222.722.923.223.523.523.624.124.024.05.76.16.57.07.68.29.010.312.214.516.219.423.026.129.535.744.749.152.458.466.889.794.1102.1109.2118.1128.5135.5146.5162.6184.5218.5254.4280.097.6104.2112.5121.3131.1138.3150.6169.9175.2180.2185.9196.6205.6213.6222.0232.9242.2250.1259.2266.2270.4277.2283.5289.07.99.39.710.311.812.613.317.820.622.926.227.930.734.542.647.950.455.561.269.881.088.6104.5112.3119.7132.8149.1162.1173.6194.5211.4224.9237.8249.3264.3113.3123.4135.6152.8165.4177.7199.5214.7221.6223.1227.0227.9234.4236.7239.2240.8246.2248.1249.8253.3256.6264.5266.8269.2376.7393.7410.4437.0460.0495.3534.9582.4628.3691.4753.1809.8871.5954.21,058.11,170.21,272.51,415.11,569.91,770.31,989.32,231.62,488.52,649.82,832.63,106.13,333.23,545.63,749.44,023.94,318.04,608.64,792.05,080.15,320.32,708.52,932.03,193.83,414.93,602.33,854.94,142.94,408.54,512.74,582.74,647.04,692.24,724.04,768.44,807.24,868.54,950.85,027.75,082.05,259.85,177.25,303.85,365.45,434.72 Personal income exclusive of the farm component of wages and salaries, other labor income, proprietors' income with inventoryvaluation and capital consumption adjustments, and net interest.Note.—The industry classification of wage and salary disbursements and proprietors' income is on an establishment basis and isbased on the 1987 Standard Industrial Classification (SIC) beginning 1987 and on the 1972 SIC for earlier years shown.Source: Department of Commerce, Bureau of Economic Analysis.299

TABLE B-27.—Disposition of personal income, 1959-93[Billions of dollars, except as noted; quarterly data at seasonally adjusted annual rates]Year or quarterPersonalincomeLess:Personaltax andnontaxpaymentsEquals:DisposablepersonalincomeLess: Personal outlaysTotalPersonalconsumptionexpendituresInterestpaid bypersonsPersonaltransferpaymentsto restof theworld(net)Equals:PersonalsavingPercent of disposablepersonal income lPersonal outlaysTotalPersonalconsumptionexpendituresPersonalsaving19591960196119621963196419651966196719681969197019711972197319741975197619771978197919801981198219831984198519861987198819891990199119921993 '1982: IV1983: IV1984: IV1985: IV1986: IV1987: IV1988: IV1989: IV1990:1 IIIllIV1991:1 IIIllIV1992:1 IIIllIV1993:1 IIIllIV ".391.2409.2426.5453.4476.4510.7552.9601.7646.5709.9773.7831.0893.5980.51,098.71,205.71,307.31,446.31,601.31,807.92,033.12,265.42,534.72,690.92,862.53,154.63,379.83,590.43,802.04,075.94,380.34,673.84,850.95,144.95,387.62,746.82,965.83,242.53,456.73,647.83,918.54,195.24,469.44,585.64,648.64,701.94,759.14,783.94,833.44,858.84,927.55,017.85,093,85,139.85,328.35,254.75,373.25,412.75,509.844.548.750.354.858.056.061.971.077.992.1109.9109.0108.7132.0140.6159.1156.4182.3210.0240.1280.2312.4360.2371.4368.8395.1436.8459.0512.5527.7593.3623.3620.4644.8681.6372.1371.6413.4448.8478.5528.6542.0605.1611.9627.4628.5625.2616.4616.6619.7628.8630.9634.6642.8670.7657.1681.0689.0699.1346.7360.5376.2398.7418.4454.7491.0530.7568.6617.8663.8722.0784.9848.5958.11,046.51,150.91,264.01,391.31,567.81,753.01,952.92,174.52,319.62,493.72,759.52,943.03,131.53,289.53,548.23,787.04,050.54,230.54,500.24,706.02,374.72,594.32,829.13,007.93,169.33,389.93,653.23,864.33,973.74,021.24,073.44,133.94,167.54,216.84,239.14,298.84,386.94,459.24,497.04,657.64,597.54,692.24,723.74,810.7324.7339.9351.3372.8393.7423.1456.4494.4522.8573.9620.5664.5719.4788.7872.0953.11,050.61,170.91,303.41,460.01,629.61,799.11,982.62,120.12,325.12,537.52,753.72,944.03,147.53,392.53,634.93,880.64,029.04,261.54,515.72,190.92,417.92,606.52,828.73,018.23,220.13,496.73,715.53,797.23,845.63,921.93,957.73,966.04,010.74,052.34,087.04,169.44,221.34,277.34,377.94,419.74,483.64,544.04,615.5318.1332.4343.5364.4384.2412.5444.6481.6509.3559.1603.7646.5700.3767.8848.1927.71,024.91,143.11,271.51,421.21,583.71,748.11,926.22,059.22,257.52,460.32,667.42,850.63,052.23,296.13,523.13,761.23,906.44,139.94,390.62,128.72,346.82,526.42,739.82,923.13,124.63,398.23,599.13,679.33,727.03,801.73,836.63,843.63,887.83,929.83,964.14,046.54,099.94,157.14,256.24,296.24,359.94,419.14,487.46.17.07.37.88.910.011.112.012.513.815.716.817.819.622.424.224.526.730.737.544.549.454.658.865.775.083.690.992.393.7103.0109.3112.2111.1114.060.269.277.686.492.392.495.8106.7108.0108.4109.8110.9111.9112.5112.2112.1111.9110.9110.5111.3112.5112.7114.1116.70.4.5.5.5.6.71.01.01.11.21.31.31.41.21.21.21.21.31.41.61.82.11.82.32.72.53.02.78.910.110.510.411.01.92.02.52.52.83.12.79.89.910.110.310.210.410.410.310.811.110.59.710.511.011.010.811.422.020.624.925.924.631.634.636.345.843.943.357.565.459.786.193.4100.393.087.9107.8123.3153.8191.8199.5168.7222.0189.3187.5142.0155.7152.1170.0201.5238.7190.3183.8176.3222.6179.2151.1169.8156.4148.8176.5175.7151.6176.2201.5206.0186.8211.7217.5237.9219.6279.7177.9208.7179.7195.293.794.393.493.594.193.193.093.291.992.993.592.091.793.091.091.191.392.693.793.193.092.191.291.493.292.093.694.095.795.696.095.895.294.796.092.393.292.194.095.295.095.796.295.695.696.395.795.295.195.695.195.094.795.194.096.195.696.295.991.892.291.391.491.890.790.590.789.690.590.989.589.290.588.588.689.190.491.490.790.389.588.688.890.589.290.691.092.892.993.092.992.392.093.389.690.589.391.192.292.293.093.192.692.793.392.892.292.292.792.292.291.992.491.493.492.993.693.36.35.76.66.55.96.97.06.88.17.16.58.08.37.09.08.98.77.46.36.97.07.98.88.66.88.06.46.04.34.44.04.24.85.34.07.76.87.96.04.85.04.33.94.44.43.74.34.84.94.44.95.05.34.96.03.94.43.84.11 Percents based on data in millions of dollars.Source: Department of Commerce, Bureau of Economic Analysis.300

TABLE B-28.—Total and per capita disposable personal income and personal consumption expenditures incurrent and 1987 dollars, 1959-93[Quarterly data at seasonally adjusted annual rates, except as noted]Year or quarterDisposable personal incomeTotal (billions ofdollars)Currentdollars1987dollarsCurrentdollarsPer capita(dollars)1987dollarsPersonal consumption expendituresTotal (billions ofdollars)Currentdollars1987dollarsCurrentdollarsPer capita(dollars)1987dollarsPopulation(thousands)l19591960196119621963196419651966196719681969197019711972197319741975197619771978197919801981198219831984198519861987198819891990199119921993 »1982: IV1983: IV1984: IV1985: IV1986: IV1987: IV1988: IV1989: IV1990:1..II....III..IV...1991:1IIIllIV1992:11993:1....II...IV "...346.7360.5376.2398.7418.4454.7491.0530.7568.6617.8663.8722.0784.9848.5958.11,046.51,150.91,264.01,391.31,567.81,753.01,952.92,174.52,319.62,493.72,759.52,943.03,131.53,289.53,548.23,787.04,050.54,230.54,500.24,706.02,374.72,594.32,829.13,007.93,169.33,389.93,653.23,864.33,973.74,021.24,073.44,133.94,167.54,216.84,239.14,298.84,386.94,459.24,497.04,657.64,597.54,692.24,723.74,810.71,284.91,313.01,356.41,414.81,461.11,562.21,653.51,734.31,811.41,886.81,947.42,025.32,099.92,186.22,334.12,317.02,355.42,440.92,512.62,638.42,710.12,733.62,795.82,820.42,893.63,080.13,162.13,261.93,289.53,404.33,464.93,524.53,529.03,632.53,700.52,832.62,960.63,118.53,178.73,266.23,335.83,443.13,480.93,525.63,529.83,523.53,519.03,515.93,532.53,524.23,543.43,580.13,607.53,624.83,717.63,642.63,694.43,708.73,756.41,9581,9942,0482,1372,2102,3692,5272,6992,8613,0773,2743,5213,7794,0424,5214,8935,3295,7966,3167,0427,7878,5769,4559,98910,64211,67312,33913,01013,54514,47715,30716,20516,74117,61518,22210,18911,03311,92512,56513,12113,90714,85015,55815,96316,11416,27516,46716,56016,71216,75216,93917,24517,48117,57718,15317,87618,19618,26518,5497,2567,2647,3827,5837,7188,1408,5088,8229,1149,3999,6069,87510,11110,41411,01310,83210,90611,19211,40611,85112,03912,00512,15612,14612,34913,02913,25813,55213,54513,89014,00514,10113,96514,21914,32912,15412,59113,14513,27813,52213,68513,99614,01514,16314,14414,07814,01813,97114,00013,92713,96314,07314,14214,16914,49014,16314,32614,34114,484318.1332.4343.5364.4384.2412.5444.6481.6509.3559.1603.7646.5700.3767.8848.1927.71,024.91,143.11,271.51,421.21,583.71,748.11,926.22,059.22,257.52,460.32,667.42,850.63,052.23,296.13,523.13,761.23,906.44,139.94,390.62,128.72,346.82,526.42,739.82,923.13,124.63,398.23,599.13,679.33,727.03,801.73,836.63,843.63,887.83,929.83,964.14,046.54,099.94,157.14,256.24,296.24,359.94,419.14,487.41,178.91,210.81,238.41,293.31,341.91,417.21,497.01,573.81,622.41,707.51,771.21,813.51,873.71,978.42,066.72,053.82,097.52,207.32,296.62,391.82,448.42,447.12,476.92,503.72,619.42,746.12,865.82,969.13,052.23,162.43,223.33,272.63,258.63,341.83,452.52,539.32,678.22,784.82,895.33,012.53,074.73,202.93,242.03,264.43,271.63,288.43,265.93,242.73,256.93,267.13,267.53,302.33,316.83,350.93,397.23,403.83,432.73,469.63,503.91,7961,8391,8691,9532,0302,1492,2872,4502,5622,7852,9783,1523,3723,6584,0024,3374,7455,2415,7726,3847,0357,6778,3758,8689,63410,40811,18411,84312,56813,44814,24115,04815,45916,20517,0019,1349,98010,64911,44512,10112,81913,81414,49114,78114,93515,18915,28315,27315,40915,53015,62115,90616,07216,24916,58916,70416,90717,08817,3036,6586,6986,7406,9317,0897,3847,7038,0058,1638,5068,7378,8429,0229,4259,7529,6029,71110,12110,42510,74410,87610,74610,77010,78211,17911,61712,01512,33612,56812,90313,02913,09312,89513,08113,36910,89511,39011,73912,09512,47212,61513,02013,05313,11413,11013,13813,01012,88512,90812,91112,87612,98113,00213,09813,24113,23413,31213,41613,511177,073180,760183,742186,590189,300191,927194,347196,599198,752200,745202,736205,089207,692209,924211,939213,898215,981218,086220,289222,629225,106227,715229,989232,201234,326236,393238,510240,691242,860245,093247,397249,951252,699255,472258,256233,060235,146237,231239,387241,550243,745246,004248,372248,927249,552250,291251,035251,659252,312253,048253,776254,392255,090255,836256,569257,197257,872258,612259,3431 Population of the United States including Armed Forces overseas; includes Alaska and Hawaii beginning 1960. Annual data areaverages of quarterly data. Quarterly data are averages for the period.Source: Department of Commerce (Bureau of Economic Analysis and Bureau of the Census).301

TABLE B-29.—Gross sating and investment, 1959-93[Billions of dollars; quarterly data at seasonally adjusted annual rates]Gross savingGross investmentYear orquarterTotalGross private savingTotalPersonalsavingGrossbusinesssaving1Government surplus or deficit(-), national income andproduct accountsTotalFederalStateandlocalCapitalgrantsreceivedby theUnitedStates(net) 2TotalGrossprivatedomesticinvestmentNetforeigninvestment3Statisticaldiscrepancy19591960196119621963196419651966196719681969197019711972197319741975197619771978197919801981198219831984198519861987198819891990199119921993 "1982: IV1983: IV1984: IV1985: IV1986: IV1987: IV1988: IV1989: IV1990:11991:1.1992:1II....III...IV...1993:1IllIV »79.485.184.492.8100.4110.0125.0131.5130.8141.7159.5155.2173.7201.7252.3249.5241.4284.8338.2415.7468.5465.4556.6508.4501.6633.9610.4574.6619.0704.0741.8722.7733.7717.8458.5542.4637.0603.8550.1667.9720.1728.4735.5765.9705.5683.8780.3734.3694.4726.0709.9715.5727.0718.8762.0766.7774.382.581.587.495.898.8111.5123.7132.5144.5146.4149.5165.8192.2204.9245.4256.0306.3323.1355.0412.8457.9499.6585.9616.9641.3742.7735.7721.4730.7802.3819.4861.1929.9986.9615.4678.7764.7734.7676.3783.7814.8828.6867.4888.5825.5863.1919.4935.0906.6958.7974.1987.71,016.5969.41,024.8988.3988.722.020.624.925.924.631.634.636.345.843.843.357.565.459.786.193.4100.393.087.9107.8123.3153.8191.8199.5168.7222.0189.3187.5142.0155.7170.0201.5238.7190.3183.8176.3222.6179.2151.1169.8156.4148.8176.5175.7151.6176.2201.5206.0186.8211.7217.5237.9219.6279.7177.9208.7179.7195.260.560.962.569.974.180.089.296.198.7102.5106.2108.2126.8145.1159.3162.6206.0230.0267.1305.0334.5345.7394.1417.5472.7520.7546.4533.9588.7646.6667.3691.2728.4748.3431.6502.4542.1555.5525.3613.9658.3679.8690.9712.9673.9686.9717.9728.9719.8746.9756.6749.8796.9689.7847.0779.6809.0-3.13.6-3.0-2.91.6-1.61.2-1.0-13.7-4.610.0-11.5-19.2-3.96.9-4.5-64.8-38.3-16.82.99.4-35.3-30.3-108.6-139.8-108.8-125.3-146.8-111.7-98.3-77.5-138.4-196.2-269.1-223.7-156.9-136.3-127.8-130.9-126.2-115.8-94.7-100.2-131.9-122.7-119.9-179.3-139.1-200.7-212.2-232.6-264.2-272.2-289.5-250.6-262.8-221.5-214.4-2.63.5-2.6-3.41.1-2.61.3-1.4-12.7-4.78.5-13.3-21.7-17.3-6.6-11.6-69.4-52.9-42.4-28.1-15.7-60.1-58.8-135.5-180.1-166.9-181.4-201.0-151.8-136.6-122.3-163.5-203.4-276.3-225.8-183.4-184.6-186.8-187.2-177.5-152.7-134.9-141.5-166.4-152.0-144.6-191.0-145.2-206.2-217.7-244.7-270.2-279.9-290.7-264.2-263.5-222.6-212.7-0.5.0-.4.5.41.0.0.5-1.1.11.51.82.513.413.47.14.614.625.631.125.124.828.526.940.358.156.154.340.138.444.825.17.37.22.126.548.359.056.351.237.040.241.334.529.324.711.76.15.55.512.16.17.81.213.51.1-1.777.682.082.291.898.4109.3124.2134.3131.6141.7157.0155.2176.8202.7251.8250.9247.4295.2349.1423.3482.2479.1567.5500.9511.7624.9596.5575.9594.2675.6742.9730.4743.3741.4448.4556.3616.5597.8548.1643.0694.7741.3748.6764.0720.4688.7780.5738.7721.8732.3733.0739.1742.7750.9796.5778.7787.678.878.777.987.993.4101.7118.0130.4128.0139.9155.2150.3175.5205.6243.1245.8226.0286.4358.3434.0480.2467.6558.0503.4546.7718.9714.5717.6749.3793.6832.3808.9736.9796.5892.0464.2614.8722.8737.0697.1800.2814.8825.2828.9837.8812.5756.4729.1721.5744.5752.4750.8799.7802.2833.3874.1874.1884.0935.8-1.23.24.33.95.07.56.23.93.51.71.84.91.3-2.98.75.121.48.8-9.2-10.72.011.59.5-2.5-35.0-94.0-118.1-141.7-155.1-118.0-89.3-78.56.4-55.1-15.8-58.5-106.3-139.1-149.0-157.1-120.1-84.0-80.3-73.8-92.1-67.751.417.2-22.8-20.2-17.7-60.6-59.4-82.4-77.6-95.4-96.4-1.8-3.1-2.2-1.0-2.0-.7-.72.8.8-.1-2.6.03.11.1-.51.46.010.410.97.613.813.610.9-7.410.2-9.0-13.91.2-24.8-28.41.17.89.623.6-10.113.8-20.5-5.9-2.0-24.9-25.412.813.1-1.814.94.9.24.527.36.223.123.615.732.134.412.013.31 Undistributed corporate profits with inventory valuation and capital consumption adjustments, corporate and noncorporateconsumption of fixed capital, and private wage accruals less disbursements.2 Consists mainly of allocations of special drawing rights (SDRs).3 Net exports of goods and services plus net receipts of factor income from rest of the world less net transfers plus net capitalgrants received by the United States. See also Table B-21.4 Consists of a U.S. payment to India under the Agricultural Trade Development and Assistance Act. This payment is included incapital grants received by the United States, net.Source: Department of Commerce, Bureau of Economic Analysis.302

Year orquarterPersonalsavingTotalTABLE B-30.—Personal saving, flow of funds accounts, 1946-93Checkabledepositsandcurrency[Billions of dollars; quarterly data at seasonally adjusted annual rates]MoneymarketfundsharesIncrease infinancial assetsTimeandsavingsdepositsGovernmentsecurities2SecuritiesCorporateequities3Othersecurities4Insuranceandpensionreserves5Otherfinancialassets6Net investment intangible assets 7OwneroccupiedhomesConsumerdurablesNoncorporatebusinessassets8Less-. Net increase indebtMortgagedebtonnonfarmhomesConsumercreditOtherdebt 89194619471948194919501951..195219531954195519561957195819591960196119621963196419651966196719681969197019711972197319741975197619771978197919801981198219831984198519861987198819891990199119921991:1II....III...IV...1992:1II....III...IV...1993:1II....III...17.219.024.921.231.135.738.736.227.636.038.938.537.036.038.538.344.849.361.568.583 084.682.782.692.1104.4121.9158.3121.6150.2171.1197.4206.2220.3217.6248.0257.1314.8363.5390.3463.7363.8361.3449.6435.3384.4441.4484.4298.1410.4344.6432.8419.0412.0501.9276.3544.3390.719.412.38.78.614.919.230.124.620.828.132.029.632.534.834.236.040.545.957.157.364 072.469.070.679.9107.6134.9147.5152.5177.2211.4255.7286.5329.1328.6324.8379.9496.9532.8625.1586.1502.4489.9556.2483.3452.0499.4543.0424.4415.9424.8485.1446.3524.7541.7249.1562.8563.456.0-2.9-2.02.74.61.6.92.11.21.9_ ^371.1.9-10-1.24.26.16.72410.39.5-1.37.413.513.213.16.36.215.619.821.535.89.236.224.622.54.728.697.5-1.927.7_ 5633.52.32.62.44.87.48.29.18.59.311.813.810.512.018125.825.925.927.518 834.930.38.642.565 872.662.855.379.6104.2106.3103.275.7120.867.5113.5196.8225.3116.690.392.8134.878.212.3 34.051.8 -103.9140.2 -123.537.3 -44.239.5 -61.6114.7 -170.315.7 -139.4118.7 -72.674.7 -160.4211.8 -142.8155.5 -118.06.0 -214.0119.8 -36.4123.7 -132.62.41.3.0-.45.730.023.787.031.8-30.143.83.738.224.320.285.144.724.5-3.8108.6-7.2-17.814.634.618.6-28.4-40.0-49.760.747.1-15.51.0.5.9-.7 7.43.7.16.44.53.7-2.78.22.081.0-1.13.73.813 6-2.61.228.5-7.5-12.7-2.114.517.012.72.57.927.560.629.437.425.474.9100.377.8-55.2112.2157.7101.2135.1-45.69.4-55.2110.5-62.9-174.9116.274.4-88.1-64.823.1-70.5-119.7121.21.0.8.71.91.51.1.8122.11.61.9.7.311-1.4-1.1.0-1.50-3.0-6.0-11.1.2-112-13 5-12.21.42.41.1-6.0-10.2-20.3.7-38.9-16.94.5-44.7-37.622.5-27.5-87.1-94.521.381.9189.1131.55.669.5121.0132.4171.2256.3196.6-0 8-.8.2-.3-.97-.1.3-1.441.21.4.9.23.40.21.21.2-.1496.47.210.85.937-2.87.417.8-4.6.516.56.01.8-10.5-8.6-7.921.7-9.353.133.531.45.5-24.526.25.334.556.4-7.8-63.035.7-13.19.716.0125.5172.0 -155.8248.3 -87.7351.4 -39.5515.45.35.66.16.38.58.08.0879.79.710.712.211.912 513.514.517.117.820 219.621.123.325.830 350.441.844.671.560.380.394.3103.5126.9126.7178.1176.2162.4281.9292.0220.9165.4338.4183.8384.5243.2433.7195.5470.0438.8162.8217.1305.8287.2392.1240.8312.5362.52.01.43.01.63.82.42.01.73.41.94.31.93.744 2.52.13.23.2416.85.711.85.518.317.020.17.78.027.231.338.542.028.517.531.330.550.4101.067.350.265.672.826.053.410.3-125.2149.975.6113.36.241.0-6.0_ 375.487.820.6586.89.38.511.911.911.612.613.017 116.013.612.319.217.216 318.220.522.121.619 018.519.919.917.727 836.740.230.428.244.865.978.575.251.350.530.071.393.693.6119.4123.3126.5114.498 575.794.068.270.678.985.086.796.572.0120.9106.1103.1105.51.59.410.210.914.911.48.710.37.012.78.87.93.77.77.2458.611.915.120.223 221.326.926.219.625 434.340.629.127.441.551.556.850.426.327.322.40.11.57.02.27.44.62.82.31.82.2 .71.84.2.92.2294.34.74.48.4797.310.211.710.115118.123.211.66.14.016.323.132.014.227.510.150.6 -11.881.895.8111.4102.9112.6109.090.024.326.816.012.37.418.44.6 176.753.1 -23.5 165.5 -13.167.7 -21.1 175.5 9.348.2 -18.0 166.7 -16.149.8 -17.1 159.8 -5.160.0 -24.854.5 -34.2159.7 -20.4176.0 -10.760.3 -13.6 216.0 -9.859.5 -8.7 111.1 -14.761.6 -41.689.2 -20.2202.8172.213.548.278.8 -9.295.0 —7 794.1 -17.14.14.94.84.27.06.46.47.49.012.210.88.69.512.911.012.213.816.216.816.812 713.116.717.413.026.339.343.634.239.362.093.0109.9116.294.169.656.1117.1135.6171.7203.4240.9219.0211.8127.8175.6229.12.93.53.13.16.01.45.24.11.37.03.62.6.37.74.02.25.98.59.510.1595.110.89.94.614.019.022.79.48.022.936.745.138.34.816.916.448.981.782.357.532.950.149.513.419.222.960.82.52.62.61.75.13.62.92.04.74.94.33.26.06.07.27.07.29.110.912.112 516.615.718.617.631.243.826.958.441.445.762.283.7111.8103.995.7112.7126.3151.8197.2108.1103.4106.187.151.120.513.86.574.8-19.620.2-20.678.3-11.69.31.510.365.21 Saving by households, 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 government sponsoredenterprise securities, federally-related mortgage pool securities, and State and local obligations.3 Includes mutual fund shares.5 Private life insurance reserves, private insured and noninsured pension reserves, and government insurance and pension reserves.6 Consists of security credit, mortgages, accident and health insurance reserves, nonlife insurance claims, and investment in bankpersonal trusts for households; and of consumer credit, equity in government-sponsored enterprises, and nonlife insurance claims fornoncorporate business.7 Purchases of physical assets less depreciation.8 Includes data for corporate farms.9 Other debt consists of security credit, U.S. Government and policy loans, and noncorporate business debt.Source: Board of Governors of the Federal Reserve System.303

TABLE B-31.—Median money income (in 1992 dollars) and poverty status of families and persons, by race,selected years, 1971-92YearNumber(millions)Medianmoneyincome(in1992dollars)2Families 1TotalBelow poverty levelFemalehouseholderPersonsbelowpoverty levelMedian money income (in 1992 dollars)of persons 15 years old and over withincome 2 3AllpersonsMalesNumber(millions)PercentNumber(millions)PercentNumber(millions)PercentYearroundfull-timeworkersAllpersonsFemalesYearroundfull-timeworkersALL RACES197119731975 4197719781979 5198C198119821983 41984198519861987 419881989199019911992WHITE197119731975 4197719781979 51980198119821983 41984198519861987 419881989199019911992BLACK197119731975 4197719781979 51980198119821983 41984198519861987 41988198919901991199253.355.156.257.257.859.660.361.061.462.062.763.664.565.265.866.166.367.268.147.648.949.950.550.952.252.753.353.453.954.455.055.756.156.556.656.857.257.95.25.45.65.85.96.26.36.46.56.76.86.97.17.27.47.57.57.77.9$33,48035,82134,24935,53936,66537,13635,83934,86234,39034,75735,69336,16437,70938,24938,17738,71037,95037,02136,81234,74037,43835,61937,16238,17838,75137,34136,62036,10736,39537,38538,01139,43939,99740,22240,70439,62638,92038,909-20,96421,60721,91621,22922,61221,94421,60620,65719,95620,51120,83721,88722,53522,73222,92422,86622,99722,19721,1615.34.85.55.35.35.56.26.97.57.67.37.27.07.06.96.87.17.78.03.83.23.83.53.53.64.24.75.15.24.95.04.84.64.54.44.65.05.210.08.89.79.39.19.210.311.212.212.311.611.410.910.710.410.310.711.511.77.96.67.77.06.96.98.08.89.69.79.19.18.68.17.97.88.18.88.928.828.127.128.227.527.828.930.833.032.330.928.728.029.428.227.829.330.430.92.12.22.42.62.72.63.03.33.43.63.53.53.63.73.63.53.84.24.21.21.21.41.41.31.41.61.81.81.91.92.02.02.01.91.92.02.22.2.91.01.01.21.21.21.31.41.51.51.51.51.51.61.61.51.61.81.833.932.232.531.731.430.432.734.636.336.034.534.034.634.233.432.233.435.634.926.524.525.924.023.522.325.727.427.928.327.127.428.226.926.525.426.828.428.153.552.750.151.050.649.449.452.956.253.751.750.550.151.149.046.548.151.249.825.623.025.924.724.526.129.331.834.435.333.733.132.432.231.731.533.635.736.917.815.117.816.416.317.219.721.623.524.023.022.922.221.220.720.822.323.724.57.47.47.57.77.68.18.69.29.79.99.58.99.09.59.49.39.810.210.612.511.112.311.611.411.713.014.015.015.214.414.013.613.413.012.813.514.214.59.98.49.78.98.79.010.211.112.012.111.511.411.010.410.110.010.711.311.632.531.431.331.330.631.032.534.235.635.733.831.331.132.431.330.731.932.733.3$22,47123,94622,10122,47222,72922,33221,36020,98020,47320,65221,06521,26821,90821,96622,42422,50821,78421,08520,65423,55825,12623,21723,53823,80523,33022,72122,26121,64421,72722,23622,31123,11923,34823,67123,60522,72522,03921,64514,05015,19813,88013,96814,26114,44113,65313,23712,97012,70612,75814,04013,85313,85114,28414,26613,81313,35212,754$31,35134,08832,28933,45433,38533,13932,68532,22131,78031,70632,41332,59633,14732,95232,42732,15531,10831,24431,01232,23335,07533,03534,13834,00534,09733,61732,97832,62732,55933,52333,50134,07333,72033,51833,57232,29031,88531,73722,04123,64024,58523,53626,04424,57323,65323,33223,17323,11622,87923,43224,02324,11024,56923,42623,05923,30922,942$7,8398,3118,4508,7498,4558,2518,3878,4998,6409,0229,2749,4109,74210,24510,53610,88910,81010,79110,7747,9698,3918,5388,8828,5578,3298,4338,5948,7579,1809,3839,5939,93410,50610,79611,10211,07511,04411,0366,9827,5747,7567,6707,7057,5807,8087,6357,7247,8458,3238,1858,4058,5828,7168,9108,9409,0818,857$18,55819,28519,27019,56720,03919,96619,76019,39820,05120,39620,82521,19121,56121,69221,99422,21922,10321,88522,16718,77319,61219,31519,69120,22820,14119,95119,72120,32120,67521,03121,49121,89122,09422,32322,48322,37022,20422,42316,57616,63118,45418,40318,74818,45518,60717,81118,16318,31218,95319,02419,15619,73320,00420,22019,90619,71020,299! The term "family" refers to a group of two or more persons related by birth, 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.2 Current dollar median money income deflated by CPI-U-X1.3 Prior to 1979, data are for persons 14 years and over.4 Based on revised methodology; comparable with succeeding years.5 Based on 1980 census population controls; comparable with succeeding years.Note.—Poverty rates (percent of persons below poverty level) for all races for years not shown above are: 1959, 22.4; 1960, 22.2;1961, 21.9; 1962, 21.0; 1963, 19.5; 1964, 19.0; 1965, 17.3; 1966, 14.7; 1967, 14.2; 1968, 12.8; 1969, 12.1; 1970, 12.6; 1972, 11.9;1974, 11.2; and 1976, 11.8.Poverty thresholds are updated each year to reflect changes in the consumer price index (CPI-U).For details see "Current Population Reports," Series P-60, Nos. 184 and 185.Source: Department of Commerce, Bureau of the Census.304

POPULATION, EMPLOYMENT, WAGES, AND PRODUCTIVITYTABLE B-32.—Population by age group, 7929-93(Thousands of persons]July 1TotalAge (years)Under 5 5-15 16-19 20-24 25-44 45-6465 andover1929193319391940194119421943194419451946194719481949195019511952195319541955195619571958.,1959196019611962196319641965196619671968196919701971197219731974197519761977197819791980198119821983198419851986198719881989 ,1990199119921993121,767125,579130,880132,122133,402134,860136,739138,397139,928141,389144,126146,631149,188152,271154,878157,553160,184163,026165,931168,903171,984174,882177,830180,671183,691186,538189,242191,889194,303196,560198,712200,706202,677205,052207,661209,896211,909213,854215,973218,035220,239222,585225,055227,726229,966232,188234,307236,348238,466240,651242,804245,021247,342249,900252,671255,462258,23311,73410.61210,41810,57910,85011,30112,01612,52412,97913,24414,40614,91915,60716,41017,33317,31217,63818,05718,56619,00319,49419,88720,17520,34120,52220,46920,34220,16519,82419,20818,56317,91317,37617,16617,24417,10116,85116,48716,12115,61715,56415,73516,06316,45116,89317,22817,54717,69517,84217,96318,05218,19518,50818,85019,20419,51226,80026,89725,17924,81124,51624,23124,09323,94923,90724,10324,46825,20925,85226,72127,27928,89430,22731,48032,68233,99435,27236,44537,36838,49439,76541,20541,62642,29742,93843,70244,24444,62244,84044,81644,59144,20343,58242,98942,50842,09941,29840,42839,55238,83838,14437,78437,52637,46137,45037,40437,33337,59337,97238,59039,20139,8989,1279,3029.8229,8959,8409,7309,6079,5619,3619,1199,0978,9528,7888,5428,4468,4148,4608,6378,7448,9169,1959,54310,21510,68311,02511,18012,00712,73613,51614,31114,20014,45214,80015,28915,68816,03916,44616,76917,01717,19417,27617,28817,24217,16716,81216,33215,82315,29515,00515,02415,21515,19814,91314,44413,90313,64410,69411,15211,51911,69011,80711,95512.06412,06212,03612,00411,81411,79411,70011,68011,55211,35011,06210,83210,71410,61610,60310,75610,96911,13411,48311,95912,71413,26913,74614,05015,24815,78616,48017,20218,15918,15318,52118,97519,52719,98620,49920,94621,29721,59021,86921,90221,84421,73721,47820,94220,38519,84619,44219,30219,35219,17635,86237,31939,35439,86840,38340,86141,42042,01642,52143,02743,65744,28844,91645,67246,10346,49546,78647,00147,19447,37947,44047,33747,19247,14047,08447,01346,99446,95846,91247,00147,19447,72148,06448,47348,93650,48251,74953,05154,30255,85257,56159,40061,37963,47065,52867,69269,73371,73573,67375,65177,33878,59579,94381,20082,48882,59421,07622,93325,82326,24926,71827,19627,67128,13828,63029,06429,49829,93130,40530,84931,36231,88432,39432,94233,50634,05734,59135,10935,66336,20336,72237,25537,78238,33838,91639,53440,19340,84641,43741,99942,48242,89843,23543,52243,80144,00844,15044,28644,39044,50444,50044,46244,47444,54744,60244,66044,85445,47145,88246,28746,75948,3526,4747,3638,7649,0319,2889,5849,86710,14710,49410,82811,18511,53811,92112,39712,80313,20313,61714,07614,52514,93815,38815,80616,24816,67517,08917,45717,77818,12718,45118,75519,07119,36519,68020,10720,56121,02021,52522,06122,69623,27823,89224,50225,13425,70726,22126,78727,36127,87828,41629,00829,62630,12430,68231,22831,76432,285Note.—Includes Armed Forces overseas beginning 1940. Includes Alaska and Hawaii beginning 1950.All estimates are consistent with decennial census enumerations.Source: Department of Commerce, Bureau of the Census.305

TABLE B-33.—Population and the labor force, 1929-93[Monthly data seasonally adjusted, except as noted]Year or monthCiviliannoninstitutionalpopulation1ResidentArmedForces lLaborforceincludingresidentArmedForcesEmploymentincludingresidentArmedForcesTotalCivilian labor forceTotalEmploymentculturalNonagriculturalUnemploymentUnemploymentrateAllworkers2Civilianworkers3Civilianlaborforceparticipationrate 4Civilianemployment/populationratio 5Thousands of persons 14 years of age and overPercent1929193319391940194119421943194419451946194799,84099,90098,64094,64093,22094,090103,070106,01849,18051,59055,23055,64055,91056,41055,54054,63053,86057,52060,16847,63038,76045,75047,52050,35053,75054,47053,96052,82055,25057,81210,45010,0909,6109,5409,1009,2509,0808,9508,5808,3208,25637,18028,67036,14037,98041,25044,50045,39045,01044,24046,93049,5571,55012,8309,4808,1205,5602,6601,0706701,0402,2702,3563.224.917.214.69.94.71.91.21.93.93.955.756.057.258.758.657.255.856.847.650.454.557.657.956.153.654.5Thousands of persons 16 years of age and over1947194819491950195119521953 6195419551956195719581959I960 619611962 61963196419651966196719681969197019711972 61973 619741975197619771978 619791980198119821983198419851986 61987198819891990199119921993101,827103,068103,994104,995104,621105,231107,056108,321109,683110,954112,265113,727115,329117,245118,771120,153122,416124,485126,513128,058129,874132,028134,335137,085140,216144,126147,096150,120153,153156,150159,033161,910164,863167,745170,130172,271174,215176,383178,206180,587182,753184,613186,393188,049189,765191,576193,5501,1692,1432,3862,2312,1422,0641,9651,9481,8471,7881,8611,9002,0612,0062,0181,9462,1222,2182,2532,2382,1181,9731,8131,7741,7211,6781,6681,6561,6311,5971,6041,6451,6681,6761,6971,7061,7061,7371,7091,6881,6371,5641,5661,48563,37764,16064,52465,24665,78567,08768,51768,87769,48670,15771,48972,35972,67573,83975,10976,40177,89279,56580,99082,97284,88986,35588,84791,20393,67095,45397,826100,665103,882106,559108,544110,315111,872113,226115,241117,167119,540121,602123,378125,557126,424126,867128,548129,52560,08762,10462,63663,41062,25164,23465,76466,01964,88366,41867,63967,64668,76369,76871,32373,03475,01776,59078,17380,14080,79681,34083,96686,83888,51587,52490,42093,67397,679100,421100,907102,042101,194102,510106,702108,856111,303114,177116,677119,030119,550118,440119,164120,79159,35060,62161,28662,20862,01762,13863,01563,64365,02366,55266,92967,63968,36969,62870,45970,61471,83373,09174,45575,77077,34778,73780,73482,77184,38287,03489,42991,94993,77596,15899,009102,251104,962106,940108,670110,204111,550113,544115,461117,834119,865121,669123,869124,787125,303126,982128,04057,03858,34357,65158,91859,96160,25061,17960,10962,17063,79964,07163,03664,63065,77865,74666,70267,76269,30571,08872,89574,37275,92077,90278,67879,36782,15385,06486,79485,84688,75292,01796,04898,82499,303100,39799,526100,834105,005107,150109,597112,440114,968117,342117,914116,877117,598119,3067,8907,6297,6587,1606,7266,5006,2606,2056,4506,2835,9475,5865,5655,4585,2004,9444,6874,5234,3613,9793,8443,8173,6063,4633,3943,4843,4703,5153,4083,3313,2833,3873,3473,3643,3683,4013,3833,3213,1793,1633,2083,1693,1993,1863,2333,2073,07449,14850J1449,99351,75853,23553,74954,91953,90455,72257,51458,12357,45059,06560,31860,54661,75963,07664,78266,72668,91570,52772,10374,29675,21575,97278,66981,59483,27982,43885,42188,73492,66195,47795,93897,03096,12597,450101,685103,971106,434109,232111,800114,142114,728113,644114,391116,2322,3112,2763,6373,2882,0551,8831,8343,5322,8522,7502,8594,6023,7403,8524,7143,9114,0703,7863,3662,8752,9752,8172,8324,0935,0164,8824,3655,1567,9297,4066,9916,2026,1377,6378,27310,67810,7178,5398,3128,2377,4256,7016,5286,8748,4269,3848,7345.23.22.92.85.44.34.04.26.65.35.46.55.45.55.04.43.73.73.53.44.85.85.54.85.58.37.66.96.05.87.07.59.59.57.47.16.96.15.45.25.46.67.36.73.93.85.95.33.33.02.95.54.44.14.36.85.55.56.75.55.75.24.53.83.83.63.54.95.95.64.95.68.57.77.16.15.87.17.69.79.67.57.27.06.25.55.35.56.77.46.858.358.858.959.259.259.058.958.859.360.059.659.559.359.459.358.858.758.758.959.259.659.660.160.460.260.460.861.361.261.662.363.263.763.863.964.064.064.464.865.365.665.966.566.466.066.366.256.056.655.456.157.357.357.155.556.757.557.155.456.056.155.455.555.455.756.256.957.357.558.057.456.657.057.857.856.156.857.959.359.959.259.057.857.959.560.160.761.562.363.062.761.661.461.61 Not seasonally adjusted.2 Unemployed as percent of labor force including resident Armed Forces.3 Unemployed as percent of civilian labor force.4 Civilian labor force as percent of civilian noninstitutional population.5 Civilian employment as percent of civilian noninstitutional population.See next page for continuation of table.306

TABLE B-33.—Population and the labor force, 1929-93—Continued[Monthly data seasonally adjusted, except as noted]Year or monthCiviliannoninstitutionalpopulation1ResidentArmedForces lArmedForcesLaborforceincludingEmploymentincludingresidentArmedForcesTotalCivilian labor forceTotalEmploymentAgriculturalNonagriculturalUnemploymentUnemploymentrateAllworkers2Civilianworkers3Civilianlaborforce85:pationrate 4Civilianemployment/populationratio 5Thousands of persons 16 years of age and overPercent1990: Jan...Feb...Mar..Apr...May..June.July..Aug..Sept.Oct...Nov..Dec.1991: Jan...Feb...Mar..Apr...May..June.July..Aug..Sept.Oct...Nov..Dec.1992: Jan...Feb...Mar..Apr...May..June.July..Aug..Sept.Oct...Nov..Dec.1993: Jan...Feb...Mar..Apr...May..JuneJuly.Aug.SeptOct..Nov.Dec187,293187,412187,529187,669187,828187,977188,136188,261188,401188,525188,697188,866188,977189,115189,243189,380189,522189,668189,839189,973190,122190,289190,452190,605190,759190,884191,022191,168191,307191,455191,622191,790191,947192,131192,316192,509192,644192,786192,959193,126193,283193,456193,633193,793193,971194,151194,321194,4721,6971,6781,6691,6571,6391,6301,6271,6401,6011,5701,6151,6171,6151,6021,4601,4561,4581,5051,6041,6161,6241,6141,6051,6041,5991,5851,5851,5771,5741,5701,5681,5661,5661,5521,5311,5171,5151,5121,4971,4921,4841,4771,4711,4821,4821,4751,4701,461126,298126,299126,432126,470126,554126,282\126,284126,457126,504126,480126,477126,766126,402126,629126,716127,177126,643126,872126,706126,565127,231127,192127,124127,245127,748127,794128,130128,494128,610128,839128,926128,905128,872128,485128,818128,986128,739128,912128,937129,031129,559129,533129,573129,816129,590130,055130,132130,359119,687119,714119,942119,762119.955119,868119,576119,446119,389119,288118,974119,033118,582118.471118,251118,867118,104118,383118,342118,121118,766118,611118,453118,240118,729118,504118,840119,247119,108119,068119,331119,315119,338119,275119,505119.672119,693119,954120,059120,077120,664120.664120,841121.174121,050121.416121,802122,122124,601124,621124,763124,813124,915124,652124,657124,817124,903124,910124,862125,149124,787125,027125,256125,721125,185125,367125,102124,949125,607125,578125,519125.641126,149126,209126,545126,917127,036127,269127,358127.339127,306126,933127,287127,469127,224127,400127,440127,539128,075128.056128,102128,334128,108128,580128.662128,898117,990118,036118,273118,105118,316118,238117,949117,806117,788117,718117,359117,416116,967116,869116,791117,411116,646116,878116,738116,505117,142116,997116,848116,636117,130116,919117,255117,670117,534117,498117,763117,749117,772117,723117,974118,155118,178118,442118,562118,585119,180119,187119,370119,692119,568119,941120.332120,6613,1563,1233,2233,1673,2893,2573,1083,1493,1703,2013,1493,2523,1733,2283,1313,1893,2693,2813,2583,2733.2753,2313,2553,1413,1363,2183,2083,2203,1923,2483,2173,2373,2113,1883,1703.2223,1823,1163,0993,0713,0743,0313,0433,0053.0933,0213,1143.0%114,834114,913115,050114,938115,027114,981114,841114,657114,618114,517114,210114,164113,794113,641113,660114.222113,377113,597113,480113,232113,867113,766113,593113.495113,994113,701114,047114,450114,342114,250114,546114,512114,561114,535114,804114,933114,996115,326115,463115,514116,106116,156116,327116,687116,475116,920117,218117,5656,6116,5856,4906,7086,5996,4146,7087,0117,1157,1927,5037,7337,8208,1588,4658,3108,5398,4898,3648,4448,4658,5818,6719,0059,0199,2909,2909,2479,5029,7719,5959,5909,5349.2109,3139,3149,0468,9588,8788,9548,8958,8698,7328,6428,5408,6398,3308.2375.25.25.15.35.25.15.35.55.65.75.96.16.26.46.76.56.76.76.66.76.76.76.87.17.17.37.37.27.47.67.47.47.47.27.27.27.06.96.96.96.96.86.76.76.66.66.46.35.35.35.25.45.35.15.45.65.75.86.06.26.36.56.86.66.86.86.76.86.76.86.97.27.17.47.37.37.57.77.57.57.57.37.37.37.17.07.07.06.96.96.86.76.76.76.56.466.566.566.566.566.566.366.366.366.366.366.266.366.066.166.266.466.166.165.965.866.166.065.965.966.166.166.266.466.466.566.566.466.366.166.266.266.066.166.066.066.366.266.266.266.066.266.266.363.063.063.162.963.062.962.762.662.562.462.262.261.961.861.762.061.561.661.561.361.661.561.461.261.461.361.461.661.461.461.561.461.461.361.361.461.361.461.461.461.761.661.661.861.661.861.962.06 Not strictly comparable with earlier data due to population adjustments as follows: Beginning 1953, introduction of 1950 censusdata added about 600,000 to population and 350,000 to labor force, total employment, and agricultural employment. Beginning 1960,inclusion of Alaska and Hawaii added about 500,000 to population, 300,000 to labor force, and 240.000 to nonagricultural employment.Beginning 1962, introduction of 1960 census data reduced population by about 50.000 and labor force and employment by 200,000.Beginning 1972, introduction of 1970 census data added about 800,000 to civilian noninstitutional population and 333,000 to laborforce and employment. A subsequent adjustment based on 1970 census in March 1973 added 60,000 to labor force and to employment.Beginning 1978, changes in sampling and estimation procedures introduced into the household survey added about 250,000 to laborforce and to employment. Unemployment levels and rates were not significantly affected. Beginning 1986, the introduction of revisedpopulation controls added about 400,000 to the civilian population and labor force and 350,000 to civilian employment. Unemploymentlevels and rates were not significantly affected.Note.—Labor force data in Tables B-33 through B-42 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.307

TABLE B-34.—Civilian employment and unemployment by sex and age. 1947-93[Thousands ot persons 16 years of age and over; monthly data seasonally adjusted]Year or monthCivilian employmentTotalMalesTotal16-19years20yearsandoverFemalesTotal16-19years20yearsandoverUnemploymentTotalMalesTotal16-19years20yearsandoverFemalesTotal16-19years20yearsandover194719481949195019511952195319541955195619571958195919601961196219631964196519661967196819691970197119721973197419751976197719781979198019811982198319841985198619871988198919901991199219931992. Jan..Feb...Mar..Apr...May..June.July..Aug..Sept.Oct...Nov..Dec.1993: Jan..Feb...Mar.Apr..May.JuneJuly.Aug.SeptOct..Nov.Dec.57,03858,34357,65158,91859,96160,25061,17960,10962,17063,79964,07163,03664,63065,77865,74666,70267,76269,30571,08872,89574,37275,92077,90278,67879,36782,15385,06486,79485,84688,75292,01796,04898,82499,303100,39799,526100,834105,005107,150109,597112,440114,968117,342117,914116,877117,598119,306117,130116,919117,255117,670117,534117,498117,763117,749117,772117,723117,974118,155118,178118,442118,562118,585119,180119,187119,370119,692119,568119,941120,332120,66140,99541,72540,92541,57841,78041,68242,43041,61942,62143,37943,35742,42343,46643,90443,65644,17744,65745,47446,34046,91947,47948,11448,81848,99049,39050,89652,34953,02451,85753,13854,72856,47957,60757,18657,39756,27156,78759,09159,89160,89262,10763,27364,31564,43563,59363,80564,70063,49963,31963,55363,85363,82163,73263,83063,86963,98063,92064,02864,17864,23764,32964,35564,41664,68764,64264,72864,90464,75664,97165,14465,2592,2182,3442,1242,1862,1562,1072,1361,9852,0952,1642,1152,0122,1982,3612,3152,3622,4062,5872,9183,2533,1863,2553,4303,4093,4783,7654,0394,1033,8393,9474,1744,3364,3004,0853,8153,3793,3003,3223,3283,3233,3813,4923,4773,2372,8792,7862,8362,8502,7402,6932,7632,7462,7232,7472,7652,8392,8492,8282,8642,8192,8522,8572,8022,8382,8372,8592,8982,8552,7992,8292,81538,77639,38238,80339,39439,62639,57840,29639,63440,52641,21641,23940,41141,26741,54341,34241,81542,25142,88643,42243,66844,29444,85945,38845,58145,91247,13048,31048,92248,01849,19050,55552,14353,30853,10153,58252,89153,48755,76956,56257,56958,72659,78160,83761,19860,71461,01961,86560,64960,57960,86061,09061,07561,00961,08361,10461,14161,07161,20061,31461,41861,47761,49861,61461,84961,80561,86962,00661,90162,17262,31562,44416,04516,61716,72317,34018,18118,56818,74918,49019,55120,41920,71420,61321,16421,87422,09022,52523,10523,83124,74825,97626,89327,80729,08429,68829,97631,25732,71533,76933,98935,61537,28939,56941,21742,11743,00043,25644,04745,91547,25948,70650,33451,69653,02753,47953,28453,79354,60653,63153,60053,70253,81753,71353,76653,93353,88053,79253,80353,94653,97753,94154,11354,20754,16954,49354,54554,64254,78854,81254,97055,18855,4021,6911,6821,5881,5171,6111,6121,5841,4901,5471,6541,6631,5701,6401,7681,7931,8331,8491,9292,1182,4682,4962,5262,6872,7352,7302,9803,2313,3453,2633,3893,5143,7343,7833,6253,4113,1703,0433,1223,1053,1493,2603,3133,2823,0242,7492,6132,6942,6772,6762,6242,6152,6242,5532,5652,6422,6012,5832,5792,6192,6332,6342,5912,6362,7162,6702,7412,7042,7402,7272,7652,77114,35414,93615,13715,82416,57016,95817,16417,00018,00218,76719,05219,04319,52420,10520,29620,69321,25721,90322,63023,51024,39725,28126,39726,95227,24628,27629,48430,42430,72632,22633,77535,83637,43438,49239,59040,08641,00442,79344,15445,55647,07448,38349,74550,45550,53551,18151,91250,95450,92451,07851,20251,08951,21351,36851,23851,19151,22051,36751,35851,30851,47951,61651,53351,77751,87551,90152,08452,07252,24352,42352,6312,3112,2763,6373,2882,0551,8831,8343,5322,8522,7502,8594,6023,7403,8524,7143,9114,0703,7863,3662,8752,9752,8172,8324,0935,0164,8824,3655,1567,9297,4066,9916,2026,1377,6378,27310,67810,7178,5398,3128,2377,4256,7016,5286,8748,4269,3848,7349,0199,2909,2909,2479,5029,7719,5959,5909,5349,2109,3139,3149,0468,9588,8788,9548,8958,8698,7328,6428,5408,6398,3308,2371,6921,5592,5722,2391,2211,1851,2022,3441,8541,7111,8413,0982,4202,4862,9972,4232,4722,2051,9141,5511,5081,4191,4032,2382,7892,6592,2752,7144,4424,0363,6673,1423,1204,2674,5776,1796,2604,7444,5214,5304,1013,6553,5253,7994,8175,3804,9325,2115,3795,3465,2795,5265,6505,4425,4765,4435,3445,3305,2014,9775,0675,1475,0985,0165,0415,0024,9434,8244,8494,5864,5542702563533181912051843102742693004163984264794085014874794324484264405996937116537579669398748138119139621,0901,0038128067797326676586297097617287247717727037428657687768206837647537377427298107317597317286877157036771,4221,3052,2191,9221,0299801,0192,0351,5801,4421,5412,6812,0222,0602,5182,0161,9711,7181,4351,1201,0609939631,6382,0971,9481,6241,9573,4763,0982,7942,3282,3083,3533,6155,0895,2573,9323,7153,7513,3692,9872,8673,1704,1094,6194,2044,4874,6084,5744,5764,7844,7854,6744,7004,6234,6614,5664,4484,2404,3254,4184,2884,2854,2824,2714,2154,1374,1343,8833,8776197171,0651,0498346986321,1889981,0391,0181,5041,3201,3661,7171,4881,5981,5811,4521,3241,4681,3971,4291,8552,2272,2222,0892,4413,4863,3693,3243,0613,0183,3703,6964,4994,4573,7943,7913,7073,3243,0463,0033,0753,6094,0053,8013,8083,9113,9443,9683,9764,1214,1534,1144,0913,8663,9834,1134,0693,8913,7313,8563,8793,8283,7303,6993,7163,7903,7443,6831441532231951451401231911762091972622562863493133833853954053914124135065685985836658027807897697437558008868256876616756165585365195815915685615795755595946826305776145356155765945965885756405715315345375715465314755648418546895595109978238328211,2421,0631,0801,3681,1751,2161,1951,0569211,0789851,0151,3491,6581,6251,5071,7772,6842,5882,5352,2922,2762,6152,8953,6133,6323,1073,1293,0322,7092,4872,4672,5553,0283,4133,2343,2473,3323,3693,4093,3823,4393,5233,5373,4773,3313,3683,5373,4753,2953,1433,2813,2393,2573,1993,1653,1793,2193,1983,152Note.—See footnote 6 and Note, Table B-33.Source: Department of Labor, Bureau of Labor Statistics.308

TABLE B-35.—Civilian employment by demographic characteristic, 1954-93[Thousands of persons 16 years of age and over; monthly data seasonally adjusted]Year ormonthAllcivilianworkersWhiteTotalMalesFemalesBothsexes16-19Black and otherTotalMalesFemalesBothsexes16-19BlackTotalMalesFemalesBothsexes16-1919541955195619571958195919601961196219631964196519661967196819691970197119721973197419751976197719781979198019811982198319841985198619871988198919901991199219931992: JanFeb....Mar....Apr....May...June...July....Aug....Sept...Oct....Nov....Dec...1993:JanFeb....Mar....Apr...May..June-July...Aug...Sept..Oct...Nov...Dec...60,10962,17063,79964,07163,03664,63065,77865,74666,70267,76269,30571,08872,89574,37275,92077,90278,67879,36782,15385,06486,79485,84688,75292,01796,04898,82499,303100,39799,526100,834105,005107,150109,597112,440114,968117,342117,914116,877117,598119,306117,130116,919117,255117,670117,534117,498117,763117,749117,772117,723117,974118,155118,178118,442118,562118,585119,180119,187119,370119,692119,568119,941120,332120,66153,95755,83357,26957,46556,61358,00658,85058,91359,69860,62261,92263,44665,02166,36167,75069,51870,21770,87873,37075,70877,18476,41178,85381,70084,93687,25987,71588,70987,90392,12093,73695,66097,78999,812101,584102,087101,039101,479102,812101,195101,051101,308101,599101,473101,277101,568101,479101,497101,547101,793101,944102,029102,076102,251102,190102,612102,721102,835103,179103,094103,273103,662103,80737,84638,71939,36839,34938,59139,49439,75539,58840,01640,42841,11541,84442,33142,83343,41144,04844,17844,59545,94447,08547,67446,69747,77549,15050,54451,45251,12751,31550,28750,62152,46253,04653,78554,64755,55056,35256,43255,55755,70956,39755,48555,35755,50755,74555,70955,59655,76855,74955,82955,82355,84656,05256,08656,10056,17556,16656,30456,36256,33656,52356,46756,62756,79956,79416,11117,11417,90118,11618,02218,51219,09519,32519,68220,19420,80721,60222,69023,52824,33925,47026,03926,28327,42628,62329,51129,71431,07832,55034,39235,80736,58737,39437,61538,27239,65940,69041,87643,14244,26245,23245,65445,48245,77046,41545,71045,69445,80145,85445,76445,68145,80045,73045,66845,72445,94745,89245,94345,97646,07646,02446,30846,35946,49946,65646,62746,64646,86347,0133,0783,2253,3893,3743,2163,4753,7003,6933,7743,8514,0764,5625,1765,1145,1955,5085,5715,6706,1736,6236,7966,4876,7247,0687,3677,3567,0216,5885,9845,7995,8365,7685,7925,8986,0305,9465,5184,9894,7614,8874,8774,7824,6884,7684,7634,6014,7004,7564,7954,7974,7644,8274,8084,8244,8294,8264,8784,8354,9024,9304,9394,9064,9914,9706,1526,3416,5346,6046,4236,6236,9286,8337,0037,1407,3837,6437,8778,0118,1698,3848,4648,4888,7839,3569,6109,4359,89910,31711,11211,56511,58811,68811,62411,94112,88513,41413,93714,65215,15615,75715,82715,83816,11916,49415,92815,94315,94516,02916,00216,17916,16816,31516,30516,21016,18916,20616,12616,43916,30616,35416,50716,40816,45916,52216,51216,69716,70516,8763,7733,9044,0134,0063,8333,9714,1494,0684,1604,2294,3594,4964,5884,6464,7024,7704,8134,7964,9525,2655,3525,1615,3635,5795,9366,1566,0596,0835,9836,1666,6296,8457,1077,4597,7227,9638,0038,0368,0968,3038,0408,0368,0418,0768,0388,1058,0768,1368,1578,1298,1898,1188,1578,2848,1628,2108,3078,2498,3678,3668,3028,3808,3638,4762,3792,4372,5212,5982,5902,6522,7792,7652,8432,9113,0243,1473,2893,3653,4673,6143,6503,6923,8324,0924,2584,2754,5364,7395,1775,4095,5295,6065,6415,7756,2566,5696,8307,1927,4347,7957,8257,8028,0238,1917,8887,9077,9047,9537,9648,0748,0928,1798,1488,0818,0008,0887,9698,1558,1448,1448,2008,1598,0928,1568,2108,3178,3428,4003964184304073653624304144204044404745455685846095745385736476526156116197037276896375655436076666817427748137436396376426656496096185976366266856396406406486356535936186756406816526306166287,8028,1288,2037,8948,2278,5409,1029,3599,3139,3559,1899,37510,11910,50110,81411,30911,65811,95311,96611,86311,93312,14611,86611,79911,83611,85611,84511,98211,97412,07912,04911,97611,95811,95411,86412,15711,99111,96512,14012,07612,13412,22512,20212,29212,29712,3974,3684,5274,5274,2754,4044,5654,7964,9234,7984,7944,6374,7535,1245,2705,4285,6615,8245,9285,9155,8805,8465,9575,8765,8125,8145,8235,8095,8625,8265,8555,8705,8505,8975,8495,8956,0095,8845,8465,9615,9316,0086,0315,9605,9915,9516,0133,4333,6013,6773,6183,8233,9754,3074,4364,5154,5614,5524,6224,9955,2315,3865,6485,8346,0256,0515,9836,0876,1895,9905,9876,0226,0336,0366,1206,1486,2246,1796,1266,0616,1055,9696,1486,1076,1196,1796,1456,1266,1946,2426,3016,3466,384509570554507508508571579547505428416474532536587601625573474474474519492477461445470462496467451465485485487443436494451513514484463461467Note.—See footnote 6 and Note, Table B-33.Source: Department of Labor, Bureau of Labor Statistics.309

TABLE B-36.—Unemployment by demographic characteristic, 1954-93[Thousands of persons 16 years of age and over; monthly data seasonally adjusted]Year ormonthAllcivilianworkersWhiteTotalMalesFemalesBothsexes16-19Black and otherTotalMalesFemalesBothsexes16-19BlackTotalMalesFemalesBothsexes16-1919541955195619571958195919601961196219631964196519661967196819691970197119721973197419751976197719781979198019811982198319841985198619871988198919901991199219931992: Jan...Feb..Mar..Apr..May.June.July..Aug..Sept.Oct..Nov..Dec.1993: Jan...Feb..Mar..Apr..May.June.July..Aug..Sept.Oct..Nov..Dec.3,5322,8522,7502,8594,6023,7403,8524,7143,9114,0703,7863,3662,8752,9752,8172,8324,0935,0164,8824,3655,1567,9297,4066,9916,2026,1377,6378,27310,67810,7178,5398,3128,2377,4256,7016,5286,8748,4269,3848,7349,0199,2909,2909,247.9,5029,7719,5959,5909,5349,2109,3139,3149,0468,9588,8788,9548,8958,8698,7328,6428,5408,6398,3308,2372,8592,2522,1592,2893,6802,9463,0653,7433,0523,2082,9992,6912,2552,3382,2262,2603,3394,0853,9063,4424,0976,4215,9145,4414,6984,6645,8846,3438,2418,1286,3726,1916,1405,5014,9444,7705,0916,4477,0476,5476,8266,9967,0716,9807,0407,3277,1937,1667,2146,9666,8996,9176,7506,6706,6716,6016,6226,6526,5586,4676,3986,7366,1426,2091,9131,4781,3661,4772,4891,9031,9882,3981,9151,9761,7791,5561,2411,2081,1421,1371,8572,3092,1731,8362,1693,6273,2582,8832,4112,4053,3453,5804,8464,8593,6003,4263,4333,1322,7662,6362,8663,7754,1213,7534,0534,1324,1364,0834,2394,3374,1344,1594,2034,0554,0293,9333,8473,8493,9093,8253,7813,8183,8333,7563,6573,7883,3863,5099467747938121,1911,0431,0771,3451,1371,2321,2201,1351,0141,1301,0841,1231,4821,7771,7331,6061,9272,7942,6562,5582,2872,2602,5402,7623,3953,2702,7722,7652,7082,3692,1772,1352,2252,6722,9262,7932,7732,8642,9352,8972,8012,9903,0593,0073,0112,9112,8702,9842,9032,8212,7622,7762,8412,8342,7252,7112,7412,9482,7562,7004233733824015415255756695807087087056516356446608711,0111,0219551,1041,4131,3641,2841,1891,1931,2911,3741,5341,3871,1161,0741,0709959108638569779839439399991,0449199571,1381,0069691,0328649929489519639459629839459099349121,0039228946736015915709237937889718618637876786226385905717549309779241,0581,5071,4921,5501,5051,4731,7521,9302,4372,5882,1672,1212,0971,9241,7571,7571,7831,9792,3372,1872,2572,2612,2422,2452,3882,4562,4012,4002,3262,3652,3422,3772,3552,2662,2222,3182,2042,2312,1692,1562,1322,0402,1332,0134313763453646105174985995094964263603103002772673804814864405448157797847317149229971,3341,4011,1441,0951,0979698888899331,0431,2591,1791,2521,2301,2241,1911,2641,2981,2931,2961,2561,3081,2431,2671,2271,2071,2481,2531,2131,2091,1581,1711,1691,0881,1511,0462422252462063132762903723523673613183123383133043744504914845146927137667747598309331,1041,1871,0221,0269999558698688509361,0791,0081,0051,0311,0181,0541,1241,1581,1081,1041,0701,0571,0991,1101,1281,0599741,0659911,0221,011985963952982967797795961381281381591421761651711862031941932352492882803183553553793943623773884434413843943833533163312923133693533373523143393723983863754003833933843713753804163793803443193063143373179068469651,3691,3341,3931,3301,3191,5531,7312,1422,2721,9141,8641,8401,6841,5471,5441,5271,6791,9581,7961,8711,9241,9151,8942,0222,0212,0102,0111,9271,9821,9441,9791,9531,8571,8711,9031,8041,8461,7861,7441,7501,6531,7601,6144483954947416986986416368158911,1671,2131,0039519468267717737938741,0469541,0171,0471,0409861,0631,0731,0651,0761,0461,0821,0181,0471,0069681,0341,0349709769299319508639508254584514706296376956906837388409751,059911913894858776772734805912842854877875908959948945935881900926932947889837869834870857813800790810789279262297330330354360333343357396392353357347312288300258270313302291313268288322328321316346329321316312311325361323321293259275269301274Note.—See footnote 6 and Note, Table B-33.Source: Department of Labor, Bureau of Labor Statistics.310

TABLE B-37.—Civilian labor force participation rate and employment/population ratio, 1948-93[Percent; 1monthly data seasonally adjusted]Year or monthLabor force participation ratecivilianwork-MalesFemalesBothsexes16-19yearsWhiteBlackandotherBlackEmployment/population ratioAllcivilianworkersMalesFemalesBothsexes16-19yearsWhiteBlackandotherBlack19481949195019511952195319541955195619571958195919601961196219631964196519661967196819691970197119721973197419751976197719781979198019811982198319841985198619871988198919901991199219931992: Jan..Feb..Mar.Apr..May.JuneJuly..Aug.SeptOct..Nov..Dec.1993: Jan..Feb..Mar.Apr..May.JuneJuly..Aug.SeptOct..Nov..Dec.58.858.959.259.259.058.958.859.360.059.659.559.359.459.358.858.758.758.959.259.659.660.160.460.260.460.861.361.261.662.363.263.763.863.964.064.064.464.865.365.665.966.566.466.066.366.266.166.166.266.466.466.566.566.466.366.166.266.266.066.166.066.066.366.266.266.266.066.266.266.386.686.486.486.386.386.085.585.485.584.884.283.783.382.982.081.481.080.780.480.480.179.879.779.178.978.878.777.977.577.777.977.877.477.076.676.476.476.376.376.276.276.476.175.575.675.275.475.475.575.775.975.875.775.775.775.475.475.475.175.375.375.275.475.375.275.374.975.175.075.032.733.133.934.634.734.434.635.736.936.937.137.137.738.137.938.338.739.340.341.141.642.743.343.443.944.745.746.347.348.450.050.951.552.152.652.953.654.555.356.056.657.457.557.357.857.957.657.757.857.957.757.958.157.957.857.557.757.857.757.757.657.657.957.957.857.957.958.158.258.352.552.251.852.251.350.248.348.950.949.647.446.747.546.946.145.244.545.748.248.448.349.449.949.751.953.754.854.054.556.057.857.956.755.454.153.553.954.554.754.755.355.953.751.751.351.551.751.550.650.451.151.951.251.452.250.451.451.751.451.951.551.852.551.551.851.651.251.151.250.958.258.759.459.158.958.758.858.858.358.258.258.458.759.259.359.960.260.160.460.861.461.561.862.563.363.964.164.364.364.364.665.065.565.866.266.766.866.666.766.766.666.666.866.966.866.866.966.766.766.666.666.766.666.566.666.566.766.766.766.866.767.066.866.964.064.264.964.464.864.364.564.163.263.063.162.963.062.862.262.161.860.960.260.560.359.659.860.462.262.261.761.361.662.162.663.363.764.364.064.763.763.163.863.163.663.563.363.563.864.564.264.564.163.863.563.563.163.763.063.363.463.062.862.862.662.863.063.159.960.259.858.859.059.861.561.461.060.861.061.562.262.963.363.863.864.263.362.663.362.463.062.962.962.863.363.863.764.163.463.362.963.062.463.262.462.362.662.462.362.462.362.162.562.356.655.456.157.357.357.155.556.757.557.155.456.056.155.455.555.455.756.256.957.357.558.057.456.657.057.857.856.156.857.959.359.959.259.057.857.959.560.160.761.562.363.062.761.661.461.661.461.361.461.661.461.461.561.461.461.361.361.461.361.461.461.461.761.661.661.861.661.861.962.083.581.382.084.083.983.681.081.882.381.378.579.378.977.677.777.177.377.577.978.077.877.676.274.975.075.574.971.772.072.873.873.872.071.369.068.870.770.971.071.572.072.571.970.269.769.969.769.569.769.969.869.769.769.769.769.669.669.769.769.869.769.769.969.869.870.069.769.970.070.131.331.232.033.133.433.332.534.035.135.134.535.035.535.435.635.836.337.138.339.039.640.740.840.441.042.042.642.043.244.546.447.547.748.047.748.049.550.451.452.553.454.354.353.753.854.153.853.853.853.953.853.853.953.853.753.653.753.753.753.853.953.854.154.154.154.254.254.354.554.747.745.245.547.946.946.442.343.545.343.939.939.940.539.139.437.437.338.942.142.242.243.442.341.343.545.946.043.344.246.148.348.546.644.641.541.543.744.444.645.546.847.545.442.141.041.742.041.340.440.840.940.240.541.141.341.240.941.641.341.741.441.342.141.542.242.142.041.441.841.955.256.557.356.855.355.955.955.355.455.355.556.056.857.257.458.057.556.857.458.258.356.757.558.660.060.660.060.058.858.960.561.061.562.363.163.863.662.662.462.762.462.362.462.662.562.362.462.362.362.362.462.462.562.562.562.462.762.762.762.962.862.963.063.158.058.759.559.356.757.557.956.256.356.257.057.858.458.258.058.156.854.954.155.054.351.452.052.554.755.253.652.650.951.053.654.755.456.857.458.257.356.155.755.755.755.655.555.755.556.055.956.356.155.755.555.455.056.055.455.555.955.455.555.655.456.055.956.353.754.553.550.150.851.453.653.852.351.349.449.552.353.454.155.656.356.956.254.954.354.454.454.154.254.254.154.654.554.954.754.354.154.053.554.854.053.854.554.154.354.654.554.854.755.11 Civilian labor force or civilian employment as percent of civilian noninstitutional population in group specified.Note.—Data relate to persons 16 years of age and over.See footnote 6 and Note, Table B-33.Source: Department of Labor, Bureau of Labor Statistics.311

TABLE B-38.—Civilian labor force participation rate by demographic characteristic, 1954-93[Percent; 1 monthly data seasonally adjusted]WhiteBlack and other or blackYear or monthAllcivilianworkersTotalTotalMales16-19years20yearsandoverTotalFemales16-19years20yearsandoverTotalTotalMales16-19years20yearsandoverTotalFemales16-19years20yearsandoverBlack and other19541955 .1956195719581959196019611962196319641965196619671968196919701971.197258.859 360.059 659.559.359.459.358.858.758.758 959.259 659.660.160.460.260.458.258 759.459158.958.758.858.858.358.258.258 458.759 259.359.960.260.160.485.685 485.684 884.383.883.483.082.181.581.180 880.680 680.480.280.079.679.657.658 660.459 256.555.955.954.553.853.152.754 155.956 355.956.857.557.960.187.887 587.686 986.686.386.085.784.984.484.283 983.683 583.283.082.882.382.033.334 535.735 735.836.036.536.936.737.237.538 139.240 140.741.842.642.643.240.640 743.142 240.139.640.340.639.838.737.839 242.642 543.044.645.645.448.132.734 035.135 235.535.636.236.636.537.037.538 038.839 840.441.542.242.342.764.064 264.964 464.864.364.564.163.263.063.162 963.062 862.262.161.860.960.285.285 185.184 284.183.483.082.280.880.280.179 679.078 577.776.976.574.973.961.260 861.558 857.355.557.655.853.551.549.951351.451 149.749.647.444.746.087.187 887.887 087.186.786.285.584.283.984.183 783.382 982.281.481.480.078.646.146147.347 148.047.748.248.348.048.148.648 649.449 549.349.849.549.248.831.032 736.333 231.928.232.932.833.132.631.729 533.535 234.834.634.131.232.347.747 548.448 649.849.849.950.149.649.950.751151.651651.452.051.851.851.2Black1972....1973197419751976197719781979198019811982198319841985198619871988198919901991199219931992: JanFebMarMay"!!!!!!!!!!JuneJulyAugSeptOctNovDec1993:JanFebMarJay!!!!!!!!!!JuneJulyAugSeptOctNovDec60.460.861.361.261662.363.263.763 863.964 064.064.464.865 365.665.966.566.466.066.366.266.166.166.266.466.466.566.566.466.366.166.266.266.066.166.066.066.366.266.266.266.066.266.266.360.460.861.461.561.862.563.363.964164.364 364.364.665.065.565.866.266.766.866.666.766.766.666.666.866.966.866.866.966.766.766.666.666.766.666.566.666.566.766.766.766.866.767.066.866.979.679.479.478.778 478.578.678.678 277.977.477.177.177.076.976.876.977.176.976.476.476.176.376.276.376.576.676.576.476.476.576.276.176.276.176.176.276.076.176.176.176.175.976.275.875.960.162.062.961.962 364.065.064.863 762.460 059.459.059.759 359.060.061.059.457.256.756.557.256.555.956.356.457.056.556.558.656.056.957.156.456.757.056.656.156.856.557.356.156.156.756.082.081.681.480.780 380.280.180.179 879.579 278.978.778.578 578.478.378.578.377.877.877.577.777.677.878.078.178.077.977.877.877.777.577.677.577.577.677.477.577.577.577.577.377.777.277.443.244.145.245.946 948.049.450.551251.952 452.753.354.155 055.756.457.257.557.457.858.057.757.757.957.957.757.857.957.857.757.657.857.857.757.757.757.658.058.058.058.158.158.358.358.448.150.151.751.552 854.556.757.456 255.455 054.555.455.256 356.557.257.155.454.352.653.752.953.152.951.952.652.552.652.652.451.852.652.753.053.252.553.155.052.653.353.354.155.254.454.242.743.544.445.346 247.348.749.850 651.552 252.553.154.054 955.656.357.257.657.758.158.358.058.058.258.358.058.158.358.158.058.058.158.158.158.058.057.958.258.458.358.558.458.558.658.759.960.259.858.859 059.861.561.461060.861 061.562.262.963 363.863.864.263.362.663.362.463.062.962.962.863.363.863.764.163.463.362.963.062.463.262.462.362.662.462.362.462.362.162.562.373.673.472.970.970 070.671.571.370 370.070 170.670.870.871 271.171.071.070.169.569.768.670.369.869.769.169.770.269.770.069.769.769.469.169.169.769.068.668.968.668.868.968.367.668.067.346.345.746.742.641343.244.943.643 241.639.839.941.744.643 743.643.844.640.637.440.739.544.442.939.237.237.341.440.340.641.141.740.942.141.141.741.344.642.739.841.039.238.034.934.935.278.578.477.676.075 475.676.276.375.174.574 775.274.874.474.874.774.674.473.873.473.172.073.373.073.272.873.473.673.173.473.073.072.772.272.373.072.271.372.071.972.072.471.871.571.870.948.749.349.048.849 850.853.153.153 153.553.754.255.256.556 958.058.058.757.857.058.057.457.157.257.457.758.158.658.759.258.358.057.657.956.857.856.957.257.457.357.057.157.357.658.158.132.234.233.434.232 932.937.336.834.934.033.533.035.037.939.139.637.940.436.733.535.234.533.634.832.635.036.835.835.537.837.333.534.734.935.534.932.431.835.534.036.034.533.834.136.935.151.251.651.451.152 553.655.555.455 656.056.256.857.658.658.960.060.160.660.059.360.159.559.359.359.859.860.160.860.961.260.360.359.760.158.959.959.259.659.459.559.859.259.559.860.160.31 Civilian labor force as percent of civilian noninstitutional population in group specified.Note.—Data relate to persons 16 years of age and over.See footnote 6 and Note, Table B-33.Source: Department of Labor, Bureau of Labor Statistics.312

TABLE B-39.—Civilian employment/population ratio by demographic characteristic, 1954-93[Percent; 1 monthly data seasonally adjusted]Year or monthAllcivilianworkersTotalTotalMales16-19yearsWhite20yearsandoverTotalFemales16-19years20yearsandoverTotalTotalBlack and other or blackMales16-19years20yearsandoverTotalFemales16-19years20yearsandoverBlack and other19541955195619571958195919601961 ...19621963 ..19641965196619671968196919701971197255 556 757 557.155.456.056.155 455.555.455.756.256.957 357.558.057 456.657.055 256.557 356855.355.955 955 355 455 355.556 056.857 257.458.057 556 857.481582.282 781879.279.979 478 278.477 777.877.978.378.478.378.276 875776.049 952.054152447 648.148145 946 444745.047150.150 250.351.149 649*251.584084785.084181.882.882.48148L581181381581781781.681.480.179079.031.433^034 234233.634.034.634 534735 035I536 237 538 338.940.140 339940.736.437!(338 938235.034.835.134 634^832 932233 737 537 737 839.539 538641.331132733 833933.534.034.534 534735 235 836 537 538 339140.140.440140.658 058759 559356.757.557.956 256 356 257.057 858.458 258.058.156 854954.176 577^678 477272.573.874.171772 071872 973 774 073 873 372.870 968167.352 452752.248042.041.443.841041737 437^839 440 538 838 739.035 531*832.479.280481380576.077.677.975 575.776 277778 779 279 478.978.476 874 273.241942^243 043742 843.243 642 642 742 743 444145145045.245.944943 943.324 726428 026522 820.324 823 223.121321.820 223.124 824.725.122 420 219.943 743^944 745545.045.745.844 844.945 246.147.348.247.948.248.948 247 346.7Black19721973 .19741975197619771978197919801981 ..1982198319841985198619871988198919901991199219931992:JanFebMarAprMayJuneJulyAugSeptOctNovDec1993: JanFebMarAprMayJuneJulyAugSeptOctNovDec57.057.857.856.156 857.959 359.959.259.057.857.959 560.160 761.562.363.062.761.661.461.661.461.361.461.661461.461.561461.461.361.361.461.361.461.461.461.761.661.661.861.661.861.962.057.458 258.356.757 558.660 060.660.060.058.858.960 561.061562.363.163.863.662.662.462.762.462.362.462.662 562.362.462 362.362.362.462.462.562.562.562.462.762.762.762.962.862.963.063.176.076 575.973.073 474.175 075.173.472.870.670.472172.372 372.773.273.773 271.571.171.371.170.971.071.371271.071.271 171.171.171.071.271.271.271.271.271.371.371.271.471.371.471.671.551.554354.450.651554.456 355.753.451347.047.449 149.949 649.951.752.651047.246.346.647.445.744.446.645 945.146.046147.247.246.947.146.346.647.346.146.446.346.547.246.746.046.746.579.079 278.675.776 076.577 277.375.675173.072.674 374.374 374.775.175.475 073.372.973.172.872.773.073.173 072.973.072 972.972.872.873.073.073.073.073.073.173.173.073.273.173.373.473.340.741842 442.043 244.546 347.547.848 348.148.549 850.751752.853.854.654 854.354.354.754.454.354.454.554 354.254.354 254.154.154.454.354.354.354.454.354.654.754.854.954.954.955.155.241.343 644 342.544 245.948 549447.946 244.644.547 047.147 949.050.250.548 546.144.345.844.944.944.644.144 842.743.944 744.244.143.744.745.045.044.345.446.045.246.245.946.346.347.246.940.641642 241.943 144.446 147^347.848 548.448.950 051.052 053.154.054.955 254.854.955.355.054.955.155.155 055.055.054 854.854.855.154.954.954.955.154.955.255.355.455.555.455.455.655.853 754 553 550.150 851.453 653.852.351.349.449.552 353.454 155.656.356.956 254.954.354.454.454.154.254.254 154.654.554.954.754.354.154.053.554.854.053.854.554.154.354.654.554.854.755.166 867 565.860.660 661.463 363.460.459156.056.359 260.060 662.062.762.861860.559.159.159.959.259.159.158 959.358.959159.258.959.258.659.060.158.758.359.358.959.659.758.959.158.659.131.632 831426.325 826.428 528727.024 620.320.423 926.326 528.529.430.427 623.823.623.628.125.624.721.521222.123.022 723.223.723.124.624.825.223.123.725.624.425.525.522.920.821.221.573.073 771.966.566 867.569 169.165.864.561.461.664164.665166.467.167.066164.963.363.263.663.163.163.563 363.763.063 363.362.963.462.663.064.162.862.263.262.963.563.763.163.663.063.543.043 843.541.642 843.345 846.045.745.144.244.146 748.148 850.351.252.051650.350.450.550.049.950.150.150150.750.951551.050.549.950.249.150.550.150.150.550.250.050.550.851.251.551.719.222 020.920.219 218.522122.421.019 717.717.020123.123 825.825.827.125.721.422.121.621.921.921.323.021823.321.725.121.919.721.622.021.821.519.418.021.718.823.523.522.922.922.222.846.547 246.944.946 447.049 349.349.148 547.547.449 850.951653.053.954.654 253.153.153.252.652.652.952.752 853.353.754.053.853.452.652.951.653.253.053.153.253.152.553.053.453.954.254.51 Civilian employment as percent of civilian noninstitutional population in group specified.Note.—Data relate to persons 16 years of age and over.See footnote 6 and Note, Table B-33.Source: Department of Labor, Bureau of Labor Statistics.313

TABLE B-40.—Civilian unemployment rate, 1948-93[Percent; 1monthly data seasonally adjusted]Year or month1948194919501951195219531954195519561957195819591960.19611962.19631964196519661967196819691970197119721973197419751976197719781979198019811982198319841985198619871988198919901991199219931992: JanFebMarAprMayJuneJulyAugSeptOctNovDec1993: JanFebMarMay!"'.!"!!'JuneJulyAugSeptOctNovDecAllcivilianworkers3.85.95.33.33.0295.5444.1436.85.55.56.75.5575.2453.83.8363.5495.95.64.95.6857.7716.15.87.1769.79.67.57.27.06.25.55.3.5.5677.46.87.17.47.37.37.57.77.57.57.57.37.37.37.17.07.07.06.96.96.86.76.76.76.56.4MalesTotal3.65.95.12.82.8285.3423.84 16.85.25.46.45.2524.640323.1292.8445.3504.24.9797.1635.35.16.9749.9997.47.06.96.25.55.25.6707.87.17.67.87.87.68.08.17.97.97.87.77.77.57.27.37.47.37.27.27.27.16.96.96.66.516-19years9.814.312.78.18.97913.511611.112 417.115.315.317.114.717 215.814 111712.311611.415 016.615 913.915.620 119.217 315.815.918.320124.423 319.619.519.017.816.015.916.319.821.520.420.322.022.320.321.324.121.821.922.419.321.320.820.720.620.322.420.521.120.420.119.420.319.919.420yearsandover325.44.72.52.4254.9383.4366!24.7475.74.6453.932252.3222.1354.4403.33.8685.9524.34.25.9638.8896.66.26.15.44.84.54.9637.06.46.97.17.07.07.37.37.17.17.07.16.96.86.56.66.76.56.56.56.56.46.36.25.95.8Total416.05.74.43.6336.04 94.8476!85.9597.26.2656.255485.2484.7596.9666.06.7938.6827.26.87.4799.4927.67.47.16.25.65.45.46.36.96.56.66.86.86.96.97.17.17.17.16.76.97.17.06.76.46.66.66.66.46.36.36.46.46.2Females16-19years8.312.311.48.38.07211.410 211.210 6R313.513 916.314.617 216.615 714 113.514 013.315 617.216 715.316.619 718.718 317.116.417.219 021.921318.017.617.615.914.414.014.717 418.517.417.317.818.017.618.521.119.717.919.117.219.318.018.418.518.517.919.117.616.216.516.417.316.516.120yearsandover365.35.1403.2295.54.4424 16!l5.25 1635.4545.245384.2383.7485.754495.5807.4706.05.76.4688.3816.86.66.25.44.94.74.85.76.35.96.06.16.26.26.26.36.46.56.46.16.26.46.36.05.76.05.95.95.85.75.85.85.75.7Bothsexes16-19years9.213.412.2828.57612!611.0n!i11 615!914.614 716 814.717 216.214 812 812.912 712.215 316.916 214 516.019 919.017 816.416.117.819 623.222 418.918.618.316.915.315.015.518.620.019.018.920.020.219.019.922.720.820.020.918.320.319.519.619.619.520.319.819.518.418.417.918.918.317.8White3.55.64.93.12.8275.0393.6386.14.8506.04.9504.6413.43.4323.1455.45.14.35.0787.0625.25.16.3678.6846.56.26.05.34.74.54.76.06.56.06.36.56.56.46.56.76.66.66.66.46.36.46.26.16.16.16.16.16.05.95.86.15.65.6Blackandother5.98.99.05.35.4459.9878.37912.610.710 212.410.910 89.6817.37.4676.4829.910.09.09.913 813.113 111.911.313.114.217.317.814.413.713.111.610.410.010.111.112.711.712.412.412.312.313.013.212.912.812.512.712.612.812.712.112.012.411.812.011.611.511.410.911.310.7Black..„„..„.9.410.514 814.014 012.812.314.315 618.919 515.915.114.513.011.711.411.312.414.112.913.614.013.913.814.614.414.414.313.814.214.014.214.113.313.513.712.913.312.812.512.511.912.511.5Experiencedwageandsalaryworkers4.36.86.03.73.4326.2484.4467.35.7576.85.6565.0433.53.6343.3485.75.34.55.3827.3665.65.56.9739.39.27.16.86.65.85.25.05.36.57.16.56.97.17.17.07.27.27.27.27.27.07.07.06.86.76.76.76.66.66.56.46.36.46.26.2Marriedmen,spousepresent 23.54.61.51.4174.02623285.13.6374.63.6342.824191.8161.5263.2282.32.7514.2362.82.84.2436.56.54.64.34.43.93.33.03.44.45.04.44.85.14.84.95.15.25.25.25.25.14.94.84.54.64.74.54.54.44.54.44.24.44.03.9Womenwhomaintainfamilies4.94.44.45.47.37.27.17.010 010.1948.58.39.210.411.712.210.310.49.89.28.18.18.29.19.99.59.09.49.910.09.910.010.210.79.49.310.510.210.410.19.09.69.89.79.69.09.09.39.010.21 Unemployed as percent of civilian labor force in group specified.2 Data for 1949 and 1951-54 are for April; 1950, for March.Note.—Data relate to persons 16 years of age and over.See footnote 6 and Note, Table B-33.Source: Department of Labor, Bureau of Labor Statistics.314

TABLE B-41.—Civilian unemployment rate by demographic characteristic, 1950-93[Percent; lmonthly data seasonally adjusted]Year or monthAllcivilianworkersWhiteTotalMalesTotal16-19years20yearsandoverFemalesTotal16-19years20yearsandoverBlack and other or blackTotalMalesTotal16-19years20yearsandoverFemalesTotal16-19years20yearsandoverBlack and other195019511952195319541955195619571958195919601961196219631964196519661967196819691970197119724.53.84.47.26.45.54.64.56.16.58.88.86.46.16.05.44.74.54.86.46.96.26.86.96.96.87.17.26.96.97.06.86.76.66.46.46.56.46.36.36.46.26.16.35.65.88.46.15.74.19.28.58.97.310.89.49.411.911.011.210.79.28.79.18.37.89.310.911.419721973197419751976197719781979198019811982198319841985....:198619871988198919901991199219931992: Jan...Feb...Mar..Apr...May..June.July..Aug..Sept.Oct..Nov..Dec.1993: Jan..Feb..Mar.feJuneJuly.Aug.SeptOct..Nov.Dec.5.64.95.68.57.77.16.15.87.17.69.79.67.57.27.06.25.55.35.56.77.46.87.17.47.37.37.57.77.57.57.57.37.37.37.17.07.07.06.96.96.86.76.76.76.56.45.14.35.07.87.06.25.25.16.36.78.68.46.56.26.05.34.74.54.76.06.56.06.36.56.56.46.56.76.66.66.66.46.36.46.26.16.16.16.16.16.05.95.86.15.65.613.411.310.511.515.714.014.015.713.715.914.712.910.510.710.110.013.715.114.214.212.313.518.317.315.013.513.916.217.921.720.216.816.516.315.513.913.714.217.518.417.617.219.020.617.218.620.818.618.519.515.717.617.517.917.817.118.517.218.417.717.716.817.917.716.93.63.03.56.25.44.73.73.65.35.67.87.95.75.45.34.84.13.94.35.76.35.66.26.36.26.36.56.56.36.36.36.36.16.05.85.85.95.75.75.75.85.65.55.75.05.210.49.19.79.512.712.012.714.812.815.114.914.012.111.512.111.513.415.114.214.213.014.517.416.415.914.414.014.816.619.018.315.214.814.913.412.311.512.615.215.714.615.015.415.715.014.718.716.515.115.714.816.815.215.015.315.514.516.314.013.414.014.316.013.313.44.94.35.17.56.86.25.25.05.65.97.36.95.85.75.44.64.14.04.14.95.45.15.25.35.45.45.25.45.75.65.65.55.25.65.45.25.15.25.15.35.15.05.05.35.14.910.38.87.98.313.711.510.712.810.910.58.97.46.36.05.65.37.39.18.914.413.415.018.426.825.224.026.822.027.324.323.321.323.922.121.425.028.829.79.98.47.47.612.710.59.611.710.09.27.76.04.94.33.93.75.67.36.9Black20.619.222.820.228.427.724.829.230.234.731.631.731.329.628.727.634.535.438.48.47.77.86.49.58.38.310.69.69.49.07.56.67.16.35.86.98.710.49.410.514.814.014.012.812.314.315.618.919.515.915.114.513.011.711.411.312.414.112.913.614.013.913.814.614.414.414.313.814.214.014.214.113.313.513.712.913.312.812.512.511.912.511.59.38.09.814.813.713.311.811.414.515.720.120.316.415.314.812.711.711.511.812.915.213.814.815.315.214.515.515.515.515.515.115.614.715.214.613.914.915.014.014.113.413.413.712.613.812.131.727.833.138.137.539.236.734.237.540.748.948.842.741.039.334.432.731.932.136.542.040.136.740.437.142.343.146.642.944.043.643.043.541.539.739.544.146.840.238.837.934.939.740.639.238.87.06.07.412.511.410.79.39.312.413.517.818.114.313.212.911.110.110.010.411.513.412.113.213.513.812.813.813.413.713.713.313.812.813.412.912.213.012.712.212.611.812.012.111.012.310.511.811.111.314.814.314.913.813.314.015.617.618.615.414.914.213.211.711.410.811.913.012.012.512.812.713.113.713.413.313.112.512.813.313.213.712.612.112.411.912.412.311.611.411.111.311.040.536.137.441.041.643.440.839.139.842.247.148.242.639.239.234.932.033.030.036.137.237.534.937.134.634.440.934.938.933.541.441.137.737.038.538.440.143.238.744.834.732.032.332.839.735.29.08.68.812.211.712.311.210.911.913.415.416.513.513.112.411.610.49.89.610.511.710.611.311.411.511.912.112.211.911.910.811.311.911.912.311.210.610.910.410.711.010.510.210.09.79.71 Unemployed as percent of civilian labor force in group specified.Note.-See Note, Table B-40.Source: Department of Labor, Bureau of Labor Statistics.315

TABLE B-42.—Unemployment by duration and reason, 1950-93[Thousands of persons, except as noted; monthly data seasonally adjusted 1 ]Duration of unemploymentReason for unemploymentYear or monthUnemploymentLessthan5weeks5-14weeks15-26weeks27weeksandoverAverage(mean)duration(weeks)Medianduration(weeks)TotalJob losersOnlayoffOtherJobleaversReentrantsNewentrants19501951195219531954195519561957195819591960196119621963196419651966.196719681969197019711972197319741975197619771978197919801981...1982198319841985198619871988198919901991199219931992: Jan...FebMar....AprMay....June...July ....AugSeptOctNovDec1993:JanFebMarMay"!JuneJulyAugSeptOctNovDec3,2882,0551,8831,8343,5322,8522,7502,8594,6023,7403,8524,7143,9114,0703,7863,3662,8752,9752,8172,8324,0935,0164,8824,3655,1567,9297,4066,9916,2026,1377,6378,27310,67810,7178,5398,3128,2377,4256,7016,5286,8748,4269,3848,7349,0199,2909,2909,2479,5029,7719,5959,5909,5349,2109,3139,3149,0468,9588,8788,9548,8958,8698,7328,6428,5408,6398,3308,2371,4501,1771,1351,1421,6051,3351,4121,4081,7531,5851,7191,8061,6631,7511,6971,6281,5731,6341,5941,6292,1392,2452,2422,2242,6042,9402,8442,9192,8652,9503,2953,4493,8833,5703,3503,4983,4483,2463,0843,1743,1693,3803,2703,1603,3263,1013,3283,2323,2973,4753,3453,3413,3253,1943,1823,0403,2623,2323,1483,3093,2423,2323,2233,0463,0523,1562,9463,0631,0555745164821,1168158058911,3961,1141,1761,3761,1341,2311,1179837798938108271,2901,5851,4721,3141,5972,4842,1962,1321,9231,9462,4702,5393,3112,9372,4512,5092,5572,1962,0071,9782,2012,7242,7602,5222,7522,9392,7072,7412,7052,7602,7622,7742,8252,6052,7992,6742,5432,5492,5832,5372,5262,7582,5432,6082,4572,4912,4012,2474251661481324953663013217854695037285345354914042872712562424286686014835741,3031,0189137667061,0521,1221,7081,6521,1041,0251,0459438017308091,2251,4241,2741,4241,4891,4241,3221,4071,5121,4461,4721,3531,3841,3991,5381,3721,2841,2751,3111,2701,2571,2581,2591,2971,2841,2161,15035713784783173362322396675714548045855534823512391771561332355195663433811,2031,3481,0286485358201,1621,7762,5591,6341,2801,1871,0408096466951,0981,9301,7781,6001,7051,7841,7841,9792,1422,1042,0432,0832,0631,9252,0041,9211,8901,8351,6751,7761,7681,7491,7411,7501,7461,7551,71412.19.78.48.011.813.011.310.513.914.412.815.614.714.013.311.810.48.78.47.88.611.312.010.09.814.215.814.311.910.811.913.715.620.018.215.615.014.513.511.912.113.817.918.116.216.817.217.518.118.418.318.218.319.118.119.018.518.217.717.717.817.817.918.318.418.418.918.22.34.54.44.96.36.25.25.28.48.27.05.95.46.56.98.710.17.96.86.96.55.94.85.46.98.88.48.28.38.28.69.08.88.78.99.19.29.09.38.68.48.48.58.38.38.38.48.98.38.58.21,2291,0701,0171,8112,3232,1081,6942,2424,3863,6793,1662,5852,6353,9474,2676,2686,2584,4214,1394,0333,5663,0922,9833,3224,6085,2914,7694,9485,3575,3045,2545,4945,5285,3755,3165,3595,3745,1835,0764,9344,7994,8564,8624,7524,8454,8724,8644,6994,7794,4444,4423943343396757355824727461,6711,0508657128511,4881,4302,1271,7801,1711,1571,0909438518501,0181,2791,2461,1041,2571,2951,2491,2561,2011,3021,2621,2041,3391,2181,1711,1801,0721,0811,0961,0681,1441,1311,1831,1901,1121,2169631,0608367366781,1371,5881,5261,2211,4952,7142,6282,3001,8731,7842,4592,8374,1414,4783,2502,9822,9432,6232,2412,1332,3053,3294,0453,6643,6914,0624,0553,9984,2934,2264,1134,1124,0204,1564,0123,8963,8623,7183,7603,7943,6083,7143,6893,6743,5873,5633,4813,3824384314365505906416837688279039098748808919238408308238771,0159659831,0241,0149799759469859089149989871,0111,0151,0709728949709788341,0201,0619909609409158829269579609329459099651,2281,4721,4561,3401,4631,8921,9281,9631,8571,8061,9272,1022,3842,4122,1842,2562,1601,9741,8091,8431,8832,0872,2282,1452,2732,1582,2122,1482,1462,2512,2882,2672,2972,2202,2052,2702,2952,2812,0592,1872,2372,2012,1172,0812,0752,0842,0842,0183964074135046306776496818238959538858178729811,1851,2161,1101,0391,0299208166776547538908747998498248368481,0289729479437659339399508999229208908948708348438398337971 Because of independent seasonal adjustment of the various series, detail will not add to totals.2 Data for 1967 by reason for unemployment are not strictly comparable with those for later years and the total by reason is notequal to total unemployment.Note.—Data relate to persons 16 years of age and over.See footnote 6 and Note, Table B-33.Source: Department of Labor, Bureau of Labor Statistics.316

TABLE B-43.—Unemployment insurance programs, selected data, 1962-93All programsState programsYear or monthCoveredemployment1Insuredunemployment(weeklyaverage)^ 3Totalbenefitspaid(millionsofdollars) 2 4InitialclaimsInsuredunemploymentExhaustions5InsuredunemploymentaspercentofcoveredemploymentBenefits paidTotal(millionsofdollars) 4Averageweeklycheck(dollars) 6ThousandsWeekly average; thousands19621963196419651966196719681969197019711972197319741975197619771978197919801981198219831984198519861987198819891990199119921993 "...47,77648,43449,63751,58054,73956,34257,97759,99959,52659,37566,45869,89772,45171,03773,45976,41988,80492,06292,65993,30091,62891,89896,47499,186101,099103,933107,157109,926111,498109,6131 110,1671,9467 1,9731,7531,4501,1291,2701,1871,1772,0702,6082,1921,7932,5584,9373,8463,3082,6452,5923,8373,4104,5923,7742,5602,6992,7392,3692,1352,2052,5753,4063,3482,8453,145.13,025.92,749.22,360.41,890.92,221.52,191.02,298.64,209.36,154.05,491.14,517.36,933.916,802.412,344.810,998.99,006.99,401.316,175.415,287.123,774.820,206.213,109.615,056.316,292.514,501.013,694.414,957.018,744.626,716.79 26,487.59 22,548.31,7837 1,8061,6051,3281,0611,2051,1111,1011,8052,1501,8481,6322,2623,9862,9912,6552,3592,4343,3503,0474,0593,3952,4752,6172,6432,3002,0812,1582,5223,3423,2452,7513027 2982682322032262012002962952612473634783863753463884884605834383773973783283103303884474083404.44.33.83.02.32.52.22.13.44.13.52.73.56.04.63.93.32.93.93.54.63.92.82.92.82.42.02.12.43.23.12.62,675.42,774.72,522.12,166.01,771.32,092.32,031.62,127.93,848.54,957.04,471.04,007.65,974.911,754.78,974.58,357.27,717.28,612.913,761.113,262.120,649.517,762.812,594.714,130.815,329.313,606.812,564.713,760.317,356.024,525.723,893.520,186.134.5635.2735.9237.1939.7541.2543.4346.1750.3454.0256.7659.0064.2570.2375.1678.7983.6789.6798.95106.70119.34123.59123.47128.14135.65140.55144.97151.73161.56169.88173.64179.611992-. JanFebMar....AprMay....June...July....Aug....Sept..OctNovDec1993: JanFeb....Mar...Apr....May...June..July ...Aug...Sept..Oct....Nov....Dec ".4,2114,2144,1163,6393,2023,1483,1243,1202,8202,5422,6763,0713,4003,3553,4052,9392,6042,8122,6602,7252,4262,3302,5692,7982,807.82,555.72,750.12,477.12,086.02,058.42,129.51,978.01,861.01,682.61,681.02,131.22,162.72,109.82,456.42,034.91,696.81,882.91,750.11,814.31,616.91,472.61,709.72,014.53,3503,3263,3373,3403,3143,2793,3043,1783,1683,0352,93?2,7832,7152,6402,7012,7642,7702,8132,8322,7962,8102,8062,7802,7104484524404134084144333874023653593413533433623473413433523273283443393283.23.13.23.23.23.13.23.03.02.92.82.72.62.52.62.62.62.72.72.72.72.72.62.62,723.82,476.22,664.12,397.91,946.01,983.22,049.01,899.51,778.11,601.01,598.72,035.32,075.52,024.32,361.51,958.01,631.51,811.01,684.31,746.31,552.21,402.31,609.11,904.6171.65173.39173.87173.88173.70173.22171.51173.95174.09174.86175.55175.49177.36179.47180.70180.50180.52179.88178.29179.71179.61180.45180.07179.17**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-servicemembers).2 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), Federal SupplementalCompensation, and Emergency Unemployment Compensation programs, except as noted in footnote 9.3 Covered workers who have completed at least 1 week of unemployment.4 Annual data are net amounts and monthly data are gross amounts.5 Individuals receiving final payments in benefit year.6 For total unemployment only.7 Programs include Puerto Rican sugarcane workers for initial claims and insured unemployment beginning July 1963.8 Latest data available for all programs combined. Workers covered by State programs account for about 97 percent of wage andsalary earners.9 Including Emergency Unemployment Compensation and Federal Supplemental Compensation, total benefits paid for 1992 and 1993would be (in millions of dollars): for 1992, 40,275.2 and, for 1993, p34,484.8.Source: Department of Labor, Employment and Training Administration.151-444 0 - 9 4 - 1 1317

TABLE B-44.—Employees on nonagricultural payrolls, by major industry, 1946-93[Thousands of persons; monthly data seasonally adjusted]Soods-producing industriesYear or monthTotalTotalMiningTotalManufacturingDurablegoodsConstructionNondurablegoods194619471948194919501951195219531954195519561957195819591960196119621963196419651966196719681969197019711972197319741975197619771978197919801981198219831984198519861987198819891990199119921993"1992 JanFebMarAprMayJuneJulyAugSeptOctNovDec1993 JanFebMarAprMayJuneJulyAugSeptOct .Nov pDec"4165243^85744,86643,75445,19747,81948,79350,20248,99050,64152,36952,85351,32453,26854,18953,99955,54956,65358,28360,76563,90165,80367,89770,38470,88071,21473,67576,79078,26576,94579,38282,47186,69789,82390,40691,15289,54490,15294,40897,38799,344101,958105,210107,895109,419108,256108,519110,171108,051108,045108,164108,347108,470108,454108,605108,615108,674108,789108,921109,079109,235109,539109,565109,820110,058110,101110,338110,305110,502110,664110,866111,04917 24818]50918,77417,56518,50619,95920,19821,07419,75120,51321,10420,96419,51320,41120,43419,85720,45120,64021,00521,92623,15823,30823,73724,36123,57822,93523,66824,89324,79422,60023,35224,34625,58526,46125,65825,49723,81223,33024,71824,84224,53324,67425,12525,25424,90523,74523,14222,97423,31023,26623,26723,25123,23723,17223,16023,07323,01222,99522,99522,98523,00123,06923,01622,98023,00622,94122,94822,90322,88622,93422,99223,0028629559949309019298988667917928228287517327126726506356346326276136066196236096286426977527798138519581,0271,1391,1289529669271111117136927096896315996536496456426376306286236166186166136116006006006025965955925965965946031 6832^0092,1982,1942,3642,6372,6682,6592,6462,8393,0392,9622,8173,0042,9262,8592,9483,0103,0973,2323,3173,2483,3503,5753,5883,7043,8894,0974,0203,5253,5763,8514,2294,4634,3464,1883,9043,9464,3804,6684,8104,9585,0985,1715,1204,6504,4714,5734,5064,4684,4854,4854,4914,4694,4594,4594,4474,4664,4624,4594,4544,5154,4814,5174,5774,5744,5934,5934,5924,6294,6634,66214 70315^54515,58214,44115,24116,39316,63217,54916,31416,88217,24317,17415,94516,67516,79616,32616,85316,99517,27418,06219,21419,44719,78120,16719,36718,62319,15120,15420,07718,32318,99719,68220,50521,04020,28520,17018,78018,43219,37219,24818,94718,99919,31419,39119,07618,40618,04017,80218,15118,14918,13718,12418,10918,07318,07317,99117,94917,91117,91717,91317,93617,95417,93517,86317,82717,77117,76017,71817,69817,70917,73517,7377 7858,'3588,2987,4628,0669,0599,32010,0809,1019,5119,8029,8258,8019,3429,4299,0419,4509,5869,78510,37411,25011,40811,59411,86211,17610,60411,02211,86311,89710,66211,05111,57012,24512,73012,15912,08211,01410,70711,47611,45811,19511,15411,36311,39411,10910,56910,23710,04710,32810,33610,32410,30410,28610,26010,23610,19210,16410,13510,14210,13610,15210,16310,14410,09010,04710,0119,9969,9749,9749,98810,01310,0276 9187,1877,2856,9797,1757,3347,3137,4687,2137,3707,4427,3517,1447,3337,3677,2857,4037,4107,4897,6887,9638,0398,1878,3048,1908,0198,1298,2918,1817,6617,9468,1128,2598,3108,1278,0897,7667,7257,8967,7907,7527,8457,9517,9977,9687,8377,8047,7557,8237,8137,8137,8207,8237,8137,8377,7997,7857,7767,7757,7777,7847,7917,7917,7737,7807,7607,7647,7447,7247,7217,7227,710Note.—Data in Tables B-44 and B-45 are based on reports from employing establishments and relate to full- and part-time wage andsalary workers in nonagricultural establishments who received pay for any part of the pay period which includes the 12th of the month.Not comparable with labor force data (Tables B-33 through B-42), which include proprietors, self-employed persons, domestic servants,See next page for continuation of table.318

TABLE B-44.—Employees on nonagricultural payrolls, by major industry, 1946-93—Continued[Thousands of persons; monthly data seasonally adjusted]Service-producing industriesYear or monthTotalTransportationandpublicutilitiesWholesaletradeRetailtradeFinance,insurance,and realestateServicesTotalGovernmentFederalState andlocal194619471948194919501951195219531954195519561957195819591960196119621963196419651966196719681969197019711972197319741975197619771978197919801981198219831984198519861987198819891990199119921993 P.1992: JanFebMar..AprMay..June.July..Aug..Sept.OctNov..Dec..1993:JanFebMar..AprMay.JuneJuly.Aug.SeptOct..NovDec24,40425,34826,09226,18926,69127,86028,59529,12829,23930,12831,26631,88931,81132,85733,75534,14235,09836,01337,27838,83940,74342,49544,16046,02347,30248,27850,00751,89753,47154,34556,03058,12561,11363,36364,74865,65565,73266,82169,69072,54474,81177,28480,08682,64284,51484,51185,37787,19784,74184,77984,89785,09685,23385,28285,44585,54285,66285,79485,92686,09486,23486,47086,54986,84087,05287,16087,39087,40287,61687,73087,87488,0474,0614,1664,1894,0014,0344,2264,2484,2904,0844,1414,2444,2413,9764,0114,0043,9033,9063,9033,9514,0364,1584,2684,3184,4424,5154,4764,5414,6564,7254,5424,5824,7134,9235,1365,1465,1655,0814,9525,1565,2335,2475,3625,5145,6255,7935,7625,7095,7105,7175,7195,7165,7135,7115,7115,7075,7015,7045,6995,6995,7075,7195,7255,7245,7205,7195,7115,7095,6905,6925,6935,7035,7162,2982,4782,6122,6102,6432,7352,8212,8622,8752,9343,0273,0372,9893,0923,1533,1423,2073,2583,3473,4773,6083,7003,7913,9194,0064,0144,1274,2914,4474,4304,5624,7234,9855,2215,2925,3755,2955,2835,5685,7275,7615,8486,0306,1876,1736,0816,0456,1146,0446,0406,0426,0416,0456,0426,0376,0376,0376,0526,0616,0626,0866,0976,1036,1106,1256,1106,1266,1076,1176,1226,1286,1386,0776,4776,6596,6546,7437,0077,1847,3857,3607,6017,8317,8487,7618,0358,2388,1958,3598,5208,8129,2399,6379,90610,30810,78511,03411,33811,82212,31512,53912,63013,19313,79214,55614,97215,01815,17115,15815,58716,51217,31517,88018,42219,02319,47519,60119,28419,34619,73419,22919,25819,26819,32519,35719,34419,36019,35919,38019,40219,40519,46019,52319,62919,60419,64819,70219,75119,79019,79519,83619,84619,83319,8651,6751,7281,8001,8281,8881,9562,0352,1112,2002,2982,3892,4382,4812,5492,6282,6882,7542,8302,9112,9773,0583,1853,3373,5123,6453,7723,9084,0464,1484,1654,2714,4674,7244,9755,1605,2985,3405,4665,6845,9486,2736,5336,6306,6686,7096,6466,5716,6056,5806,5816,5766,5776,5776,5696,5596,5586,5656,5706,5696,5756,5786,5776,5746,5856,5886,5906,6046,6026,6166,6326,6546,6684,6975,0255,1815,2395,3565,5475,6995,8355,9696,2406,4976,7086,7657,0877,3787,6197,9828,2778,6609,0369,49810,04510,56711,16911,54811,79712,27612,85713,44113,89214,55115,30216,25217,11217,89018,61519,02119,66420,74621,92722,95724,11025,50426,90727,93428,33629,05330,19328,64528,64328,71528,83328,92528,99629,11129,17829,24729,36129,43029,52429,57329,66529,75629,97730,09930,17530,32030,38130,43330,53430,65130,7195,5955,4745,6505,8566,0266,3896,6096,6456,7516,9147,2787,6167,8398,0838,3538,5948,8909,2259,59610,07410,78411,39111,83912,19512,55412,88113,33413,73214,17014,68614,87115,12715,67215,94716,24116,03115,83715,86916,02416,39416,69317,01017,38617,77918,30418,40218,65318,84118,52618,53818,58018,60718,61818,62018,67118,70918,72918,71018,76218,76618,75518,77718,78818,80018,81918,82318,84118,82718,92218,90318,90518,9412,2541,8921,8631,9081,9282,3022,4202,3052,1882,1872,2092,2172,1912,2332,2702,2792,3402,3582,3482,3782,5642,7192,7372,7582,7312,6962,6842,6632,7242,7482,7332,7272,7532,7732,8662,7722,7392,7742,8072,8752,8992,9432,9712,9883,0852,9662,9692,9142,9822,9822,9862,9822,9802,9732,9622,9612,9662,9452,9432,9682,9452,9442,9382,9232,9122,9012,8962,9062,9012,9012,8932,9023,3413,5823,7873,9484,0984,0874,1884,3404,5634,7275,0695,3995,6485,8506,0836,3156,5506,8687,2487,6968,2208,6729,1029,4379,82310,18510,64911,06811,44611,93712,13812,39912,91913,17413,37513,25913,09813,09613,21613,51913,79414,06714,41514,79115,21915,43615,68315,92715,54415,55615,59415,62515,63815,64715,70915,74815,76315,76515,81915,79815,81015,83315,85015,87715,90715,92215,94515,92116,02116,00216,01216,039Note (cont'd).—which count persons as employed when they are not at work because of industrial disputes, bad weather, etc., evenif they are not paid for the time off; and which are based on a sample of the working-age population. For description and details of thevarious establishment data, see "Employment and Earnings."Source-. Department of Labor, Bureau of Labor Statistics.319

TABLE B-45.—Hours and earnings in private nonagricultural industries, 1959-93 1[Monthly data seasonally adjusted, except as noted]Year or monthAverage weekly hoursTotalprivateManufacturingTntal1OI3IOvertimeAverage hourly earningsTotal privateCurrentdollars1QOOIDOL.ftf.1QOIlars2Manufacturing(currentdollars)Average weekly earnings, total privateCurrentdollarsLevel1982dollars 2Percent changefrnmirom ycaiearlier 3Currentdollars1QQOL)iocdollars219591960196119621963196419651966196719681969197019711972197319741975197619771978197919801981198219831984198519861987198819891990199119921993 "1992:JanFebMarAprMayJuneJulyAugSeptOctNovDec1993:JanFebMarAprMay....JuneJulyAugSept....OctNov "..Dec "..39.038.638.638.738.838.738.838.638.037.837.737.136.937.036.936.536.136.136.035.835.735.335.234.835.035.234.934.834.834.734.634.534.334.434.534.234.534.534.334.534.334.334.634.234.434.634.334.534.434.234.434.734.434.534.734.334.534.634.640.339.739.840.440.540.741.241.440.640.740.639.839.940.540.740.039.540.140.340.440.239.739.838.940.140.740.540.741.041.141.040.840.741.041.440.841.041.141.141.241.141.141.141.041.141.241.241.441.441.241.541.441.241.441.441.541.641.741.72.72.52.42.82.83.13.63.93.43.63.63.02.93.53.83.32.63.13.53.63.32.82.82.33.03.43.33.43.73.93.83.63.63.84.13.63.73.83.84.03.83.83.83.63.83.93.94.04.24.04.24.14.04.04.14.14.34.44.4$2.022.092.142.222.282.362.462.562.682.853.043.233.453.703.944.244.534.865.255.696.166.667.257.688.028.328.578.768.989.289.6610.0110.3210.5810.8310.4510.4910.5210.5110.5410.5610.5710.6310.6210.6510.6910.6810.7310.7410.7810.7710.8210.8110.8110.8610.8610.9210.9310.95$6.696.796.887.077.177.337.527.627.727.897.988.038.218.538.558.288.128.248.368.408.177.787.697.687.797.807.777.817.737.697.647.527.457.427.397.437.447.437.417.427.427.407.437.417.407.417.407.407.387.397.367.397.387.377.397.397.407.407.40$2.192.262.322.392.452.532.612.712.823.013.193.353.573.824.094.424.835.225.686.176.707.277.998.498.839.199.549.739.9110.1910.4810.8311.1811.4611.7611.2911.3511.3911.4211.4411.4511.4611.5011.5111.5211.5511.5811.6111.6411.6611.7111.7111.7211.7211.7711.8411.8311.8811.94$78.7880.6782.6085.9188.4691.3395.4598.82101.84107.73114.61119.83127.31136.90145.39154.76163.53175.45189.00203.70219.91235.10255.20267.26280.70292.86299.09304.85312.50322.02334.24345.35353.98363.95373.64357.39361.91362.94360.49363.63362.21362.55367.80363.20366.36369.87366.32370.19369.46368.68370.49375.45371.86372.95376.84372.50376.74378.18378.87$260.86261.92265.59273.60278.18283.63291.90294.11293.49298.42300.81298.08303.12315.44315.38302.27293.06297.37300.96300.89291.66274.65270.63267.26272.52274.73271.16271.94269.16266.79264.22259.47255.40255.22254.87254.01256.67256.49254.05255.90254.36253.89257.02253.45254.59256.50253.68255.30253.92252.87253.24256.28253.83254.40256.53253.57255.24255.87255.994.92.42.44.03.03.24.53.53.15.86.44.66.27.56.26.45.77.37.77.88.06.98.54.75.04.32.11.92.53.03.83.32.52.82.72.83.83.72.73.21.62.53.11.12.53.31.93.42.22.02.83.42.62.92.83.03.02.23.14.2.41.43.01.72.02.9.8-.21.7.8-.91.74.1-.0-4.2-3.01.51.2-.0-3.1-5.8-1.5-1.22.0.8-1.3.3-1.0-.9-1.0-1.8-1.6.1-.1.41.0.7-.2.4-1.3-.5.0-1.8-.6.3-1.0.2-.9-1.0-.3.2-.2.2.1.5.4-.3.61 For production or nonsupervisory workers; total includes private industry groups shown in Table B-44.2 Current dollars divided by the consumer price index for urban wage earners and clerical workers on a 1982 = 100 base.3 Percent changes are based on data that are not seasonally adjusted.Note.—See Note, Table B-44.Source: Department of Labor, Bureau of Labor Statistics.320

TABLE B-46.—Employment cost index, private industry, 1979-93Total privateGoods-producingService-producingManufacturingNonmanufacturingYear and monthTotalcompensationWagesandsalariesBenefits1TotalcompensationWagesandsala-Benefits1TotalcompensationWagesandsalariesfits" 61 "TotalcompensationWagesandsalariesBenefits1TotalcompensationWagesandsala- fits 1Index, June 1989=100; not seasonally adjustedDecember:1979198019811982198319841985198619871988198919901991199219931992: MarJuneSeptDec1993: MarJuneSeptDec59.164.871.275.880.184.087.390.193.197.6102.3107.0111.7115.6119.8113.1113.9114.8115.6117.1118.0119.1119.861.567.173.077.681.484.888.391.194.198.0102.0106.1110.0112.9116.4110.9111.6112.2112.9113.9114.6115.7116.453.259.466.671.476.781.784.687.590.596.7102.6109.4116.2122.2128.3118.6119.7121.2122.2125.2126.7127.7128.360.766.773.377.881.685.488.291.093.897.9102.1107.0111.9116.1120.6113.5114.3115.3116.1118.0119.1119.9120.663.769.775.780.083.286.489.492.395.298.2102.0105.8109.7112.8116.1110.7111.4112.1112.8113.8114.5115.3116.154.660.568.273.278.383.285.788.390.997.3102.6109.9116.7123.4130.3119.7120.6122.3123.4127.3129.0130.0130.357.763.369.574.178.982.986.689.392.697.3102.3107.0111.6115.2119.3112.8113.6114.4115.2116.4117.3118.5119.360.065.371.175.980.283.787.790.393.497.8102.2106.3110.2113.0116.6111.1111.7112.3113.0113.9114.7115.9116.651.958.465.169.675.280.483.686.890.296.1102.6109.0115.7121.2126.7117.7118.8120.4121.2123.4124.6125.7126.760.166.072.576.980.885.087.890.793.497.6102.0107.2112.2116.5121.3114.0114.7115.7116.5118.6119.7120.6121.363.068.974.979.182.586.189.292.195.298.1101.9106.2110.3113.7117.3111.5112.2112.9113.7114.7115.5116.3117.354.259.967.572.477.582.785.087.589.896.6102.3109.5116.1122.6130.0119.3120.1121.5122.6126.8128.6129.7130.058.564.270.475.179.683.487.089.792.997.5102.3106.9111.5115.1119.0112.7113.5114.4115.1116.3117.2118.4119.060.866.272.176.881.084.288.090.693.797.8102.2106.1109.8112.6116.0110.7111.3111.9112.6113.4114.2115.4116.052.559.166.170.676.281.184.487.591.096.8102.8109.3116.2122.0127.4118.2119.4121.0122.0124.2125.5126.5127.4Index, June 1989=100; seasonally adjusted1992: MarJuneSeptDec1993: MarJunesept :::::Dec112.9113.8114.7115.7116.8117.9118.9119.9110.9111.6112.1113.0113.9114.6115.6116.5118.2119.5121.3122.9124.7126.4127.7129.1113.3114.1115.2116.3117.7118.8119.8120.7110.7111.4112.1112.8113.8114.5115.3116.1119.1120.4122.3124.3126.7128.7130.0131.3112.7113.5114.3115.3116.2117.2118.3119.4111.1111.7112.1113.1113.9114.7115.8116.7117.4118.7120.4121.7123.1124.5125.7127.2113.7114.7115.7116.9118.3119.6120.6121.7111.5112.2112.9113.7114.7115.5116.3117.3118.6119.8121.5123.7126.0128.3129.7131.1112.6113.5114.3115.3116.2117.2118.3119.2110.7111.3111.8112.7113.4114.2115.3116.1117.9119.2121.0122.5123.9125.3126.5127.9Percent change from 12 months earlier, not seasonally adjustedDecember:198019811982198319841985198619871988198919901991199219931992: MarJuneSeptDec1993: MarJuneSeptDec9.69.96.55.74.93.93.23.34.84.84.64.43.53.64.23.73.43.53.53.63.73.69.18.86.34.94.24.13.23.34.14.14.03.72.63.13.43.02.72.62.72.73.13.111.712.17.27.46.53.53.43.46.96.16.66.25.25.06.35.55.25.25.65.85.45.09.99.96.14.94.73.33.23.14.44.34.84.63.83.94.64.13.93.84.04.24.03.99.48.65.74.03.83.53.23.13.23.93.73.72.82.93.53.13.12.82.82.82.92.910.812.77.37.06.33.03.02.97.05.47.16.25.75.67.05.95.65.76.37.06.35.69.79.86.66.55.14.53.13.75.15.14.64.33.23.64.03.53.13.23.23.33.63.68.88.96.85.74.44.83.03.44.74.54.03.72.53.23.32.82.42.52.52.73.23.212.511.56.98.06.94.03.83.96.56.86.26.14.84.55.75.15.14.84.84.94.44.59.89.86.15.15.23.33.33.04.54.55.14.73.84.15.04.34.03.84.04.44.24.19.48.75.64.34.43.63.33.43.03.94.23.93.13.23.83.53.33.12.92.93.03.210.512.77.37.06.72.82.92.67.65.97.06.05.66.07.36.05.45.66.37.16.76.09.79.76.76.04.84.33.13.65.04.94.54.33.23.43.93.53.23.23.23.33.53.48.98.96.55.54.04.53.03.44.44.53.83.52.63.03.22.72.42.62.42.63.13.012.611.86.87.96.44.13.74.06.46.26.36.35.04.45.65.25.15.05.15.14.54.4Percent change from 3 months earlier, seasonally adjusted1992: MarJuneSeptDec1993: MarJuneSeptDec0.90.7.6.4.8.8.6.9.81.21.11.51.31.51.41.01.11.1.71.01.01.2.9.8.80.9 1.4.6 1.1.6 1.6.6 1.6.9 1.9.6 1.6.7 1.0.7 1.00.8.7.7.9.8.9.9.90.7 1.1.5 1.1.4 1.4.9 1.1.7 1.2.7 1.11.0 1.0.8 1.21.1 1.1 1.3.9 .6 1.0.9 .6 1.41.0 .7 1.81.2 .9 1.91.1.8 .7 1.8.7 1.1.9 .9 1.10.8.8.7.9.8.9.9.80.7 1.0.5 1.1.4 1.5.8 1.2.6 1.1.7 1.11.0 1.0.7 1.11 Employer costs for employee benefits.Note.—The employment cost index is a measure of the change in the cost of labor, free from the influence of employment shiftsamong occupations and industries.Data exclude farm and household workers.Through December 1981, percent changes are based on unrounded data; thereafter changes are based on indexes as published.Source: Department of Labor, Bureau of Labor Statistics.321

TABLE B-47.—Productivity and related data, business sector, 1947-93[1982=100; quarterly data seasonally adjusted]Year nrTear OfquarterOutput per hourof all personsBusinesssectorNonfarmbusinesssectorBusinesssectorOutput 1NonfarmbusinesssectorHours of allpersons 2BusinesssectorNonfarmbusinesssectorCompensationpert our 3BusinesssectorNonfarmbusinesssectorReal compensationper hour 4BusinesssectorNonfarmbusinesssectorUnit labor costsBusinesssectorNonfarmbusinesssectorImplicit pricedeflator«BusinesssectorNonfarmbusinesssector19471948194919501951195219531954195519561957195819591960196119621963196419651966196719681969197019711972197319741975197619771978197919801981198219831984198519861987198819891990199119921982: IV1983: IV1984: IV1985: IV1986: IV1987: IV1988: IV1989: IV1990: IV1991:1IIIllIV1992:1IIIllIV1993:1IIIll43 445.346.049.951753.655.356.758.659.361.063.064.665.668.170.573 376.578 680.782.885.385.887.089.892.795.093.295.598 399.9100.599.498.699.9100.0102.3104.8106.3108.5109.6110.7109.9110.7111.8115.5101.1103.1105.4107.0108.3110.6110.9109.7110.5110.9111.6111.8112.8114.1114.8116.0117.1116.6116.6117.650 652.353.456.858 259.860.762.264.364.565.867.669.269.972.274.577180.081883.485.287.787.788.591.394.296.494.596.799.2100.7101.499.999.999.9100 0102.5104.7105.6107.7108.6109.6108.6109.1110.3113.7101.1103.3105.3106.0107.4109.5110.0108.5108.9109.4110.2110.4111.3112.4113.1114.1115.3114.8114.7115.934135.935.338.641142.644.444.047.148.449.048.251.452.253.356.158 762.265 969.370.874.076.275.878.083.088.286.685.089.994.9100.1102.1100.5102.4100.0104.1112.6116.7119.9124.8130.1132.3133.3131.6135.4100.0107.5114.4118.0120.6127.4131.7132.3132.1131.0131.5131.5132.4133.3134.5136.0137.9138.0139.3140.533 535.234.637.940 542.143.843.346.547.948.647.851.051.852.955.758 361.965 769.370.874.076.275.777.983.088.486.784.990 095.0100.5102.5100.8102.4100.0104.4113.0116.8120.1125.0130.6132.7133.5131.8135.4100.0108.1114.8118.2120.8127.6132.5132.7132.2131.2131.7131.8132.6133.3134.4135.9137.9138.1139.5141.078 779.376.677.479 679.680 377.680.481680.376.679.679.778.379.680 081.383 985.885.586.788.887.286.889.592.892.989.091595.099.6102.8101.9102.5100.0101.8107.4109.8110.5113.8117.5120.4120.5117.7117.398.9104.3108.5110.2111.3115.1118.8120.6119.6118.1117.8117.6117.3116.8117.1117.2117.7118.3119.5119.466 367.464.766.769 770.472 169.672.474 273.870.773.774.273.374.875 777.480 383.183.084.486.985.685.388.191.691.887.990 794.499.2102.6101.8102.5100.0101.9107.9110.7111.5115.1119.1122.2122.4119.5119.199.0104.7109.0111.4112.5116.5120.5122.3121.4119.9119.5119.4119.2118.7118.8119.0119.6120.3121.6121.710 411.311.512.313 514.415 415.916.317 418.519.420.221.121.923.023 825.126 027.829.431.834.136.739.141.645.149.654.559 564.370.076.885.093.0100 0103.8108.3113.2118.9123.1128.5133.0140.6147.4154.9102.1105.3109.9115.6120.9125.8130.6134.9143.5144.9146.6148.2150.1152.2153.7156.1157.8159.1160.1161.611312.312.713.514 615.516 316.917.518 619.620.421.322.223.023.924 725.926 728.330.032.334.537.039.441.945.449.954.959 664.470.176.784.993.0100 0104.0108.3112.8118.4122.5127.7131.9139.2146.2153.7102.1105.2109.9115.0120.4125.1129.8133.9142.1143.7145.4147.1148.8150.9152.6154.8156.6157.7158.4159.944 945.246.549.450 252.455 657.058.761763.664.767.068.870 873.375 178.079 782.985.088.389.891.393.195.998.197.097.8100 9102.4103.6102.199.598.7100 0100.6100.6101.5104.7104.6104.8103.5103.8104.5106.5100.6100.5100.7102.4105.6105.1104.7103.4103.5103.6104.2104.7105.2105.8106.0106.9107.3107.1107.0107.749 149.351.554.054 456.359.160.663.165 967.568.270.572.474176.378 080.581 984.386.689.690.892.093.996.898.797.698.4101 1102.5103.7102.099.498.8100 0100.8100.6101.2104.3104.1104.2102.7102.8103.6105.7100.6100.4100.7101.8105.2104.6104.1102.6102.5102.7103.4103.9104.3104.8105.2106.0106.4106.2105.9106.624 024.924.924.726 226.927.828.027.829.330.430.831.332.232.232.632 532.833 134.535.537.339.842.243.544.847.553.157.160 564.369.677.386.293.1100.0101.5103.4106.5109.5112.3116.0121.0127.1131.9134.1101.0102.1104.3108.0111.6113.7117.9123.0129.8130.6131.4132.6133.1133.4133.9134.5134.8136.4137.3137.422 423.623.823.725 225.926.927.127.328.829.830.230.831.831.832.132 132.332 733.935.236.839.441.843.144.547.152.856.860.163.969.176.885.793.1100.0101.5103.4106.8110.0112.8116.5121.5127.6132.6135.1101.0101.9104.4108.5112.2114.3118.0123.4130.5131.3132.0133.2133.7134.3134.9135.6135.8137.4138.2138.023 825.725.425.827 527.828.128.228.929.930.931.332.132.632.833.533 734.135 036.137.238.840.642.444.546.249.053.759.062.466.571.878.385.994.5100.0103.4107.7111.2113.6116.6120.8126.1131.2136.1139.2101.1104.8109.0112.4114.6117.9122.8127.8133.2134.8135.8136.6137.2138.3139.1138.7140.6141.6142.5142.922 524.224.424.826 426.827.527.628.529.530.530.831.832.332.533.133 433.934 635.836.938.640.442.244.345.847.952.858.361.966.171.277.585.694.2100.0104.0107.6111.6114.2117.2121.4126.5131.8137.0140.3101.4105.2109.0112.9115.2118.5123.4128.2134.0135.7136.6137.5138.2139.3140.2139.8141.8142.7143.5144.01 Output refers to gross domestic product originating in the sector in 1987 dollars.2 Hours at work of all persons engaged in the sector, including hours of proprietors and unpaid family workers. Estimates basedprimarily on establishment 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.322

TABLE B-48.—Changes in productivity and related data, business sector, 1948-93[Percent change from preceding period; quarterly data at seasonally adjusted annual rates]Voar nrTear orquarter1948194919501951195219531954195519561957195819591960196119621963196419651966196719681969197019711972197319741975197619771978197919801981198219831984198519861987198819891990199119921991:1IIIllIV1992:1IIillIV1993:1IIIllOutput per hourof all personsBusinessbusinessNonfarmsector sector4.5 3.31.6 2.28.5 6.53.6 2.33.7 2.83.2 1.62.5 2.53.4 3.21.3 .42.8 2.03.2 2.72.5 2.31.6 1.13.8 3.33.5 3.14.1 3.64.3 3.82.7 2.22.8 1.92.6 2.23.0 2.9.6 -.01.4 1.03.3 3.13.2 3.12.5 2.4-1.9 -2.02.4 2.33.0 2.61.7 1.5.6 .7-1.1 -1.4-.8 -.91.3 .9.1 .12.3 2.52.4 2.21.4 .82.1 2.01.0 .81.0 9_ 7 -.9.7 .41.0 1.13.3 3.11.5 1.92.5 2.7.6 .83.7 3.44.7 3.82.5 2.84.2 3.63.8 4.2-1.6 -1.8-.0 -.43.6Nonfarmbusinesssector5.0-1.89.67.03.84.0-1.07.33.01.5-1.76.71.72.15.34.76.26.15.42.24.62.9-.62.96.56.4-1.9-2.05.95.65.82.0-1.71.6-2.44.4 v8.23.42.84.1441.7.6-1.32.7-3.11.5.32.72.13.34.46.0.64.04.4Hours of allpersons 2Output 1Businesssector5.2-1.89.56.63.74.1-.97.12.81.3-1.66.51.72.15.14.66.06.05.22.24.52.9-.52.96.46.2-1.8-1.95.85.65.52.0-1.61.9-2.34.18.23.62.84.1431.7.7-1.32.9-3.31.4.12.72.93.44.65.6.53.84.3 3.5Businesssector0.7-3.3.92.8.0.9-3.33.61.5-1.5-4.63.8.1-1.61.6.51.63.22.3-.31.42.4-1.8-.43.23.6.1-422.83.84.93.2-.9.6-2.51.85.62.1.63.0332.5.1-2.3_ 4-4.7-1.1-.5-1.0-1.81.0.41.82.13.8_ iNonfarmbusinesssector1.7-3.93.04.61.02.4-3.43.92.5-.5-4.24.3.6-1.22.11.12.33.83.4-.11.72.9-1.5-.33.34.0.2-423.24.15.03.5-.8.7-2.41.95.92.5.83.2352.6.2-2.4_ 4-4.9-1.1-.6-.7-1.6.5.81.82.54.4.1Compensation perhour 3Businesssector8.61.77.49.86.36.83.32.66.76.64.64.34.34.04.7385.23.87.05.78.17.37.56.46.48.69.810 09.18.08.99.710.79.47.63.84.34.55.03.6443.55.74.95.04.14.84.55.25.74.16.24.63.32.53.9Nonfarmbusinesssector8.63.06.28.75.65.73.33.76.15.74.04.14.43.44.13.54.63.35.95.97.96.87.26.46.58.29.810.08.78.08.99.510.79.67.54.04.14.15.03.5423.35.55.05.14.44.94.64.95.64.75.94.62.91.93.7Real compensationper hour 4Businesssector0.53.06.11.84.36.02.53.05.13.11.73.62.62.93.62.43.92.24.02.63.81.71.71.93.12.3-1.1.83.21.41.2-1.5-2.5-.81.3.6.0.93.1-.12-1.3.3.62.0.42.51.81.92.3.93.41.4-.5-.42.7Ncnfarmbusinesssector0.54.34.8.73.64.92.54.14.52.31.23.42.62.33.02.23.31.72.92.73.51.31.42.03.21.9-1.182.71.41.2-1.7-2.5-.71.2.8-.2.63.1-.21-1.4.1.82.0.62.71.91.62.21.53.11.4-.9-1.02.5Unit labor costsBusinesssectorNonfarmbusinesssector4.0 5.2.1 .8-.9 -.36.0 6.22.6 2.83.5 4.1.7 .8-.7 .55.3 5.63.6 3.71.4 1.31.7 1.72.7 3.3.1 01.2 1.0-.3 -.1.9 .81.1 1.04.1 3.93.1 3.55.0 4.86.7 6.96.1 6.23.0 3.23.1 3.25.9 5.711.9 12.17.5 7.56.0 5.96.3 6.48.2 8.111.0 11.011.5 11.78.0 8.67.4 7.41.5 1.51.9 1.93.0 3.32.8 2.92.5 2.634 324.3 4.35.0 5.13.8 3.91.7 2.02.5 2.52.2 2.23.8 3.71.4 1.5.9 1.71.6 1.81.9 2.2.7 .45.0 4.82.5 2.3.3 -.6Implicit pricedeflator 5Businesssector7.9-1.21.66.71.01.3.42.53.33.21.42.71.5.52.0 .81.12.53.32.94.44.74.34.93.86.19.510.05.86.58.09.19.710.15.83.44.13.32.22.6364.44.13.72.34.83.12.41.73.32.4-1.25.62.72.61.2Nonfarmbusinesssector7.8.81.86.11.62.5.73.23.53.3.93.41.5.62.1.91.42.23.33.34.54.64.55.03.54.510.210.46.36.87.68.910.410.16.14.03.53.72.42.6364.24.23.92.44.92.72.62.23.22.7-1.15.62.52.41.21 Output refers to gross domestic product originating in the sector in 1987 dollars.2 Hours at work of all persons engaged in the sector, including hours of proprietors and unpaid family workers. Estimates basedprimarily on establishment 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.Note.—Percent changes are based on original data and therefore may differ slightly from percent changes based on indexes in TableB-47.Source: Department of Labor, Bureau of Labor Statistics.323

PRODUCTION AND BUSINESS ACTIVITYTABLE B-49.—Industrial production indexes, major industry divisions, 1947-93[1987 = 100; monthly data seasonally adjusted]Year or monthTotalindustrialproductionTotalManufacturingDurableNondurableMiningUtilities194719481949195019511952195319541955195619571958195919601961196219631964196519661967196819691970197119721973197419751976 .1977197819791980 .1981198219831984198519861987198819891990199119921993".1992: JanFebMarAprMayJuneJulyAugSeptOctNovDec1993:JanFebMarAprJuneJulyAugSeptOct"NovDec pSource: Board of Governors of the Federal Reserve System.111 21223.622.022.320.825.824.228.026.129.127.231.629.629.927.733.731.335.132.535.632.933.330.637.334.538135 238.435.341638 444.040.747 043 551.748.256 352 657.553.660 756 663.559.161456 462.257.368.363.373.868.972.767.966.361.172.467.478.273.382.677.885.780.984.178.885.780.381.976.684.980.992.889.394 491695.394.3100.0 100.0104.4 104.7106.0 106.4106.0 106.1104.1 103.7106.5 106.9111.0 111.9104.5 104.5105.3 105.4105.6 106.1106.3 106.5106.7 107.1106.0 106.5106.8 107.1106 6 107 0106.2 106.8107 5 108 0108.4 108.9108.9 109.2109.3 109.9109 9 110 5110.1 110.81104 1114110.2 111.3110 5 1113110.8 111.6111.0 111.9111.4 112.31 112 1 113 2113.2 114.5114.0 j 115.3i19 920.818.923.025.927.531.127.431.332.432.628.532.833 332.736 338.741447.152 352.955 557.753 353.159.366.264.856.762.668.773.978.375.777.472.776.888.491893.9100.0106.6108.6107.4103.8108.1115.9104.6106.2106.7107.2108.4107.6108.2108 5108.1109 8110.9111.8112.91138114.11150114.9114 6115.4115.7117.0118.3120.1121.722 623.423.025.626.426.928.028.231.332.933.533.737.138 039.141543.846 649.852 954.658161.161163.669.311172.367.774.680.183.584.683.184.582.587.090.891594.9100.0102.3103.7104.4103.5105.4106.8104.4104.6105.3105.5105.4105.2105.7105 2105.2105 8106.4106.0106.4106 4106.6106 9106.9107.2107.0107.3106.5107 0107.6107.455 558.351.757.763.462.864.563.270.574.274.368.171.372.773.175.278.281.484.488.990.694.197.8100 497.899.9100.8100.398.098.9101.5104.6106.6110.0114.3109.3104.8111.9109.0101.0100.0101.3100.0102.0100.497.697.097.596.797.297.498.897.198.597 097.197.697.898.298.395.995.396.497.398.096.495.597.798 297.497.911.713.013.915.818.119.621.322.925.628.130.031.434.536.939.041.944.848.751.755.658.463.168.772 976.481.384.583.584.387.689.992.795.395.994.391.893.697.099.596.3100.0105.0108.7109.9112.2112.0116.0110.2111.0111.4112.0111.2110.0111.2110 4111.2112.7114.7116.8112.81175117.81144112.1114 9116.9117.7115.3114 6115.4116.6324

TABLE B-50.—Industrial production indexes, market groupings, 1947-93[1987 = 100; monthly data seasonally adjusted]Year or monthTotalindustrialproductionFinal productsTotalConsumer goodsTotalAutomotiveproductsOtherdurablegoodsNondurablegoodsTotalEquipmentDefenseandspaceIntermediateproductsMaterialsTotalDurableNondurableEner-19471948194919501951195219531954195519561957195819591960196119621963196419651966196719681969197019711972197319741975197619771978197919801981198219831984198519861987198819891990199119921993 ".1992:JanFebMar....AprMay....June..July...Aug...Sept..OctNov...Dec...1993: Jan....Feb....Mar...Apr....May...June..July...Aug...Sept..Oct".Nov.Dec".22.723.622.325.828.029.131.629.933.735.135.633.337.338.138.441.644.047.051.756.357.560.763.561.462.268.373.872.766.372.478.282.685.784.185.781.984.992.894.495.3100.0104.4106.0106.0104.1106.5111.0104.5105.3105.6106.3106.7106.0106.8106.6106.2107.5108.4108.9109.3109.9110.1110.4110.2110.5110.8111.0111.4112.1113.2114.020.821.520.923.525.427.329.127.629.831.632.531.034.035.135.438.440.642.947.151.653.756.358.156.056.561.365.965.761.866.271.676.179.080.082.180.883.091.094.295.7100.0104.8106.8107.0105.3108.2113.5105.3106.5106.9107.7108.3107.1108.1108.9108.1110.1111.0111.5111.9112.4112.7112.8112.5112.7113.2113.5113.8114.8115.9116.625.426.226.129.729.430.131.931.735.436.737.637.240.942.443.346.248.851.555.558.459.863.465.865.068.874.377.675.272.379.485.188.487.385.385.884.588.892.893.796.8100.0102.9104.0103.4102.8105.2108.1103.2104.0104.7105.4105.8104.0104.9105.1104.4106.4107.1107.5107.6108.5108.6108.1107.3107.3107.7107.8107.4108.6109.6109.821.722.622.528.325.022.528.426.535.228.930.324.130.234.631.638.341.943.954.153.947.456.456.747.760.865.672.462.659.073.284.086.378.559.559.257.571.986.692.795.3100.0106.4108.2100.789.899.4110.690.595.296.599.0102.999.098.899.597.3103.1104.1108.7112.7111.9111.2112.1109.7105.3103.3103.0105.6112.9119.5123.422.823.822.030.426.226.229.627.332.233.933.231.336.036.237.340.543.747.754.159.660.464.769.066.970.881.085.779.369.878.287.491.289.885.186.378.186.294.690.693.9100.0103.0105.2103.699.9105.2111.9102.5103.6104.7105.8107.9104.6106.3104.0104.1104.9107.1107.2109.3110.7111.7112.3111.8110.2113.2112.2112.5113.8114.9114.427.027.727.930.331.332.633.533.936.538.840.141.344.145.547.049.251.454.056.359.062.064.566.767.869.774.276.576.574.980.484.487.887.789.189.689.791.993.494.497.6100.0102.4103.2103.8105.0105.9107.2105.0105.2105.7106.1105.9104.6105.5106.0105.3107.1107.5107.4106.7107.7107.7106.9106.3107.2107.4107.8106.9107.3107.4107.215.015.814.115.321.225.527.624.224.727.128.225.227.728.528.131.333.135.039.646.149.050.451.848.145.049.355.056.852.053.858.864.271.074.678.277.076.889.294.894.5100.0107.6110.9112.1108.9112.7121.2108.3110.1110.2111.1112.0111.6112.7114.3113.5115.4116.7117.2118.1118.0118.7119.7119.9120.4121.2121.6122.9123.8125.:126.614.715.313.414.317.519.820.618.119.622.723.619.922.423.022.324.325.528.532.637.838.640.342.941.339.344.852.454.748.850.656.763.171.573.576.172.971.985.491.193.1100.0110.7115.5116.9115.7123.2137.0116.3118.8119.0120.6122.1121.9123.7126.1125.0127.5129.0129.6131.2131.7133.4134.8135.4136.1137.1137.6139.4140.8142.9144.97.58.89.210.826.537.244.639.335.935.136.736.838.839.940.646.950.649.054.363.772.772.969.458.752.851.350.149.448.549.249.249.551.557.458.565.771.878.989.496.0100.099.7100.198.891.785.978.789.589.088.987.787.286.585.184.584.483.583.282.582.081.580.780.579.578.678.678.077.576.976.676.122.423.622.426.127.427.229.129.032.934.434.433.637.137.438.140.442.745.548.451.453.556.659.658.760.567.671.969.462.669.074.979.181.277.077.075.180.386.288.391.9100.0101.8102.0101.296.597.6100.197.097.297.297.997.997.798.697.096.997.898.198.398.299.399.6100.099.799.4100.4100.6100.4101.0101.8101.925.126.223.928.631.632.135.632.938.939.939.935.941.442.042.045.848.752.658.763.963.367.571.569.070.077.284.582.872.681.287.391.895.491.392.885.188.396.696.695.9100.0105.0106.7106.8105.5107.9112.2106.2106.8107.3107.9108.0107.8108.5107.6107.4108.1109.3110.0110.4110.9110.9111.5111.6112.1112.0112.2112.7113.2114.3115.521.522.119.824.928.328.933.829.235.735.835.830.135.936.335.539.442.145.952.657.955.959.262.356.556.864.273.371.259.368.475.381.485.379.382.173.479.292.192.993.7100.0106.8108.4107.6105.2108.9116.0106.8107.8108.1108.8109.0108.7109.3108.9107.6109.7111.1111.9113.3114.2114.1114.9114.8114.9115.4115.8117.118.2119.7121.725.228.930.230.129.934.234.836.239.241.645.249.653.654.559.964.965.268.074.980.480.871.981.486.789.792.988.790.582.189.293.091.794.4100.0104.4107.1108.0107.1110.9114.0108.8109.9110.9111.2111.5111.5111.5110.7111.7110.7112.0111.5112.4112.1112.8113.8114.1114.8114.2115.2113.8114.4115.5115.352.759.362.763.458.862.363.163.665.869.772.575.880.683.487.291.796.297.1100.8101.598.896.799.0101.1102.2105.0106.2104.3100.798.9103.8103.499.5100.0102.2103.1104.2104.6103.4103.5103.1102.5102.7103.5103.3103.1104.4102.5103.6103.0103.9105.1103.4103.8103.5103.4103.4104.6103.7102.8103.3102.9103.0103.91 Two components—oil and gas well drilling and manufactured homes—are included in total equipment, but not in detail shown.Source: Board of Governors of the Federal Reserve System.325

TABLE B-51.—Industrial production indexes, selected manufactures, 1947-93[1987 = 100; monthly data seasonally adjusted]Durable manufacturesNondurable manufacturesYear or monthTotalPrimarymetalsIronandsteelFabricatedmetalproductsIndustrialandcommercialmachineryandcomputerequipmentElectricaimachineryTransportationequipmentTotalMotorvehiclesandpartsLumberandproductsApparelproductsTextilemillproductsPrintingandpublishingChemicalsandproductsFoods194719481949195019511952.195319541955195619571958195919601961 . .19621963196419651966196719681969197019711972197319741975197619771978197919801981198219831984198519861987198819891990199119921993 "1992:JanFebMarAprMayJuneJulyAugSeptOctNovDec1993:JanFebMarAprMayJuneJulyAugSeptOct"Nov "Dec "70 273.061.477.384.176 887.070 491.590 987.169 080.780.478.984.691.2102 9113.2120.2111.1115.1123.8115.2109.2122.4138.9134 5107.2119 9121.5130 7133.0110 8117.583.291.0102 4101.893.7100.0108.7107.2106.598 4101.1105.5101.7102.4102.6101.8101.1101.2100.6100.598.0100.5101.6102.4102.8108.0104.2104.4104.2105.7105.3106.2106.0105.0107.1109.1102 1106.891.2112.4125.7110 6127.5991131.8129 3124.693 9108.1109.9104 9109.3119.1135 5148.7153.1141.5146.1159.2148.2135.5150.6171.51661133.5147 1145.1155 3156.5126 0135.186.296.1105.9104.590.8100 0112.7111.2111.5100.6104.7110.5105.5106.4106.5105.6104.8103.8104.7103.8102.0104.1103.6107.4107.0112.9107.6108.4108.1110.9111.9112.1111.1112.4111.1114.637 538.234.442.245.144 049.644 751.051853.147 653.453.452 156.758.562168.373.176.580.681.975.975.682.992.188 476.784 992.796 299.592 591.183.285.593 394.593.8100 0104.2102.899.594 996.7100.994.995.996.696.897.297.197.097.096.597.597.697.899.899.7100.3101.4100.6100.1101.2101.0100.9101.6102.7103.312 012.110.311.614.716 016.714 215.617 917.915 017.517.617 119.220.523 326.230.531.131.333.932.830.535.441.444 138.140 045.150 256.960 665.963.964.380 886.890.3100.0113.0117.3117.6113.7124.8146.8114.7118.1120.0120.9123.2123.8125.7126.9127.9130.6132.8133.8135.0136.7139.6142.8144.2145.4148.5149.9152.1153.7156.2158.8858.88.311.311413 014.913 315.316 516.415 018.219.821024.124.826 231.337.537.739.842.340.540.746.553.052 445.150 758.464 071.373 375.475.980.394 193.194.3100 0108.5111.0111.4112 8119.8131.7114.9116.3117.2118.2119.5119.3120.7120.6121.5122.6124.4124.8125.8127.1128.5129.0129.7130.1132.3133.5135.2136.0137.2138.719 621.421.525.728.733 341.836 441.940 643.534 338.940.337.843.748.049 258.562.761.366.666.155.560.164.173.066 459.768 073.779 581.072.368.764.872.783.191.896.9100 0105.2109.6107.0101.8102.6105.6100.6102.2102.3103.2104.5102.7101.4102.4100.5103.0103.6106.3108.4107.8106.9106.9105.5102.6100.8100.4102.4106.3110.0112.727 329.630.439.035.830 738.733 344.636 238.028 036.441.136 043.948.649 963.762.655.166.066.353.366.973.085.073 462.281994.799.291.067 064.458.874.590.699.098.5100.0105.7106.9101.094.3104.8120.196.1100.3101.2104.5107.9104.8103.1105.0102.6108.0109.9116.2120.9120.7120.1120.4118.1114.3110.1110.0115.0124.1132.3138.838 840.435.743.443.242 745.144 850.149 545.446152.349.351.654.456.961 163.565.965.367.267.166.768.578.478.771466.575 682.383.682.476 974.767.379.986 088.095.1100.0100.199.497.190.596.4100.095.196.396.595.396.193.896.696.694.797.899.898.099.3101.898.098.197.496.599.199.9100.7104.0104.2104.643145.044.547.947.049.550.149.554.756.055.854 359.760.961363.866.468 772.674.574.176.078.475.376.280.981.577 971.183 991.693.989.089 291.090.193.895 792.696.3100 098.195.092.291.992.390.893.493.393.693.493.591.792.791.391.591.792.992.793.192.592.192.091.291.190.790.689.689.490.089.735 237.734.839.639.238 939.937 342.543 741.641 146.445.646 950.151.956 061.064.764.872.376.074.478.586.089.681577.786 391.692.095.092 189.483.093.293 789.793.9100.098.6100.397.196.8104.7106.3102.9104.3104.3105.0105.0103.8107.0103.5105.1103.5106.0106.0106.9106.2105.4104.2106.9107.1107.7107.4105.4106.6106.3106.822 123.223.824.925.425 326.527 630.332 333.432 634.836.236.437.739.742 144.848.350.951.754.252.753.256.758.357.453.758.764.368.169.970.372.175.279.084 587.690.6100.0100.9101.1100.896.895.094.196.495.695.195.894.595.695.793.594.194.594.294.794.794.094.795.694.794.593.893.493.894.394.493.3879.49.311.613.113.714.815.017.618 919.920 624.024.926.129.031.734 838.742.244.249.653.755.959.566.973.175.869.177.383.388.091.387.889.281.887.591.491.494.6100.0106.0109.2111.8111.3115.0118.3112.8113.6114.2114.6114.8114.9114.6114.4115.2116.2117.7116.7116.8116.2117.6117.8118.1119.1118.7119.1118.5118.1119.6120.033132.833.134.335.035.736.437.239.341.542.243.245.446.647.949.551.253 654.856.959.461.063.064.066.069.570.971.971.475.579.081.882.684.686.587.790.192.194.997.4100.0101.5102.5103.7105.3106.0106.9104.6105.8106.4106.0106.1105.4105.9106.3105.6106.8106.4106.2105.9106.9106.7106.7106.7107.1107.2107.8107.3107.8107.2107.0Source: Board of Governors of the Federal Reserve System.326

TABLE B-52.—Capacity utilization rates, 1948-93[Percent; 1monthly data seasonally adjusted]Year or monthTotalindustryManufacturingTotalDurablegoodsNondurablegoodsPrimaryprocessingAdvancedprocessingMiningUtilities1948194919501951195219531954195519561957195819591960196119621963196419651966196719681969197019711972197319741975197619771978197919801981198219831984198519861987198819891990199119921993"1992:JanFebMarAprMayJuneJulyAugSeptOctNovDec1993:JanFebMar..M P ay"JuneJulyAugSeptOct pNov P.Dec "86.486.886.980.879.284.388.484.274.679.383.385.586.282.180.975.075.881.180.379.281.583.783.682.179.279.881.978.879.379.579.980.179.580.079.779.380.280.881.081.281.581.681.781.581.581.781.781.982.383.083.582.574.282.885.885.489.380.187.086.183.675.081.680.177.381.483.585.689.591.187.287.286.879.778.283.788.183.873.278.582.885.185.480.278.872.874.980.479.579.181.683.683.181.177.878.881.177.678.278.678.879.178.678.978.778.479.279.779.880.380.580.680.980.780.680.780.881.081.582.382.787.186.886.376.774.380.987.582.770.275.480.383.584.978.676.669.070.578.377.876.278.681.881.579.074.976.480.474.675.675.876.176.876.176.476.576.177.177.878.278.979.479.579.979.779.479.879.980.681.482.583.486.386.686.682.982.886.687.584.076.481.885.286.285.181.481.078.081.183.181.983.085.685.985.384.081.782.082.081.781.882.382.482.281.982.281.781.782.082.482.082.282.182.282.382.282.382.082.181.581.782.081.887.376.288.590.284.989.480.692.089.484.775.483.079.877.981.583.887.891.091.485.486.386.980.479.386.491.586.072.980.184.086.386.478.078.069.074.880.479.880.984.986.986.284.280.182.484.682.382.683.082.382.682.282.681.981.782.383.082.983.584.383.884.384.284.584.584.884.484.885.786.080.073.279.883.485.989.380.084.284.483.174.981.180.577.281.683.484.688.891.188.087.486.579.177.482.586.582.873.577.881.984.384.881.379.174.674.980.379.478.380.182.181.879.876.877.979.678.779.179.277.377.577.077.377.377.077.978.478.678.979.079.379.579.378.979.279.279.680.180.981.481.283.586.688.987.490.492.592.589.990.090.991.391.994.094.686.579.984.482.978.279.984.485.989.188.686.887.186.485.786.286.587.886.387.686.486.587.187.487.887.985.885.386.487.287.986.585.887.888.487.788.293.494.195.895.493.994.692.986.884.084.884.684.885.985.582.879.580.382.583.580.282.084.186.086.086.385.387.084.685.185.385.784.983.984.884.184.585.687.188.585.488.989.086.484.686.688.188.686.786.186.687.51 Output as percent of capacity.Source: Board of Governors of the Federal Reserve System.327

TABLE B-53.—New construction activity, 1929-93[Value put in place, billions of dollars; monthly data at seasonally adjusted annual rates]Year or monthTotalnewconstructionPrivate constructionTotalResidentialbuildings 1Total 2NewhousingunitsNonresidential buildings and otherconstruction»TotalCommercial3IndustrialOther 4Public constructionTotal Federal State andlocal 51929193319391940194119421943194419451946New series19471948194919501951195219531954195519561957195819591960196119621963New series196419651966196719681969197019711972197319741975197619771978197919801981198219831984198519861987198819891990199119921993*.10.82.98.28.712.014.18.35.35.814.320.026.126.733.635.436.839.141.446.547.649.150.055.454.756.460.264.872.178.081.283.092.499.8100.7117.3133.3146.8147.5145.6165.4193.1230.2259.8259.7272.0260.6294.9348.8377.4407.7419.4432.3443.6442.1403.4436.0470.38.31.24.45.16.23.42.02.23.412.116.721.420.526.726.226.027.929.734.834.935.134.639.338.939.342.345.551.956.157.457.665.072.072.887.6103.3114.5109.3102.3121.5150.0180.0203.2196.1207.3197.5231.5278.6299.5323.1328.7337.5345.5334.7293.5317.3342.73.6.52.73.03.51.7.91.36.29.913.112.418.115.915.816.618.221.920.219.019.824.323.023.125.227.930.530.228.628.734.237.235.948.560.765.156.051.668.392.0109.8116.4100.499.284.7125.5153.8158.5187.1194.7198.1196.6182.9157.8187.8207.93.02^32.63.01.4.7.6.74.87.810.510.015.613.212.913.414.918.216.114.715.419.217.317.119.421.724.123.821.821.526.729.227.138.750.154.643.436.350.872.285.689.369.669.457.094.6113.8114.7133.2139.9138.9139.2128.0110.6129.6144.54.7.81.72.12.71.71.11.42.15.86.98.28.08.610.310.211.311.512.914.716.114.815.115.916.217.217.621.425.828.828.830.834.837.039.142.649.453.450.753.258.070.286.895.7108.0112.9106.0124.8141.1136.0134.1139.4148.9151.8135.7129.4134.86.88.18.18.09.010.811.213.115.718.118.114.314.116.420.628.334.640.244.143.959.172.669.568.971.573.972.554.845.047.30.9.2.31.71.41.01.12.12.32.22.02.43.13.62.42.12.92.82.82.93.65.16.66.06.06.86.65.54.86.48.18.37.48.011.515.614.618.018.513.814.817.114.915.016.520.423.822.320.720.72.6.51.21.31.51.2.91.11.33.04.25.55.96.16.76.87.37.27.38.09.08.89.08.98.79.29.711.012.614.114.915.817.219.220.522.124.927.228.231.633.738.242.846.649.850.248.250.851.351.650.151.554.655.458.763.766.82.51.63.83.65.810.76.33.12.42.23.34.76.36.99.310.811.211.711.712.714.115.516.115.917.117.919.420.221.923.825.427.427.827.929.730.032.338.143.344.043.150.156.663.664.763.163.570.277.884.690.694.898.1107.5109.9118.8127.60.2.51.23.89.35.62.51.7.91.21.51.63.04.24.13.42.82.73.03.43.73.63.93.94.03.73.93.83.33.23.23.13.84.24.75.16.16.87.18.18.69.610.410.010.611.212.012.414.112.312.212.112.814.314.52.31.13.12.42.01.3.7.6.71.42.53.55.26.36.67.18.38.910.011.112.112.312.213.314.015.416.518.020.022.124.224.624.825.925.827.633.037.237.236.042.048.154.054.353.152.959.065.872.276.682.586.095.497.1104.5113.1See next page for continuation of table.328

TABLE B-53.—New construction activity, 1929-93—Continued[Value put in place, billions of dollars; monthly data at seasonally adjusted annual rates]Private constructionPublic constructionYear or monthTotalResidentialbuildings 1Total 2NewhousingunitsNonresidential buildings and otherconstruction 1TotalTotalnewconstructionCommercial3IndustrialOther 4TotalFederalState andlocal 51992: JanFebMar£==JuneJulyAugSeptOctNovDec417.6416.5433.8429.9436.7434.9432.0430.4433.5442.6449.3455.2300.0297.8312.3313.6314.8319.3314.0312.3317.4324.8328.2335.4172.1171.7180.3185.4184.4186.7184.6187.3189.2194.6119.3206.4121.1120.1127.0131.0128.8129.4126.8127.9129.1132.1135.4138.9127.9126.1131.9128.2130.5132.6129.4125.0128.2130.3128.9128.945.845.746.244.744.447.443.843.044.145.644.843.622.221.524.521.121.220.521.118.919.319.419.220.059.958.961.262.464.964.764.563.164.965.364.865.3117.7118.7121.5116.3121.9115.6118.0118.1116.1117.7121.1119.914.614.414.613.614.914.013.713.013.214.415.816.0103.1104.4106.9102.6107.0101.6104.3105.1102.9103.3105.2103.91993: JanFebMarAprMayJune451.3453.8454.5449.1453.3460.7335.5334.8337.0328.1332.2335.0207.2205.7205.5197.3198.4200.5141.8142.9141.8137.7138.3139.3128.3129.1131.5130.8133.9134.544.845.945.346.247.347.819.620.522.219.520.119.363.962.764.065.266.467.4115.8119.0117.5120.9121.0125.714.214.815.614.912.813.4101.6104.2101.9106.0108.2112.2JulyAugSeptOctNovDec466.6468.5477.1489.7500.0513.1337.9341.4345.6354.1364.5371.9204.6206.6209.5215.2222.3228.6141.1143.0145.7149.9156.4161.8133.3134.8136.1138.9142.2143.345.846.847.049.150.551.319.820.121.321.322.322.867.767.867.868.469.369.2128.7127.2131.6135.6135.6141.214.213.414.315.615.216.2114.5113.8117.3120.0120.4125.01 Beginning 1960, farm residential buildings included in residential buildings; prior to 1960, included in nonresidential buildings andother construction.2 Includes residential improvements, not shown separately. Prior to 1964, also includes nonhousekeeping units (hotels, motels, etc.).3 Office buildings, warehouses, stores, restaurants, garages, etc., and, beginning 1964, hotels and motels; prior to 1964 hotels andmotels are included in total residential.4 Religious, educational, hospital and institutional, miscellaneous nonresidential, farm (see also footnote 1), public utilities(telecommunications, gas, ejectnc, railroad, and petroleum pipelines), and all other private.5 Includes Federal grants-in-aid for State and local projects.Source: Department of Commerce, Bureau of the Census.329

TABLE B-54.—New housing units started and authorized, 1959-93[Thousands of units]Year or monthPrivate and public*Total(farm andnonfarm)NonfarmNew housing units startedTotalPrivate (farm and nonfarm) 11 unitType of structure2 to 4 5 unitsunits or moreNew private housing units authorized 2Total1 unitType of structure2to4units5 unitsor more19591960196119621963196419651966196719681969197019711972197319741975197619771978197919801981 ,1982198319841985198619871988198919901991199219931,553.71,296.11,365.01,492.51,634.91,561.01,509.71,195.81,321.91,545.41,499.51,469.02,084.52,378.52,057.51,352.51,171.41,547.62,001.72,036.11,760.01,312.61,100.31,072.11,712.51,755.81,745.01,807.11,622.7()1,531.31,274.01,336.81,468.71,614.81,534.01,487.51,172.81,298.81,521.41,482.3()1,517.01,252.21,313.01,462.91,603.21,528.81,472.81,164.91,291.61,507.61,466.81,433.62,052.22,356.62,045.31,337.71,160.41,537.51,987.12,020.31,745.11,292.21,084.21,062.21,703.01,749.51,741.81,805.41,620.51,488.11,376.11,192.71,013.91,199.71,285.11,234.0994.7974.3991.41,012.4970.5963.7778.6843.9899.4810.6812.91,151.01,309.21,132.0888.1892.21,162.41,450.91,433.31,194.1852.2705.4662.61,067.61,084.21,072.41,179.41,146.41,081.31,003.3894.8840.41,029.91,123.4282.9257.5338.7471.5590.7108.486.661.171.680.985.084.8120.3141.3118.368.164.085.9121.7125.0122.0109.591.180.0113.5121.493.484.065.358.855.237.535.630.730.5450.0422.5325.1376.1527.3571.2535.9780.9906.2795.0381.6204.3289.2414.4462.0429.0330.5287.7319.6522.0544.0576.1542.0408.7348.0317.6260.4137.9139.0131.21,208.3998.01,064.21,186.61,334.71,285.81,239.8971.91,141.01,353.41,323.71,351.51,924.62,218.91,819.51,074.4939.21,296.21,690.01,800.51,551.81,190.6985.51,000.51,605.21,681.81,733.31,769.41,534.81,455.61,338.41,110.8948.81,094.91,214.2938.3746.1722.8716.2750.2720.1709.9563.2650.6694.7625.9646.8906.11,033.1882.1643.8675.5893.61,126.11,182.6981.5710.4564.3546.4901.5922.4956.61,077.61,024.4993.8931.7793.9753.5910.71,004.677.164.667.687.1118.9100.884.861.073.084.385.288.1132.9148.6117.064.363.993.1121.3130.6125.4114.5101.888.3133.6142.6120.1108.489.375.767.054.343.145.851.2192.9187.4273.8383.3465.6464.9445.1347.7417.5574.4612.7616.7885.71,037.2820.5366.2199.8309.5442.7487.3444.8365.7319.4365.8570.1616.8656.6583.5421.1386.1339.8262.6152.1138.4158.3Seasonally adjusted annual rates1992:JanFeb..Mar..May -June.JulyAugSeptOctNovDec1993: JanFebMarAprMayJuneJulyAugSeptOctNov pDec" ,( 3 )( 3 )( 3 )( 3 )( 3 )( 3 )( 3 )( 3 )( 3 )( 3 )1,1641,2851,3181,0951,1971,1411,1061,2291,2181,2261,2261,2861,1711,1801,1241,2061,2481,2481,2321,3281,3711,3901,4501,5409761,1371,0509391,0199949611,0381,0451,0791,0891,1331,0511,0369871,0591,1071,0791,0641,1831,1661,2111,2851,330282551283240253128182832262432262631541733343333160123217128146107120160145129109121941201051211151381141281721451321771,0771,1351,0821,0401,0531,0481,0831,0811,1201,1411,1361,1961,1571,1411,0341,1011,1211,1151,1621,2421,2711,3041,3741,4768939488968588778788828859189549631,0379729578719259199259771,0151,0471,0971,1451,19845 13941 14644 14242 14045 13148 12242 15952 14445 15751 13649 12445 11445 14045 13943 12049 12746 15647 1435113447180571675715058171522261 Units in structures built by private developers for sale 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 17,000 permit-issuing places beginning 1984; in 16,000 places for 1978-83; in14,000 places for 1972-77; in 13,000 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 1970.4 Series discontinued December 1988.Source: Department of Commerce, Bureau of the Census.330

TABLE B-55.—Business expenditures for new plant and equipment, 1947-94[Billions of dollars; quarterly data at seasonally adjusted annual rates]Industries surveyed quarterly 'AddendaYear or quarterTotalManufacturingAllindustriesDurablegoodsNondurablegoodsTotal 2NonmanufacturingMiningTransportationPublicutilitiesCommercialandotherTotalnonfarmbusiness3NonmanufacturingTotalManufacturingSurveyedquarterlySurveyedannually419471948194919501951195219531954195519561957195819591960196119621963196419651966196719681969197019711972197319741975197619771978197919801981198219831984198519861987198819891990199119921993 51994 51992:1IIIllIV1993:1IIIllIV 5 ....1994:I 5II s20.1122.7820.2821.5626.8128.1629.9628.8630.9437.9040.5433.8435.8839.4438.3440.8643.6751.2659.5270.4072.7576.4285.7491.9192.91103.40120.03139.67142.42158.44184.82216.81255.26286.40324.73326.19321.16373.83410.12399.36410.52455.49507.40532.61528.39546.60584.64616.50534.85541.41547.40559.24564.13579.79594.11600.53616.38624.338.739.257.327.7311.0712.1212.4312.0012.5016.3317.5012.9813.7616.3615.5316.0317.2721.2325.4131.3732.2532.3436.2736.9933.6035.4242.3552.4853.6658.5367.4878.1395.13112.60128.68123.97117.35139.61152.88137.95141.06163.45183.80192.61182.81174.02179.46186.27173.82171.98172.86176.86175.05177.09182.17183.52186.22183.443.393.542.673.225.125.755.715.495.878.198.596.216.728.287.437.818.6410.9813.4917.2317.8317.9319.9719.8016.7818.2222.6326.7725.3727.5032.7739.0247.7254.8258.9354.5851.6164.5770.8765.6868.0377.0482.5682.5877.6473.3281.4984.9373.9874.0772.0973.3079.1180.8881.9983.9987.5083.925.345.714.644.515.956.376.726.516.628.158.916.777.048.088.108.228.6310.2511.9214.1514.4214.4016.3117.1916.8217.2019.7225.7128.2831.0334.7139.1047.4157.7769.7569.3965.7475.0482.0172.2873.0386.41101.24110.04105.17100.6997.97101.3499.8597.91100.77103.5695.9496.21100.1899.5398.7299.5211.3813.5312.9613.8315.7416.0417.5316.8518.4421.5723.0420.8622.1223.0822.8024.8326.4030.0434.1239.0340.5044.0849.4754.9259.3167.9877.6787.1988.7699.91117.34138.69160.13173.80196.06202.22203.82234.22257.24261.40269.46292.04323.60339.99345.58372.58405.18430.22361.03369.44374.54382.38389.08402.70411.94417.01430.16440.890.69.931.111.211.251.291.311.641.691.431.351.291.261.411.261.331.361.421.381.441.772.022.672.883.304.586.127.639.8110.5511.0512.7115.8114.1110.6411.8612.008.158.289.299.219.8810.028.8810.1310.848.929.208.988.478.899.1011.1411.3710.8311.142.693.172.802.873.603.563.582.913.103.563.842.723.473.543.143.593.644.715.666.686.576.917.237.176.427.148.009.169.9511.1012.2012.0713.9113.5612.6711.7510.8113.4414.5715.0515.0716.6318.8421.4722.6622.6422.3720.9121.8323.1523.9121.6022.4721.5821.7023.7321.4921.611.642.673.283.423.753.964.614.234.264.785.955.745.465.405.205.125.335.806.497.829.3310.5211.7013.0314.7016.2617.9919.9620.2322.9027.8332.1037.5341.3247.1753.5852.9557.5359.5856.6156.2660.3766.2867.2166.5772.2175.0081.4269.0072.6372.1874.0773.5174.5575.6276.3077.7880.806.386.776.016.707.297.318.098.429.7711.5911.5610.9711.8412.8613.2114.7116.1718.2020.6023.1123.2225.2228.7732.7135.5241.6948.3953.4952.4758.2967.5183.9697.64106.21120.41122.79129.41151.39171.09181.59189.84205.76229.28241.43246.32268.84297.69317.05261.27264.46269.46278.24284.21297.46303.47305.61320.06327.3322.2725.9724.0325.8131.3832.1634.2033.6237.0845.2548.6242.5545.1748.9948.1451.6153.5962.0270.7982.6283.8288.92100.02106.15109.18120.91139.26159.83162.60179.91208.15244.40285.24318.08358.77363.08359.73418.38454.93447.11461.51508.22563.93591.96587.93607.718.739.257.327.7311.0712.1212.4312.0012.5016.3317.5012.9813.7616.3615.5316.0317.2721.2325.4131.3732.2532.3436.2736.9933.6035.4242.3552.4853.6658.5367.4878.1395.13112.60128.68123.97117.35139.61152.88137.95141.06163.45183.80192.61182.81174.02179.46186.27173.82171.98172.86176.86175.05177.09182.17183.52186.22183.4413.5416.7316.7218.0820.3120.0421.7721.6224.5828.9131.1129.5731.4132.6332.6035.5836.3340.8045.3951.2551.5756.5863.7469.1675.5885.4996.91107.35108.95121.38140.67166.27190.11205.48230.09239.11242.38278.77302.05309.16320.45344.77380.13399.34405.12433.6911.3813.5312.9613.8315.7416.0417.5316.8518.4421.5723.0420.8622.1223.0822.8024.8326.4030.0434.1239.0340.5044.0849.4754.9259.3167.9877.6787.1988.7699.91117.34138.69160.13173.80196.06202.22203.82234.22257.24261.40269.46292.04323.60339.99345.58372.58405.18430.22361.03369.44374.54382.38389.08402.70411.94417.01430.16440.892.163.193.764.254.574.004.234.766.147.358.088.729.299.559.8010.759.9310.7611.2712.2211.0712.5014.2714.2416.2617.5119.2420.1620.1921.4723.3327.5829.9831.6834.0436.8938.5644.5544.8147.7550.9952.7356.5359.3559.5461.111 These industries accounted for 90 percent of total nonfarm spending in 1992.2 Excludes forestry, fisheries, and agricultural services; professional services; social services and membership organizations; and realestate, which, effective with the April-May 1984 survey, are no longer surveyed quarterly. See last column ("nonmanufacturing surveyedannually") for data for these industries.3 "All industries" plus the part of nonmanufacturing that is surveyed annually.4 Consists of forestry, fisheries, and agricultural services; professional services; social services and membership organizations; andreal estate.5 Planned capital expenditures as reported by business in October and November 1993, corrected for biases.Source: Department of Commerce, Bureau of the Census.331

Year or monthTABLE B-56.—Manufacturing and trade sales and inventories, 1950-93[Amounts in millions of dollars; monthly data seasonally adjusted]Total manufacturing andManufacturingwholesalerstradeMerchantRetailtradeInventories2 Ratio3 Sales J Inven-Inven-Sales*tories 2 Ratio3 Sales *tories 2 Ratio3 Sales 1 Inventories2Ratio319501951195219531954195519561957195819591960196119621963196419651966196719681969197019711972197319741975197619771978197919801981198219831984198519861987198819891990199119921992: JanFebMarAprMayJune38,596JulyAugSeptOctNovDecJuneJulyAugSeptOctNov p1993:JanFebMar43,35644,84047,98746,44351,69454,06355,87954,20159,72960,82761,15965,66268,99573,68280,28387,18790,91898,794105,812108,352117,023131,227153,881178,201182,412204,386229,786260,755298,328328,112356,909348,771370,501411,427423,940431,786459,107497,031523,729543,097538,609560,383542,949549,893553,453553,683551,496558,715562,128557,117564,197566,536569,412580,840581,584584,903583,575584,943587,930589,990585,626592,598595,804600,304607,68959,82270,24272,37776,12273,17579,51687,30489,05287,05592,09794,71995,580101,049105,463111,504120,929136,824145,681156,611170,400178,594188,991203,227234,406287,144288,992318,345350,706400,931452,640510,126547,181575,504591,875651,551665,835664,624711,725767,538813,793837,445833,518849,117830,003830,846832,300835,805835,685839,937843,411844,942844,032845,196846,912849,117851,190854,715859,094862,478864,198864,227863,612865,939867,395869,709874,4651.361.551.581.581.601.471.551.591.611.541.561.561.541.531.511.511.571.601.591.611.651.611.551.521.611.581.561.531.541.521.551.531.671.561.531.551.551.501.491.531.531.541.501.531.511.501.511.521,501.50i.521.501.491.491.461.461.461.471.471.471.461.471.461.461.451.4418,63421,71422,52924,84323,35526,48027,74028,73627,24830,28630,87830,92233,35835,05837,33140,99544,87046,48650,22953,50152,80555,90663,02772,93184,79086,58998,797113,201126,905143,936154,391168,129163,351172,547190,682194,538194,657206,326223,541232,724239,459235,518244,511235,239239,081242,011242,706241,804246,459246,259241,716246,078245,459248,525256,609252,845256,800258,979255,114254,007258,299251,680256,556260,088260,471265,57431,07839,30641,13643,94841,61245,06950,64251,87150,20352,91353,78654,87158,17260,02963,41068,20777,98684,64690,56098,145101,599102,567108,121124,499157,625159,708174,636188,378211,691242,157265,215283,413311,852312,379339,516334,799322,669338,075367,422386,911399,068386,348379,238384,828383,771383,508382,502383,404382,908383,369385,186384,013383,095381,055379,238378,624379,232379,539380,307381,591381,326381,561381,392380,689380,301380,1811.481.661.781.761.811.621.731.801.841.751.741.771.741.711.701.661.741.821.801.831.921.831.721.711.861.841.771.661.671.681.721.691.951.781.731.731.681.591.581.641.651.671.571.641.611.581.581.591.551.561.591.561.561.531.481.501.481.471.491.501.481.521.491.461.461.437,6958,5978,7829,0528,9939,89310,51310,47510,25711,49111,65611,98812,67413,38214,52915,61116,98719,67521,12122,94024,29826,61930,01138,31948,27146,84850,93456,40966,84979,67893,977102,26796,357100,440113,502114,816116,326124,340135,357144,158149,489147,635152,337148,745149,749151,394150,726148,586151,021153,762152,241153,551154,211153,759155,297159,507158,987157,206159,291162,187159,095160,531161,459160,710161,284162,9719,2849,88610,21010,68610,63711,67813,26012,73012,73913,87914,12014,48814,93616,04817,00018,31720,76525,78627,16629,80033,35436,56840,29746,91858,66757,77464,62273,17986,93499,679123,833131,049129,024131,663144,223149,155155,445165,814180,519188,539196,901201,285209,232200,956201,423201,463201,687200,997204,373205,058205,399205,264206,655208,416209,232210,139209,765210,503211,860212,190212,058213,244215,199215,103214,991216,0941.071.161.121.171.181.131.191.231.241.211.211.211.181.201.171.171.221.311.291.301.371.371.341.221.221.231.271.301.301.251.321.281.361.281.231.281.321.291.301.291.291.341.341.351.351.331.341.351.351.331.351.341.341.361.351.321.321.341.331.311.331.331.331.341.331.3312,26813,04613,52914,09114,09515,32115,81116,66716,69617,95118,29418,24919,63020,55621,82323,67725,33024,75727,44529,37131,24934,49738,18942,63145,14148,97554,65560,17667,00274,71379,74386,51489,06297,514107,243114,586120,803128,442138,133146,847154,149155,456163,535158,965161,063160,048160,251161,106161,235162,107163,160164,568166,866167,128168,934169,232169,116167,390170,538171,736172,596173,415174,583175,006178,549179,14419,46021,05021,03121,48820,92622,76923,40224,45124,11325,30526,81326,22127,94129,38631,09434,40538,07335,24938,88542,45543,64149,85654,80962,98970,85271,51079,08789,149102,306110,804121,078132,719134,628147,833167,812181,881186,510207,836219,597238,343241,476245,885260,647244,219245,652247,329251,616251,284252,656254,984254,357254,755255,446257,441260,647262,427265,718269,052270,311270,417270,843268,807269,348271,603274,417278,1901 Annual data are averages of monthly not seasonally adjusted figures.2 Seasonally adjusted, end of period. Inventories beginning January 1982 for manufacturing and December 1980 for wholesale andretail trade are not comparable with earlier periods.3 Inventory/sales ratio. Annual data are-, beginning 1982, averages of monthly ratios; for 1958-81, ratio of December inventories tomonthly average sales for the year; and for earlier years, weighted averages. Monthly data are ratio of inventories at end of month tosales for month.Note.—Earlier data are not strictly comparable with data beginning 1958 for manufacturing and beginning 1967 for wholesale andretail trade.Source: Department of Commerce, Bureau of the Census.1.381.641.521.531.511.431.471.441.441.411.471.441.421.431.421.451.501.421.421.451.401.451.441.481.571.461.451.481.531.481.521.531.491.441.491.521.561.561.541.591.561.551.551.541.531.551.571.561.571.571.561.551.531.541.541.551.571.611.591.571.571.551.541.551.541.55332

TABLE B-57.—Manufacturers' shipments and inventories, 1950-93[Millions of dollars; monthly data seasonally adjusted]Year or monthShipments xTotalDurablegoodsindustriesNondurablegoodsindustriesInventories 2TotalDurable goods industriesTotalMaterialsandsuppliesWork inprocessFinishedgoodsNondurable goods industriesTotalMaterialsandsuppliesWorkinprocessFinishedgoods195019511952195319541955195619571958195919601961196219631964196519661967196819691970197119721973197419751976197719781979198019811982.....19831984198519861987198819891990199119921993 "..1992: JanFebMarAprMayJuneJulyAugSeptOctNovDec1993:JanFebMarAprMayJuneJulyAugSeptOctNov "Dec p 18,63421,71422,52924,84323,35526,48027,74028,73627,24830,28630,87830,92233,35835,05837,33140,99544,87046,48650,22953,50152,80555,90663,02772,93184,79086,58998,797113,201126,905143,936154,391168,129163,351172,547190,682194,538194,657206,326223,541232,724239,459235,518244,511258,523235,239239,081242,011242,706241,804246,459246,259241,716246,078245,459248,525256,609252,845256,800258,979255,114254,007258,299251,680256,556260,088260,471265,574269,2278,84510,49311,31313,34911,82814,07114,71515,23713,55315,59715,87015,60117,24718,25519,61122,19324,61725,23327,62429,40328,15629,92433,98739,63544,17343,59850,62359,16867,73175,92777,41983,72779,21285,48197,940101,279103,238108,128117,993121,703122,387119,151125,553135,982120,173122,865124,665124,249123,113126,166125,083124,246125,873126,425128,720134,228130,805134,133135,537132,763132,307135,042129,257134,521137,521138,153142,665146,0029,78911,22111,21611,49411,52712,40913,02513,49913,69514,68915,00815,32116,11116,80317,72018,80220,25321,25322,60524,09824,64925,98229,04033,29640,61742,99148,17454,03359,17468,00976,97284,40284,13987,06692,74293,25991,41998,198105,549111,022117,072116,367118,958122,542115,066116,216117,346118,457118,691120,293121,176117,470120,205119,034119,805122,381122,040122,667123,442122,351121,700123,257122,423122,035122,567122,318122,909123,22531,07839,30641,13643,94841,61245,06950,64251,87150,20352,91353,78654,87158,17260,02963,41068,20777,98684,64690,56098,145101,599102,567108,121124,499157,625159,708174,636188,378211,691242,157265,215283,413311,852312,379339,516334,799322,669338,075367,422386,911399,068386,348379,238377,941384,828383,771383,508382,502383,404382,908383,369385,186384,013383,095381,055379,238378,624379,232379,539380,307381,591381,326381,561381,392380,689380,301380,181377,94115,53920,99123,73125,87823,71026,40530,44731,72830,19432,01232,33732,49634,56535,77638,42142,18949,85254,89658,73264,59866,65166,13670,06781,192101,493102,590111,988120,877138,181160,734174,788186,443200,444199,854221,330218,212212,006220,776241,402256,065259,988249,117237,717236,370248,183246,482245,703244,355244,213243,625242,976243,597242,122240,909239,407237,717236,332237,034236,849237,043237,734237,514237,937237,688237,571237,632237,886236,3708,9667,8949,19410,41710,6089,97010,70910,30610,24610,79411,05311,94613,29815,46416,42317,34418,63619,14919,67920,80725,94435,07033,90337,45740,18645,19852,67055,17357,99859,13660,32566,03164,00561,40963,61469,38871,94272,78869,98768,16568,38869,82769,36668,87268,81168,90969,47768,87569,37169,39968,44268,26768,16567,70767,83967,86468,08968,40168,16368,35768,67868,44168,52268,67068,38810,7209,72110,75612,31712,83712,40813,08612,80913,21114,12414,83516,15818,05521,90824,93327,21330,28229,74528,55030,71335,49042,53043,22746,07450,22658,84869,32576,94580,99886,70786,89998,25198,08596,926102,328112,380121,919122,520115,107107,140105,364114,334113,342112,867111,601111,346110,257109,482109,507108,406108,730107,472107,140106,426106,552106,071105,671106,042106,306106,545106,463106,704106,943106,119105,3646,2066,0406,3487,5658,1257,8168,2179,2229,0399,6479,88810,31710,83612,48013,54014,17515,68017,75717,90718,54719,75823,89325,46028,45730,46534,13538,73942,67047,44754,60152,63057,04856,12253,67154,83459,63462,20464,68064,02362,41262,61864,02263,77463,96463,94363,95863,89164,61964,71964,31763,73763,66862,41262,19962,64362,91463,28363,29163,04563,03562,54762,42662,16763,09762,61815,53918,31517,40518,07017,90218,66420,19520,14320,00920,90121,44922,37523,60724,25324,98926,01828,13429,75031,82833,54734,94836,43138,05443,30756,13257,11862,64867,50173,51081,42390,42796,970111,408112,525118,186116,587110,663117,299126,020130,846139,080137,231141,521141,571136,645137,289137,805138,147139,191139,283140,393141,589141,891142,186141,648141,521142,292142,198142,690143,264143,857143,812143,624143,704143,118142,669142,295141,5718,3178,1678,5568,9718,7758,6769,0949,0979,5059,83610,00910,16710,48711,19711,76012,32812,75313,16813,68614,67718,14723,74423,56525,84727,38729,61932,81436,60638,16544,03944,81645,69244,08742,30945,28749,03049,63251,60651,55652,19451,97651,24951,36251,49651,65151,82152,18852,61652,47152,55452,52852,13752,19452,28652,12152,32952,67252,96553,05552,64752,59452,48952,25952,36351,9762,4722,4402,5712,7212,8642,8272,9422,9473,1083,3043,4203,5313,8254,2264,4314,8525,1205,2715,6785,9986,7298,1898,8349,92910,96112,08513,91015,88416,19418,61218,69119,32819,44518,12419,27920,44621,26122,44721,88622,88723,46122,10322,23322,25922,48022,47422,52922,50622,77322,90322,81722,75922,88722,96223,16123,12823,09922,99023,09723,20223,28023,32923,43723,47723,4617,4097,4157,6668,6228,6248,5068,8659,4059,76210,46710,82411,29111,70612,71113,55914,64815,67416,50917,06717,37918,43124,19924,71926,87229,15331,80634,69937,93742,61148,75749,01853,16653,05550,23052,73356,54459,95365,02763,78966,44066,13463,29363,69464,05064,01664,89664,56665,27166,34566,43466,84166,75266,44067,04466,91667,23367,49367,90267,66067,77567,83067,30066,97366,45566,1341 Annual data are averages of monthly not seasonally adjusted figures.2 Seasonally adjusted, end of period. Data beginning 1982 are not comparable with data for prior periods.Note.—Data beginning 1958 are not strictly comparable with earlier data.Source: Department of Commerce, Bureau of the Census.333

TABLE B-58.—Manufacturers' new and unfilled orders, 1950-93[Amounts in millions of dollars; monthly data seasonally adjusted]Year or monthTotalNew orders lDurable goodsindustriesTotalCapitalgoodsindustries,nondefenseNondurablegoodsindustriesTotalUnfilled orders 2DurablegoodsindustriesNondurablegoodsindustriesUnfilled orders—shipmentsTotalIdllU"DurablegoodsindustriesNondurablegoodsindustries19501951195219531954195519561957195819591960196119621963196419651966196719681969197019711972197319741975197619771978197919801981198219831984198519861987198819891990199119921993"1992 JanFebMarAprMayJuneJulyAugSeptOct NovDec1993 JanFebMarMayJuneJulyAugSeptOct Nov"Dec ".20 11023,90723 20423 58622,33527 46528,36827 55927,19330,71130,23231,11233,44035 51138,24042,13746,42047 06750,65753,99052,02255,92164,18276,00387,32785,13999,513115,109131,629147,604156,359168,025162,140175,451192,879195,706195,204209,389227,026235,932240,646234,354241,545255,719233,924234,439239,462241,747238,933243,914241,079237,230240,685244,882243,106256,727253,626257,250253,007252,369248,335255,462250,566253,461255,309258,270262,773266,0191016512,84112 0611214710,76814 99615,3651411113,38715,97915,28815,75317,36318 67120,50723,28626,16325 80328,05129,87627,34029,90535,03842,62746,86241,95751,30761,03572,27879,48379,39283,65478,06488,140100,164102,356103,647110,809121,445124,933123,556117,878122,614133,300118,996118,369121,882123,221120,522123,746119,846120,007120,608125,656123,096134,348131,266134,533129,903129,838126,783132,252128,520131,752133,176136,613139,675142,6586,3147,0466,0726,6827,7459,92611,5949,88611,49013,68117,58821,15421,13521,80619,21319,62423,66924,54523,98326,09530,72932,72532,25429,46829,65331,90129,46028,89731,65529,65329,77830,16828,73227,48629,80130,12926,80432,27528,64532,74829,12230,45329,93133,85030,09331,99230,99232,82534,87835,3669 94511,066111431143911,56612 46913,00313 44813,80514,73214,94415,35916,07816 84017,73218,85120,2582126522,60624,11424,68226,01629,14433,37640,46543,18148,20654,07359,35168,12176,96784,37184,07787,31192,71593,35191,55798,579105,581110,999117,090116,476118,932122,419114,928116,070117,580118,526118,411120,168121,233117,223120,077119,226120,010122,379122,360122,717123,104122,531121,552123,210122,046121,709122,133121,657123,098123,3614145667,26675 85761 17848,26660 00467,3755318346,60951,71744,21346,62447,79853 41764,51878,24996,846103 711108,377114,341105,008105,247119,349156,561187,043169,546178,128202,024259,169303,593327,416326,547311,887347,273373,529387,095393,412430,288471,951510,459524,846511,122475,304442,111509,807505,165502,616501,657498,786496,241491,061486,575481,182480,605475,186475,304476,085476,535470,563467,818462,146459,309458,195455,100450,321448,120445,319442,11135 43563^39472 68058'63745,25056 24163,88050 35243,80748,36941,65043,58245,17050 34661,31574,45993,00299 735104,393110,161100,412100,225113,034149,204181,519161,664169,857193,323248,281291,321315,202314,707300,798333,114359,651372,027376,622408,602450,002488,780502,914487,892452,383420,646486,715482,219479,436478,408475,817473,397468,160463,921458,656457,887452,263452,383452,844453,244447,610444,685439,161436,371435,634432,865428,520426,980423,990420,6466 0213,8723 1772 5413,0163 7633,4952 8312,8023,3482,5633,0422,6283 0713,2033,7903,8443,9763,9844,1804,5965,0226,3157,3575,5247,8828,2718,70110,88812,27212,21411,84011,08914,15913,87815,06816,79021,68621,94921,67921,93223,23022,92121,46523,09222,94623,18023,24922,96922,84422,90122,65422,52622,71822,92322,92123,24123,29122,95323,13322,98522,93822,56122,23521,80121,14021,32921,4653.423.633.873 353.022.942.712.582.642 742.993.253.743.663.793.713.613.323.263.804.093.693.243.243.573.893.853.873.843.533.603.673.593.633.644.004.144.083.463.044.003.923.843.843.863.743.713.753.653.653.573.463.563.513.423.463.423.333.413.303.223.213.123.044.124.274.554.003.623.473.293.083.183.313.593.864.484.374.584.454.364.003.854.514.934.453.883.854.204.624.584.684.744.294.374.464.404.424.454.915.135.064.213.644.914.814.714.714.754.584.564.594.464.474.354.214.354.274.144.204.154.024.173.993.893.893.753.640.961.121.04.85.85.92.71.78.68.72.71.79.75.73.69.69.76.76.86.91.62.82.74.71.81.82.75.69.62.69.64.68.70.83.76.78.76.81.77.72.81.80.80.80.79.78.77.79.78.78.78.77.79.79.78.79.78.78.76.76.73.71.72.721 Annual data are averages of monthly not seasonally adjusted figures.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 relateto seasonally adjusted data for December.Note.—Data beginning 1958 are not strictly comparable with earlier data.Source: Department of Commerce, Bureau of the Census.334

PRICESTABLE B-59.—Consumer price indexes for major expenditure classes, 1950-93[For all urban consumers; 1982-84=100]Year ormonthAll items(CPI-U)Food andUcvcFdgcSTotal l Food 2TotalShelter2HousingFuel andotherutilities 2ApparelandupkeepUmiooHouseholdfurnishingsandoperationTransportation2Medicalcare 2OthergoodsandservicesEntertainmentEnergy319501951 ,19521953195419551956195719581959196019611962196319641965196619671968196919701971197219731974197519761977197819791980198119821983..19841985.198619871988198919901991199219931992:JanFebMarAprMayJune....JulyAugSept....OctNovDec1993:JanFebMarAprMayJune....JulyAugSept....OctNovDec24.126.026 526.726.926.827.228.128.929.129.629.930.230.631.031.532.433 434.836.738.840.541.844.449.353.856.960.665.272.682 490.996 599.6103.9107.6109.6113.6118.3124.0130.7136.2140 3144.5138.1138.6139.3139.5139.7140.2140.5140.9141.3141.8142.0141.9142.6143.1143.6144.0144.2144.4144.4144.8145.1145.7145.8145.835036.238.140.141.443.148.855.560.262.165.872.279.986 793.597.399.5103.2105.6109.1113.5118.2124.9132.1136.8138 7141.6137.9138.1138.8138.8138.3138.3138.1138.8139.3139.2139.1139.5140.5140.7140.9141.4141.8141.1141.1141.5141.8142.3142.6143.325 428.228 728.328.227.828.028.930.229.730.030.430.631.131.532.233.834135.337.139.240.442.148.255.159.861.665.572.079.986 893.697 499.4103.2105.6109.0113.5118.2125.1132.4136.3137 91409137.2137.5138.1138.1137.4137.4137.2138.0138.5138.3138.3138.7139.8139.9140.1140.6141.1140.4140.3140.8141.1141.6141.9142.730832.034.036.438.039.441.245.850.753.857.462.470.181190.496.999.5103.6107.7110.9114.2118.5123.0128.5133.6137 5141.2135.7136.1136.6136.5136.7137.7138.3138.6138.4138.5138.5138.5139.3139.7140.2140.4140.5141.5141.9142.3142.3142.2142.0142.322.022.511123.124.024 524.725 225.425.826.126.527.027.828 830.132.635.537.038.740.544.448.851.554.960.568.981090.596.999.1104.0109.8115.8121.3127.1132.8140.0146.31512155.7149.2149.8150.4150.2150.2151.1151.8152.3151.9152.5152.4152.5153.7154.4154.8155.0154.9155.7156.3156.8156.6156.8156.7157.122 522.623.023.624.324 825.426 026.326.326.626.626.626.727 127.428.029.131.132.534.340.745.449.454.758.564.875 486.494.9100.2104.8106.5104.1103.0104.4107.8111.6115.3117 8121.3116.2115.9115.8115.8116.8119.0119.4119.4119.8118.5118.3118.7119.2118.4119.5119.6120.5122.9123.2123.3123.9122.4121.2121.742 043.645.246.848.649.751156.863.467.370.474.779.986 393.098 0100.2101.9103.8105.2107.1109.4111.2113.3116.0118 0119.3116.7117.3117.7118.0117.9118.2118.4118.3118.3118.4118.5118.2118.2118.6118.7119.2119.1119.1118.8119.2119.6120.0120.3120.340 343 943 543143.142.943.744.544.645.045 746.146.346.947.347.849.051053.756.859.261.162.364.669.472.575.278.681.484.990 995.397.8100.2102.1105.0105.9110.6115.4118.6124.1128.71319133.7127.9130.2133.4133.3133.1131.0129.2130.2133.3135.0134.5131.4129.7133.4136.2136.9135.0131.9129.4131.9134.6136.1136.2132.622 724125 726 526.125.826.227.728.629.829 830.130.830.931431.932.333 334.335.737.539.539.941.245.850.155.159.061.770.583193.297.099.3103.7106.4102.3105.4108.7114.1120.5123.8126 5130.4124.5124.1124.4125.2126.3126.9127.2126.9126.8128.0129.2129.0129.1129.2129.0129.4130.2120.3130.3130.2130.1131.8132.6132.115 115916 717317 818 218.919.720 621.522 322 923.524.124 625.226.328 229.931.934.036.137.338 842.447.552.057.061.867.574 982.992 5100.6106.8113.5122.0130.1138.6149.3162.8177.0190 1201.4184.3186.2187.3188.1188.7189.4190.7191.5192.3193.3194.3194.7196.4198.0198.6199.4200.5201.1202.2202.9203.3204.4204.9205.240 743.045.247.550.051.552.956.962.065.168.371.976.783 690.196.0100.1103.8107.9111.6115.3120.3126.5132.4138.4142 3145.8140.1140.7141.2142.0142.0142.0142.4142.6143.2143.5143.7143.8144.3144.5144.8145.3145.0145.5145.3145.8146.6147.3147.7147.835 136.938.740.942.944.746.449.853.957.060.464.368.975 282.691.1101.1107.9114.5121.4128.5137.0147.7159.0171.6183 3192.9178.6179.4179.8180.3181.3181.5182.3183.9187.0187.9188.0189.1191.0191.5192.0192.4193.2193.1193.7193.4193.1193.4193.8194.221.521.521.922.422.522.622.622.522.923.323 824.224.825.526.527.229.438.142.145.149.452.565.786.097.799 299.9100.9101.688.288.689.394.3102.1102.5103.0104.2100.199.098.999.5102.4105.9106.0105.4105.9104.5104.5103.9103.4102.2102.5103.1104.4106.5105.8105.2105.2105.4103.7102.41 Includes alcoholic beverages, not shown separately.2 See table B-60 for components.3 Household fuels—gas (piped), electricity, fuel oil, etc.—and motor fuel. Motor oil, coolant, etc. also included through 1982. Seetable B-60 for the components.Note.—Data beginning 1983 incorporate a rental equivalence measure for homeowners' costs.Source: Department of Labor, Bureau of Labor Statistics.335

TABLE B-60.—Consumer price indexes for selected expenditure classes, 1950-93[For all urban consumers; 1982-84 = 100, except as noted]Food and beveragesShelterFuel and other utilitiesFoodRenters costsFuelsYear or monthTotal »TotalAthomeAwayfromhomeTotalTotal 2Rent,residentialHomeowners'costs 2MaintenanceandrepairsTotalTotalFuel oilandotherhouseholdfuelcommoditiesGas(piped)andelectricity(energyservices)Otherutilitiesandpublicservices1950195119521953195419551956195719581959196019611962196319641965196619671968196919701971197219731974197519761977197819791980198119821983198419851986198719881989199019911992.19931992: JanFeb ..MarAprMayJuneJulyAugSeptOctNovDec1993: JanFebMarAprMayJuneJulyAugSeptOct.NovDec35.036.238.140141.443148.855 560.262 165 872.279.986.793.597.399.5103.2105.61091113.5118.2124.9132.1136.8138 7141.6137.91381138.8138.8138.3138.3138.1138.8139.3139 2139.1139.5140.5140.7140.91414141.8141.1141.1141.5141.8142.3142.6143.325 428.228 728 328.227 828 028 930.229.730.030 430.631131.532 233.834.135.337.139 240.442.148.255.159.861.665 572.079.986.893.697.499.4103.2105.6109 0113.5118.2125.1132.4136.3137.9140.9137.2137.5138.1138.1137.4137.4137.2138.0138.5138 3138.3138.7139.8139.9140.1140 6141.1140.4140.3140.8141.1141.6141.9142.727 330.330 830 330129 529 630 632.031.231.531832.032 432.733 535 235.136.338.039 940.942.749.757.161.863.166 873.881.888.494.898.199.1102.8104.3107.3111.9116.6124.2132.3135.8136.8140.1136.4136 6137.5137.4136.2136.1135.7136.9137.4137 2137.0137.5139.1139.1139.4140 0140.7139.3139.1139.7140.0140.8141.2142.321 521922122.623 424.124.825.426 026.727 327.828 429 731.332.934.937 539.441044.249.854.558.262 668.375.983.490.995.8100.0104.2108.3112 5117.0121.8127.4133.4137.9140.7143.2139.7139.9140.1140.2140.4140.7140.8141.0141.21413141.5141.6142.0142.2142.4142 7142.9143.2143.4143.6143.8144.0144.2144.322 022 522 723 124 024 524.725.225 425.826 126.527 027 828.830.132.635 537.038.740.544 448.851554 960.568.981.090.596 999.1104.0109.8115 8121.3127.1132.8140.0146.3151.2155.7149.2149 8150.4150.2150.2151.1151.8152.3151.9152 5152.4152.5153.7154.4154.8155 0154.9155.7156.3156.8156.6156.8156.7157.1"'iifto108.6115.41219128.1133.6138.9146.7155.6160.9165.0158.8160.2161.2160.1159.5161.0162.8163.5161.71617160.6160.2162.5164.4165.2164 9164.2165.2166.8167.3165.3165.4164.4164.429 730.932 233 935.135 636.337 037 638.238.739 239.740 140.540 941542.243.344.746 548.750.452.555 258.061 164 869.374.380.987.994.6100.1105.3111.81183123.1127.8132.8138.4143.3146.9150.3145.4145.6146.4146.2146.3146.6147.0147.0147.2148 0148.6148.6148.9149.1149.1149 7149.9150.3150.4150.8151.0151.4151.6151.9""102:5107.3113.11194124.8131.1137.3144.6150.2155.3160.2153.2153 5154.1154.2154.4155.0155.5155.8156.0156 8157.2157.5158.2158.5158.7159 2159.4160.1160.3160.8161.4161.6162.0162.520 520.921422.323 223 624.024.424 825.025 325.826 327.528.930.633.235 838.640.643.649.554.157.662 067.274.082.490.796.499.9103.7106.5107.9111.8114.7118.0122.2126.3128.6130.6128.0128.3128.4128.0128.1128.5128.8128.1128.5129.4129.5129.3129.7130.5131.51318131.6131.2131.3131.6131.3130.8127.9127.622 522.623 023 624 324.825.426.026 326.326 626.626 626 727.127.428.029 131.132 534.340 745.449.454 758.564.875.486.494 9100.2104.8106.5104 1103.0104.4107.8111.6115.3117.8121.3116.2115 9115.8115.8116.8119.0119.4119.4119.8118 5118.3118.7119.2118.4119.5119 6120.5122.9123.2123.3123.9122.4121.2121.7"'21.4'21.722.123124.725 727.534.439.443.349 053.061.374.887.295.6100.5104 0104.599.297.398.0100.9104.5106.7108.1111.2106.6105.9105.2105.1106.5110.2110.4110.3111.1108.7108.2108.9109.2107.5108.6108 8110.3114.1114.2114.1114.8112.1110.1110.711 311.812 112 612.612 713.314 013.713.913.814 114.214 414.414 615.015.516.016.317 018.218.321.133.236.438.843 946.262.486.1104.6103.497.299.495.977.677.978.181.799.394.690.790.392.091.590.589.989.890.190.089.789.791.492.191.892.392.592.892 691.390.489.187.887.989.189.488.319 219.319 519.920.220.720.921.121.922.423.323 523.523 523.523 523.623.723.924.325 427.128.529.934.540.144.750 555.061.071.481.993.2101.5105.4107.1105 7103.8104.6107.5109.3112.6114.8118.5112.8112 0111.5111.3113.0117.4117.6117.5118.5115 4114.8115.6115.9113.8115.1115 3117.3122.0122.2122.2123.1119.7117.3118.1A6£47.148.450 053.456 257.860.763.967.770 873.774.377.084.393.399.5107.2112.1117.9120.1122.9127.1131.7137.9142.5147.0140.5141.2141.7142.2142.4142.2143.1143.3143.0143 4143.7143.6144.3145.3146.3146 2146.3146.5147.1147.8148.1148.4148.6148.81 Includes alcoholic beverages, not shown separately.2 December 1982 = 100.See next page for continuation of table.336

TABLE B-60.—Consumer price indexes for selected expenditure classes,1950-93—Continued[For all urban consumers; 1982-84=100, except as noted]Year or monthTransportationTotalPrivate transportationTotal 3NewcarsUsedcarsMotorfuel 4AutomobilemaintenanceandrepairOtherPublictransportationMedical careTotalMedicalcarecommoditiesMedicalcareservices195019511952195319541955195619571958195919601961196219631964196519661967196819691970197119721973197419751976197719781979198019811982198319841985198619871988198919901991199219931992: JanFebMarAprMayJuneJuly•AugSeptOctNovDec1993:JanFebMarAprMayJuneJulyAugSeptOctNovDec22.724.125.726.526.125.826.227.728.629.829.830.130.830.931.431.932.333.334.335.737.539.539.941.245.850.155.159.061.770.583.193.297.099.3103.7106.4102.3105.4108.7114.1120.5123.8126.5130.4124.5124.1124.4125.2126.3126.9127.2126.9126.8128.0129.2129.0129.1129.2129.0129.4130.2130.3130.3130.2130.1131.8132.6132.124.525.627.327.827.126.727.128.629.530.830.630.831.431.632.032.532.933.834.836.037.539.439.741.046.250.655.659.762.571.784.293.897.199.3103.6106.2101.2104.2107.6112.9118.8121.9124.6127.5122.5122.0122.2122.9124.3125.4125.5125.4125.4126.1127.0126.7126.6126.5126.3126.8127.5127.6127.4127.3127.1129.0129.5128.641.143.146.847.246.544.846.148.550.052.251.551.551.351.050.949.748.849.350.751.553.055.254.754.857.962.966.970.475.881.888.493.797.499.9102.8106.1110.6114.6116.9119.2121.0125.3128.4131.5128.0128.1128.2128.2128.4128.2127.8127.6127.4128.2129.7130.5130.9130.9130.9131.1131.3131.0130.9130.8130.6131.9133.4134.226.722.721.520.723.224.026.825.026.028.428.730.029.829.029.931.233.033.135.236.743.850.354.755.860.262.376.988.898.7112.5113.7108.8113.1118.0120.4117.6118.1123.2133.9117.8116.1115.7117.9120.5123.1124.8126.4127.7129.1129.9129.0127.4126.0126.6128.7131.5134.3136.1137.5138.7139.8140.7139.319.019.520.021.221.822.122.823.823.423.724.424.124.324.224.125.125.626.426.827.627.928.128.431.242.245.147.049.751.870.197.4108.5102.899.497.998.777.180.280.988.5101.299.499.098.094.592.993.495.099.4102.9102.8101.7101.7101.6102.2100.298.698.097.398.499.799.898.197.096.199.798.494.818.920.420.822.022.723.224.225.025.426.026.527.127.527.828.228.729.230.432.134.136.639.341.143.247.653.757.661.967.073.781.589.296.0100.3103.8106.8110.3114.8119.7124.9130.1136.0141.3145.9139.0139.7140.3140.5140.8141.2141.4141.6142.2142.5142.8143.2143.4144.3144.7145.2145.4145.8146.2146.2146.8147.1147.4147.737.939.241.645.248.648.948.450.253.561.867.269.975.284.391.497.798.8103.5109.0115.1120.8127.9135.8142.5149.1153.2156.8152.4152.2152.2152.4152.5152.6153.0153.1152.7154.4155.3155.5156.5156.8156.3156.1156.1155.8156.0156.4156.1157.8159.1159.013.414.815.816.818.018.519.219.920.921.522.223.224.024.324.725.226.127.428.730.935.237.839.339.740.643.547.850.051.554.969.085.694.999.5105.7110.5117.0121.1123.3129.5142.6148.9151.4167.0151.5150.7153.5154.7151.6145.3148.3146.7145.6152.9157.4158.2161.6164.1163.5162.8165.5164.5167.7168.1168.4168.2173.0176.515.115.916.717.317.818.218.919.720.621.522.322.923.524.124.625.226.328.229.931.934.036.137.338.842.447.552.057.061.867.574.982.992.5100.6106.8113.5122.0130.1138.6149.3162.8177.0190.1201.4184.3186.2187.3188.1188.7189.4190.7191.5192.3193.3194.3194.7196.4198.0198.6199.4200.5201.1202.2202.9203.2204.4204.9205.239.740.841.241.542.042.543.444.646.146.846.946.345.645.245.145.045.144.945.045.446.547.347.447.549.253.356.560.264.469.075.483.792.3100.2107.5115.2122.8131.0139.9150.8163.4176.8188.1195.0183.0185.1186.7187.9187.6188.0188.6188.9189.5189.8190.4191.1191.8193.2193.9193.7194.2194.7195.7196.1196.2196.6196.6197.012.813.414.314.815.315.716.317.017.918.719.520.220.921.522.022.723.926.027.930.232.334.735.937.541.446.651.356.461.267.274.882.892.6100.7106.7113.2121.9130.0138.3148.9162.7177.1190.5202.9184.6186.4187.4188.1188.9189.7191.1192.2192.9194.2195.2195.6197.5199.1199.7200.7202.0202.6203.8204.5205.0206.2206.8207.13 Includes other new vehicles, not shown separately. Includes direct pricing of new trucks and motorcycles beginning September1982.4 Includes direct pricing of diesel fuel and gasohol beginning September 1981.5 Not available.Note.—See Note, Table B-59.Source: Department of Labor, Bureau of Labor Statistics.337

TABLE B-61.—Consumer price indexes for commodities, services, and special groups, 1950-93[For all urban consumers; 1982-84 = 100, except as noted]CommoditiesServicesSpecial indexesYear or monthAll items(CPI-U)FoodAllcommoditiesCommoditieslessfoodAllservicesMedicalcareservicesServiceslessmedicalcareservicesAllitemslessfoodAllitemslessenergyAllitemslessfoodandenergyAllitemslessmedicalcareCPI-U-X1(all items)(Dec. 1982= 97.6) J195019511952195319541955195619571958195919601961196219631964196519661967196819691970197119721973197419751976197719781979198019811982198319841985198619871988198919901991199219931992: JanFebMarffljZZZZ.JuneJulyAugSeptOctNovDec1993:JanFebMarMay'.'.".'.'.'.!"'.!JuneJulyAugSeptOctNovDec24.126.026.526.726.926.827.228.128.929.129.629.930.230.631.031.532.433.434.836.738.840.541.844.449.353.856.960.665.272.682.490.996.599.6103.9107.6109.6113.6118.3124.0130.7136.2140.3144.5138.1138.6139.3139.5139.7140.2140.5140.9141.3141.8142.0141.9142.6143.1143.6144.0144.2144.4144.4144.8145.1145.7145.8145.829.031.632.031.931.631.331.632.633.333.333.633.834.134.434.835.236.136.838.139.941.743.244.547.853.558.260.764.268.876.686.093.297.099.8103.2105.4104.4107.7111.5116.7122.8126.6129.1131.5127.2127.6128.4128.8129.1129.2129.0129.3129.9130.3130.5130.1130.4130.9131.4131.9132.0131.4130.9131.1131.3132.3132.5132.025.428.228.728.328.2127.828.0!28.930.229.730.030.430.631.131.532.233.834.135.337.139.240.442.148.255.159.861.665.572.079.986.893.697.499.4103.2105.6109.0113.5118.2125.1132.4136.3137.9140.9137.2137.5138.1138.1137.4137.4137.2138.0138.5138.3138.3138.7139.8139.9140.1140.6141.1140.4140.3140.8141.1141.6141.9142.731.433.834.134.233.833.633.934.935.335.836.036.136.336.636.937.237.738.640.041.743.445.146.147.752.857.660.563.867.575.385.793.196.9100.0103.1105.2101.7104.3107.7112.0117.4121.3124.2126.3121.6122.1123.0123.5124.4124.5124.3124.3125.1125.7126.1125.3125.1125.8126.4127.0126.9126.3125.5125.7125.9127.1127.3126.116.917.818.619.420.020.420.921.822.623.324.124.525.025.526.026.627.628.830.332.435.037.038.440.143.848.052.056.060.867.577.988.196.099.4104.6109.9115.4120.2125.7131.9139.2146.3152.0157.9149.6150.1150.7150.8150.9151.7152.5153.0153.2153.7154.0154.2155.2155.8156.2156.5156.9157.8158.4159.0159.3159.5159.6160.012.813.414.314.815.315.716.317.017.918.719.520.220.921.522.022.723.926.027.930.232.334.735.937.541.446.651.356.461.267.274.882.892.6100.7106.7113.2121.9130.0138.3148.9162.7177.1190.5202.9184.6186.4187.4188.1188.9189.7191.1192.2192.9194.2195.2195.6197.5199.1199.7200.7202.0202.6203.8204.5205.0206.2206.8207.122.823.624.225.025.425.926.326.827.428.329.330.832.935.637.538.940.644.348.352.255.960.767.578.288.796.499.2104.4109.6114.6119.1124.3130.1136.8143.3148.4153.6146.3146.6147.1147.2147.3148.1148.8149.2149.4149.9150.1150.3151.2151.7152.1152.3152.6153.6154.1154.7155.0155.1155.2155.623.825.325.926.426.626.627.128.028.629.229.730.030.330.731.131.632.333.434.936.839.040.842.043.748.052.556.059.663.971.281.590.496.399.7104.0108.0109.8113.6118.3123.7130.3136.1140.8145.1138.3138.8139.5139.7140.1140.7141.1141.4141.8142.4142.7142.5143.1143.7144.2144.6144.8145.1145.2145.6145.9146.4146.6146.428.929.729.930.430.731.131.532.032.533.534.435.938.040.342.043.446.150.655.158.261.966.773.481.990.196.199.6104.3108.4112.6117.2122.3128.1134.7140.9145.4150.0143.3144.0144.7144.9144.9145.0145.3145.8146.2146.9147.1147.1147.9148.7149.1149.5149.6149.6149.7150.3150.6151.2151.5151.728.929.630.230.631.031.431.832.332.733.534.736.338.440.842.744.045.649.453.957.461.065.571.980.889.295.899.6104.6109.1113.5118.2123.4129.0135.5142.1147.3152.2144.9145.6146.4146.6146.7146.9147.3147.7148.1149.0149.3149.2149.9150.8151.4151.7151.7151.8152.0152.6152.9153.5153.9153.928.729.529.830.230.530.831.131.532.033.033.735.137.039.240.842.144.849.854.357.260.865.472.982.891.496.899.6103.7107.2108.8112.6117.0122.4128.8133.8137.5141.2135.5135.9136.5136.7136.9137.4137.6138.0138.4138.8139.0138.9139.5140.0140.4140.8141.0141.1141.1141.6141.8142.3142.5142.526.228.328.829.029.229.129.630.531.431.632.232.532.833.333.734.235.236.337.739.441.343.144.447.251.956.259.463.267.574.082.390.195.699.6103.9107.6109.6113.6118.3124.0130.7136.2140.3144.51 CPI-U-X1 is a rental equivalence approach to homeowners' costs for the consumer price index for years prior to 1983, the firstyear for which the official index (CPI-U) incorporates such a measure. CPI-U-X1 is rebased to the December 1982 value of the CPI-U(1982-84 = 100); thus it is identical with CPI-U data for December 1982 and all subsequent periods. Data prior to 1967 estimated bymoving the series at the same rate as the CPI-U for each year.Note.—See Note, Table B-59.Source: Department of Labor, Bureau of Labor Statistics.338

TABLE B-62.—Changes in special consumer price indexes, 1958-93[For all urban consumers; percent change]Year or month1958. .195919601961196219631964196519661967.19681969197019711972197319741975197619771978197919801981198219831984198519861987198819891990199119921993Dec.toDec 1 181.714.7131.61.0193.5304.76.25.6333.48.712.36.9496.79013.312 58.93.83.83.93.81.14.4444.66.13.1292.7All items(CPI-U)Yeartoyear28.71 71.01 0131.3162.9314.25.55.7443.26.211.09.1586.57611.313 510.36.23.24.33.61.93.6414.85.44.2303.0All items lessfoodDec.toDec 1 1 82.1101.310161.01635335.05.66.6302.95.612.27.3616.48314.013 09.84.14.13.94.1.54.6424.56.33.3322.7Yeartoyear2 12.1171.010131.3162.2344.55.46.0462.94.09.89.4676.47211.414 510.96.53.54.33.81.73.5414.65.34.53 53.1All items lessenergyDec.toDec 1 2 11.31.313191.31 934324.96.55.4343.58.211.766486.79 111.11178.54.24.54.44.03.84.1474.65.23.9303.1Yeartoyear28.7171.013131.61631274.45.86.1423.36.29.88.9566.47810.011 610.06.73.64.73.93.94.1444.75.24.6323.2All items less foodand energyDec.toDec 1 1 72.0101.31 3161.21 533385.16.26.63 13.04.711.167616.58511.312 29.54.54.84.74.33.84.2474.45.24.4333.2Yeartoyear242.0131.31 3131.61224364.65.86.3473.03.68.39.1656.3749.812 410.47.44.05.04.34.04.1444.55.04.9373.3All items lessmedical careDec.toDec. 1 171.413.313161.0193.4274.76.15.2323.49.112.26.7456.79113.412 58.83.63.63.93.5.74.3424.55.92.7272.6Yeartoyear2.81.0131.01.01.01.31.63.12.14.25.45.9413.26.411.29.05.36.37.611.513.610.45.92.94.13.41.53.53.94.65.23.92.82.7Percent change from preceding periodUnadjustedSeasonallyadjustedUnadjustedSeasonallyadjustedUnadjustedSeasonallyadjustedUnadjustedSeasonallyadjustedUnadjustedSeasonallyadjusted1992-JanFebMarAorMayJuneJulyAugSeptOctNovDec1993:JanFebMarAprMayJJuneJulyAugSeptOctNovDec0.1.4.51.1.4.23.3.4.1_.l.5.4.3.31.10.3.2.4.100.3.2.4.3.1.2.32.1.4.2.1.5.3.1.4.10.1.30.4.2.201.4.51.3.4.32.3.4.2-.1.4.4.3.3.1.2.1.3.2.3.1-.10.3.2.4.3.3.3.31.1.5.3.1.4.4.2.3.1.1.1.30.4.1.104.5.5.10.1.23.3.5.10.5.5.3.3.10.1.4.2.4.2.10.3.3.3.2.1.2.23.1.4.2.2.5.4.1.4.2.1.1.30.3.3.303.5.5.1.1.1.3.3.3.6.2-.1.5.6.4.20.1.1.4.2.4.300.4.3.3.3.3.1.3.2.1.5.3.2.5.5 .1.4.2.1.1.3.1.3.3.30.1.3.4.1.1.4.1.3.3.3.1-.1.4.4.3.3.1.10.4.1.4.100.2.2.4.2.1.2.2.2.1.4.2.1.4.4.1.4.1-.1.1.20.4.2.11 Changes from December to December are based on unadjusted indexes.Note.—See Note, Table B-59.Source: Department of Labor, Bureau of Labor Statistics.339

TABLE B-63.—Changes in consumer price indexes for commodities and services, 1929-93[For all urban consumers; percent change]YearAll items(CPI-U)Dec.toDec 1YeartoyearCommoditiesTotalDec.toDec. 1YeartoyearFoodDec.toDec 1YeartoyearServicesTotalDectoDec 1YeartoyearMedical careDec.toDec 1YeartoyearMedicalcare 2Dec.toDec 1YeartoyearEnergy3Dec.toDec 1Yeartoyear1929 ...1933....1939....1940....1941....1942...1943....1944....0.6-5.12.56.91.2-2.8194519461947194819491950...1951...1952...1953...1954...195519561957195819591960196119621963196419651966196719681969197019711972197319741975197619771978197919801981198219831984198519861987198819891990199119921993.79.99.03.02.32.218.18.83.0-2.15.96.0.8.7-.7.43.02.91.81.71.4.71.31.61.01.93.53.04.76.25.63.33.48.712.36.94.96.79.013.312.58.93.83.83.93.81.14.44.44.66.13.12.92.7-1.4.75.010.96.11.72.38.314.48.1-1.21.37.91.9.8.7— 41.53.32.8.71.71.01.01.31.31.62.93.14.25.55.74.43.26.211.09.15.86.57.611.313.510.36.23.24.33.61.93.64.14.85.44.23.03.0-0.71.413.312.94.22.02.924.810.31.7-4.17.85.9_ 9-.32.62.81.2.61.20.91.5.91.42.52.54.05.43.92.83.410.412.86.23.36.18.813.011.06.03.62.92.72.5-2.04.63.84.16.61.22.01.5-2.0.76.714.59.31.03.010.620.57.2-2.7.79.01.3-.3-.9-.91.03.22.10.9.6.9.91.21.12.61.93.54.74.53.63.07.411.98.84.35.87.211.312.38.44.12.93.42.1_ g3^23.54.75.23.12.01.9-2.52.515.717.93.003.531.311.3-.8-3.99.87.1-1.0-1.1-1.8-.72.92.82.4-1.03.1-.71.32.01.33.54.01.24.47.02.34.34.620.312.06.6.58.111.810.210.24.33.12.73.82.63.83.55.25.65.31.91.52.9-2.51.79.217.611.0-1.22.414.521.78.3-4.21.611.01.8-1.4-.4-1.4.73.24.5-1.71.01.3.71.61.32.25.0.93.55.15.73.14.214.514.38.53.06.39.911.08.67.84.12.13.82.33.24.14.15.85.82.91.22.22.42.32.32.2.73.65.65.93.73.65.24.44.22.02.03.44.22.73.92.52.11.62.41.62.74.84.35.87.78.14.13.46.211.48.27.28.09.313.614.213.04.34.85.45.14.54.34.85.15.74.63.63.83.12.32.21.51.44.36.15.13.05.34.54.33.12.02.54.33.73.13.41.72.02.02.02.33.84.35.26.98.05.73.84.49.29.68.37.78.611.015.413.19.03.55.25.15.04.24.64.95.55.13.93.91.201.23.55.63.23.19.06.46.91.64.05.35.83.42.63.23.84.84.64.93.73.52.92.82.33.68.38.07.17.38.15.43.76.013.210.310.89.09.310.510.112.611.26.25.86.87.95.66.98.69.98.07.05.91.2003.54.54.33.15.18.77.13.32.44.76.73.53.42.63.84.35.34.54.33.63.52.92.33.25.38.87.38.27.07.43.54.510.412.610.19.98.59.811.310.711.88.76.06.17.76.66.47.79.38.97.66.51.001.03.84.62.62.68.36.95.81.43.45.84.33.52.33.33.24.74.53.83.23.12.22.52.12.86.76.36.26.27.44.63.35.312.69.810.08.98.810.19.912.511.06.46.16.87.75.86.98.59.67.96.65.41.002.94.73.62.65.08.06.72.82.05.35.03.62.92.23.84.24.64.43.72.72.62.62.12.44.47.26.06.76.66.23.34.09.312.09.59.68.49.211.010.711.68.86.26.37.56.66.57.79.08.77.45.9-0.94.71.3-1.32.2-.901.81.71.71.72.94.83.12.617.021.611.47.17.27.937.518.011.91.3.21.8-19.78.218.1-7.42.0-1.401.92.3.4.40-.41.81.72.11.72.52.83.92.68.129.610.57.19.56.325.130.913.61.5.71.0.7-13.25.68.3.4.51.21 Changes from December to December are based on unadjusted indexes.2 Commodities and services.3 Household fuels—gas (piped), electricity, fuel oil, etc.—and motor fuel. Motor oil, coolant, etc. also included through 1982.Note.—See Note, Table B-59.Source: Department of Labor, Bureau of Labor Statistics.340

TABLE B-64.—Producer price indexes by stage of processing, 1947-93[1982 = 100]Finished goodsYear or monthTotalfinishedgoodsTotalConsumer foodsCrudeTotalFinished goods excluding consumer foodsTotalConsumer goodsDurableProcessedNondurableCapitalequipmentTntalfinishedconsumergoods194726.4 31.9 39.3 31.127.4 32.9 24.2 19.8 28.6194828 5 34 9 42 4 34 029 2 35 2 25 7 21.6 30.8194927.7 32.1 40.1 31.128.6 36.1 24.7 22.7 29.4195028.2 32.7 36.5 32.429.0 36.5 25.1 23.2 29.9195130.8 36.7 41.9 36.231.1 38.9 27.0 25.5 32.7195230.6 36.4 44.6 35.430.7 39.2 26.3 25.9 32.3195330.3 34.5 41.6 33.631.0 39.5 26.6 26.3 31.7195430 4 34 2 37 5 34 0311 39 8 26 7 26 7 31.7195530.5 33.4 39.1 32.731.3 40.2 26.8 27.4 31.51956313 33 3 391 32 7321 416 27.3 29 5 32.0195732.5 34.4 38.5 34.132.9 42.8 27.9 31.3 32.9195833 2 36 5 410 36132 9 43 4 27.8 32 1 33.6195933.1 34.8 37.3 34.733.3 43.9 28.2 32.7 33.3196033.4 35.5 39.8 35.233.5 43.8 28.4 32.8 33.6196133.4 35.4 38.0 35.333.4 43.6 28.4 32.9 33.6196233.5 35.7 38.4 35.633.4 43.4 28.4 33.0 33.71963 .. ..33.4 35.3 37.8 35.233.4 43.1 28.5 33.1 33.5196433 5 35 4 38 9 35 233 3 43 3 28 4 33 4 33.6196534.1 36.8 39.0 36.833.6 43.2 28.8 33.8 34.2196635 2 39 2 415 39 234 1 43 4 29.3 34 6 35.4196735.6 38.5 39.6 38.8 35.0 34.7 44.1 30.0 35.8 35.6196836.6 40.0 42.5 40.0 35.9 35.5 45.1 30.6 37.0 36.5196938.0 42.4 45.9 42.3 36.9 36.3 45.9 31.5 38.3 37.9197039.3 43.8 46.0 43.9 38.2 37.4 47.2 32.5 40.1 39.1197140.5 44.5 45.8 44.7 39.6 38.7 48.9 33.5 41.7 40.2197241.8 46.9 48.0 47.2 40.4 39.4 50.0 34.1 42.8 41.5197345.6 56.5 63.6 55.8 42.0 41.2 50.9 36.1 44.2 46.0197452 6 64 4 716 63 9 48 8 48 2 55 5 44.0 50 5 53.1197558.2 69.8 71.7 70.3 54.7 53.2 61.0 48.9 58.2 58.2197660.8 69.6 76.7 69.0 58.1 56.5 63.7 52.4 62.1 60.4197764.7 73.3 79.5 12.1 62.2 60.6 67.4 56.8 66.1 64.3197869 8 79 9 85 8 79 4 66 7 64 9 73 6 60.0 71.3 69.4197977.6 87.3 92.3 86.8 74.6 73.5 80.8 69.3 77.5 77.5198088 0 92 4 93 9 92 3 86 7 87 1 910 85.1 85.8 88.6198196.1 97.8 104.4 97.2 95.6 96.1 96.4 95.8 94.6 96.61982 . ..100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.01983101.6 101.0 102.4 100.9 101.8 101.2 102.8 100.5 102.8 101.31984103.7 105.4 111.4 104.9 103.2 102.2 104.5 101.1 105.2 103.31985104.7 104.6 102.9 104.8 104.6 103.3 106.5 101.7 107.5 103.81986103.2 107.3 105.6 107.4 101.9 98.5 108.9 93.3 109.7 101.41987105.4 109.5 107.1 109.6 104.0 100.7 111.5 94.9 111.7 103.61988108.0 112.6 109.8 112.7 106.5 103.1 113.8 97.3 114.3 106.21989113.6 118.7 . 119.6 118.6 111.8 108.9 117.6 103.8 118.8 112.11990119.2 124.4 123.0 124.4 117.4 115.3 120.4 111.5 122.9 118.219911217 124 1 119 3 124 4 120 9 118.7 123.9 115.0 126.7 120.51992123 2 123 3 107 6 124 4 1231 120 8 125.7 117.3 129.1 121.71993124.7 125.7 114.3 126.5 124.4 121.7 128.1 117.6 131.4 123.01992-Jan121.8 122.5 109.7 123.4 121.5 118.8 125.8 114.4 128.6 120.0Feb122 1 123 4 118 7 123 7 1216 118.8 125.5 114.6 128.7 120.3Mar122.2 123.3 115.8 123.8 121.8 119.0 125.8 114.8 128.9 120.4Apr122.4 122.8 105.2 124.0 122.3 119.6 125.6 115.7 129.1 120.7May .. .123.2 123.1 98.6 124.8 123.1 120.9 125.6 117.5 129.0 121.7June123 9 123 1 96 3 125 1 124 0 1221 125.2 119.5 128.9 122.6July123.7 122.8 97.3 124.7 123.8 122.0 125.4 119.2 128.8 122.4Aug123.6 123.4 104.5 124.8 123.5 121.5 125.1 118.6 128.9 122.2Sept123 3 123.3 104 6 124 7 123 2 121.4 123.4 119.3 128.1 122.2Oct124.4 123.8 113.0 124.6 124.5 122.3 127.1 118.9 130.2 122.9Nov124.0 123.4 110.4 124.3 124.1 121.7 127.1 118.1 130.2 122.4Dec123.8 124.2 117.4 124.7 123.6 121.1 126.9 117.2 130.2 122.21993-Jan124 2 124 3 114 8 125 0 124 0 1214 127.2 117.6 130.8 122.5Feb124.5 124.5 114.5 125.2 124.4 121.8 127.6 117.9 131.1 122.8Mar124.7 124.8 113.8 125.6 124.6 122.1 127.6 118.4 131.2 123.1Apr .125.5 126.5 126.5 126.5 125.1 122.7 127.9 119.1 131.2 124.0May125.8 126.9 125.2 127.0 125.4 123.3 127.8 119.9 131.2 124.5June125.5 125.4 102.3 127.1 125.5 123.4 127.7 120.1 131.0 124.1July125.3 125.0 100.7 126.8 125.3 123.0 127.9 119.5 131.3 123.8Aug 1124 2 125 4 107 4 126 7 123 8 120.9 127.9 116.6 131.2 122.4Sept123.9 125.6 107.9 126.9 123.3 120.6 126.4 116.8 130.3 122.2Oct124 7 125 5 105 6 126 9 124 3 1212 129.2 116.5 132.4 122.6Nov124.4 126.7 123.0 127.0 123.7 120.3 129.7 114.9 132.5 122.3Dec124.1 127.2 129.7 126.9 123.1 119.4 129.7 113.6 132.7 121.8Ii1 Data have been revised through August 1993 to reflect the availability of late reports and corrections by respondents. All data aresubject to revision 4 months after original publication.See next page for continuation of table.341

TABLE B-64.—Producer price indexes by stage of processing,1947-93—Continued[1982 = 100]Intermediate materials, supplies, and componentsCrude materials for further processingYear or monthTotalFoodsandfeeds 2OtherMaterials andcomponentsFormanufacturingForconstructionProcessedfuelsandlubricantsSuppliesTotalToncontainersFoodstuffsandfeedstuffsTotalOtherFuelOther19471948194919501951195219531954 . .19551956. . .19571958 .. .195919601961196219631964196519661967196819691970197119721973197419751976.1977197819791980198119821983198419851986198719881989 . . .19901991199219931992: JanFebMarMay""'.""-JuneJulyAugSeptOctNovDec1993: JanFebMarfc=JuneJulyAug 1SeptOctNovDec23 325.224.225.328.427 527.727 928.429 630.330.430.830 830.630 630.730 831.232 032.233 034.135 436.838 242.452.558.060.964.969.578.490.398.6100 0100.6103.1102.79911015107.1112.0114.5114.4114.7116.2113.2113.5113.6113.8114.5115.4115.5115.5115.8115.4115.0114.8115.2115.6116.0116.3116.2116.7116.6116.6116.8116.6116.2115.9••"41.8"41542.945 646.749 570.383.681.677.479.684.894.5105.5104 6100.0103.6105.797.396.299 2109.5113.8113.3111.1110.7112.7110.7110.7110.7110.4111.5112.3111.2110.3111.0109.7109.6110.7110.9109.8109.9111.2111.8111.1114.0114.3113.9113.8115.0117.022 224.123.524.627.626.727.027.228.029.330.130.130.530 730.330 230.130 330.731331.732 533.634 836.237 740.650 556.660.064.168.677.489.498.2100.0100.5103.0103.099.31017106.9111.9114.5114.6114.9116.4113.3113.6113.7114.0114.7115.6115.7115.8116.1115.7115.2115.1115.4115.9116.3116.6116.5117.0116.7116.7117.0116.8116.3115.824 926.825.726.930.529 329.729 830.532 032.732 833.333 332.932 732.733133.634 334.535 336.538 038.940 444.156 061.764.067.472.080.991798.7100 0101.2104.1103.3102 2105 3113.2118.1118.7118.1117.9118.9117.2117.4117.5117.6117.9118.2118.3118.3118.4118.1118.0118.0118.4118.7118.8119.1118.9118.8118.9119.0119.0119.0119.1119.222 524.924.926.228 728 529 029130 331832 032 032.932 732.232 132.232 532.833 634.035 737.738 340.843 046.555 060.164169.376.584.291.397 9100 0102.8105.6107 3108.1109 8116.1121.3122.9124.5126.5132.0124.9125.9126.6126.8126.8126.5126.3126.4126.8126.7126.9127.8129.1130.9132.5132.8132.0131.3131.1131.6132.4132.7133.4134.114 416.414.915.215.915 715.815 815.816 317.216 216.216 616.816 716.616 216.516 816.916 516.617 719.520 122.233 639.442 347.749.961.685.0100 6100 095.495.792 872.773 371.276.485.985.384.584.780.280.680.080.783.688.188.288.089.087.285.083.583.283.383.884.385.288.187.186.387.185.782.879.523 424.424.525.229.628 028.028 528.931032.433 233.033 433.233 633.232 933.534 535.035 937.239 040.842 745.253 360.063.165.971.079.489196.7100.0100.4105.9109.01103114 5120.1125.4127.7128.1127.7126.4127.6127.7127.7127.8127.7127.6127.7127.6127.7127.8127.8127.7126.7126.8126.7126.5126.5126.5126.4126.1126.0126.1126.1126.528 529.828.029.032.632.631.031731.232 032.333.133.533 333.734 535.034 735.036 536.837 137.839 740.842 551.756 861.865 869.372.980.289 996.9100 0101.8104.1104.4105 6107 7113.7118.1119.4121.4122.7125.0122.0122.1122.4122.4122.7122.7122.7122.7123.0123.2123.3123.6124.2124.3124.3124.8124.7124.7125.2125.5125.4125.5125.7126.131 734.730.132.737.634.531.931630.430 631.231.931.130 430.230 529.929 631.133131.331833.935 236.039 954.561.461.663 465.573.485.995.3103.0100.0101.3103.595.887.793 796.0103.1108.9101.2100.4102.496.998.697.998.8101.2102.1101.7100.6102.4101.9101.8100.9101.4101.4102.6103.9106.5104.2101.5100.6101.0102.2102.5100.445 148.840.543.450.247.342.342 338.437.639.241.638.838 437.938 637.536 639.242 740.340 944.145 246.151572.676 477.476.877.587.3100.0104.6103.9100.0101.8104.794.893.296 2106.1111.2113.1105.5105.1108.3103.7106.0107.2105.5108.4107.4105.0103.7102.9103.7102.8104.6105.6106.0108.3110.4112.2107.2107.5108.0107.5105.6109.5111.521.121622.523 824.727 034.344 143.748.251.757.569.684.6101.8100.0100.7102.296.981.687 985.593.4101.594.693.594.788.890.188.290.792.894.895.794.898.096.897.294.694.894.695.095.898.898.393.992.192.996.194.189.5758.98.88.89.09.09.38.98.99.510.110.210.410 510.510 410.510 510.610 911.311512.013 815.716.818.624.830.634.542.048.257.369.484.8100.0105.1105.1102.792.284.182.185.384.882.984.087.083.582.679.178.579.878.583.782.888.385.894.190.790.683.481.482.489.494.985.584.488.189.889.585.224 026.724.327.832.027.826.626.127.528.628.227.128.126 927.227 126.727 227.728 326.527.128.429.129.432.342.954.550.054.956.361.975.591.8109.8100.098.8101.094.376.088.585.995.8107.397.594.294.187.289.788.893.095.399.197.696.898.698.194.092.092.496.197.998.599.195.393.891.790.994.791.987.42 Intermediate materials for food manufacturing and feeds.Source: Department of Labor, Bureau of Labor Statistics.342

TABLE B-65.—Producer price indexes by stage of processing, special groups, 1974-93[1982=100]FinishedgoodsIntermediate materials, supplies,and componentsCrude materials for furtherprocessingExcluding foods andenergyYear or monthTotalFoodsEnergyTotalCapitalequipmentConsumergoodsexcludingfoodsandenergyTotalFoodsandfeeds 1EnergyOtherTotalFoodstuffsandfeedstuffsEnergyOther1974197519761977197819791980198119821983 .19841985198619871988198919901991199219931992:JanFebMarAprMayJune.........JulyAugSeptOctNovDec1993:JanFebMarMay'!'.!!!!!'.!JuneJulyAug 2SeptOctNovDec52.658.260.864 769.877.688.096.1100.01016103.7104.7103 2105.4108 0113.6119.21217123.2124.7121.8122.1122.2122.4123.2123.9123.7123.6123.3124.4124.0123.8124.2124.5124.7125.5125.8125.5125.3124.2123.9124.7124.4124.164.469.869.673 379.987.392.497.8100.01010105.4104.6107 3109.5112 6118.7124.4124 1123.3125.7122.5123.4123.3122.8123.1123.1122.8123.4123.3123.8123.4124.2124.3124.5124.8126.5126.9125.4125.0125.4125.6125.5126.7127.226.230.734.339 742.357.185 2101.5100 095 291.287.663 061.859 865.775.078177.878.074.374.374.475.477.881.080.480.280.880.078.476.476.676.977.578.379.680.579.679.179.578.976.273.553.659 763.166 971.978.387 194.6100.0103 0105.5108.1110 6113.3117 0122.1126.61311134.2135.8133.4133.5133.7134.0134.2134.1134.2133.8133.2135.2135.2135.4135.9136.2136.3136.7136.6136.3136.4134.6133.8135.4135.6135.950.558 262.166 17L377.585 894.6100.0102 8105.2107.5109 7111.7114 3118.8122.9126 7129.1131.4128.6128.7128.9129.1129.0128.9128.8128.9128.1130.2130.2130.2130.8131.1131.2131.2131.2131.0131.3131.2130.3132.4132.5132.755.560 663.767 312278.887 894.6100 01031105.7108.4111 1114.2118 5124.0128.8133 7137.3138.5136.4136.4136.6137.0137.5137.3137.5136.8136.4138.2138.3138.6139.0139.4139.5140.0140.0139.552.558 060.964 969!578.490 398.6100.0100 6103.1102.799 1101.5107 1112.0114.5114 4114.7116.2113.2113.5113.6113.8114.5115.4115.5115.5115.8115.4115.0114.8115.2115.6116.0116.3116.2116.7139.5 116.6136.7 116.6136.0 • 116.8137.3 116.6137.5 116.2137.8 115.983.681677.479.684!894.5105 5104.6100.0103 6105.797.396 299.2109 5113.8113.3111 1110.7112.7110.7110.7110.7110.4111.5112.3111.2110.3111.0109.7109.6110.7110.9109.8109.9111.2111.8111.1114.0114.3113.9113.8115.0117.033.138 741.546.849! 161.184 9100.5100.095 395.592.672 673.070 976.185.585184.384.680.180.479.980.683.487.888.087.888.787.084.983.483.183.283.784.285.187.987.086.186.985.682.779.454.060 263.867 67?580.790 397.7100 01016104.7105.2104 9107:81152120.2120.9121 4122.0123.8121.1121.4121.6121.8121.9122.0122.1122.2122.4122.3122.3122.4122.9123.5123.9124.1123.8123.7123.6123.8124.0124.0124.1124.461.461.663.465 573.485.995 3103.0100.0101 3103.595.887 793.796 0103.1108.91012100.4102.496.998.697.998.8101.2102.1101.7100.6102.4101.9101.8100.9101.4101.4102.6103.9106.5104.2101.5100.6101.0102.2102.5100.476.477.476.877 587.3100.0104.6103.9100 01018104.794.893 296.2106 1111.2113.1105 5105.1108.3103.7106.0107.2105.5108.4107.4105.0103.7102.9103.7102.8104.6105.6106.0108.3110.4112.2107.2107.5108.0107.5105.6109.5111.527.833.335.340 445.254.973.197.7100.098 798.093.371875.067 775.985.980 478.876.774.475.572.275.077.480.181.079.783.882.983.879.878.677.577.778.081.380.975.073.674.978.675.668.983.369.380.279 887.8106.2113.1111.7100.0105 3111.7104.91031115.7133.0137.9136.3128.2128.4140.1123.0125.2128.1129.1129.7129.2130.0130.8130.4128.2127.1129.7134.3137.4138.2140.7142.2141.7142.6139.8138.9139.6141.4144.81 Intermediate materials for food manufacturing and feeds.2 Data have been revised through August 1993 to reflect the availability of late reports and corrections by respondents. All data aresubject to revision 4 months after original publication.Source: Department of Labor, Bureau of Labor Statistics.343

TABLE B-66.—Producer price indexes for major commodity groups, 1930-93[1982 = 100]Farm products and processedfoods and feedsIndustrial commoditiesYear or monthTotalFarmproductsProcessedfoods andfeedsTotalTextileproductsandapparelHides,skins,leather,andrelatedproductsFuels andrelatedproductsandpower 1Chemicalsand alliedproducts*195019511952195319541955195619571958195919601961196219631964196519661967196819691970197119721973197419751976197719781979198019811982198319841985198619871988198919901991199219931992: Jan....Feb....Mar....Apr....May...June..July....Aug...Sept..Oct...Nov...Dec...1993: Jan...Feb...Mar...May"June.July...Aug 2Sept..Oct...Nov...Dec...37.743.041.338.638.536.636.437.739.437.637.737.738.137.737.539.041.640.241.143.444.945.849.263.971.374.073.675.983.092.398.3101.1100.0102.0105.5100.7101.2103.7110.0115.4118.6116.4115.9118.4115.2116.3116.7115.8117.0116.9115.8115.4115.3115.4115.0116.2116.6116.6117.5119.1119.8117.5118.0118.4118.3117.8119.8121.244.051.248.443.843.240.540.041.142.940.240.139.740.439.639.040.743.741.342.345.045.846.651.672.777.477.078.879.487.799.6102.9105.2100.0102.4105.595.192.995.5104.9110.9112.2105.7103.6107.0102.8105.5106.4103.2105.8104.7102.5102.2101.6102.7101.8103.7104.3104.4106.4109.7111.0104.3105.4106.6106.1104.1109.3112.433.236.936.434.835.433.833.834.836.535.635.636.236.536.836.738.040.239.840.642.744.645.548.058.968.072.670.874.080.688.595.998.9100.0101.8105.4103.5105.4107.9112.7117.8121.9121.9122.1124.0121.3121.7121.8122.0122.5123.0122.4122.1122.1121.8121.6122.4122.7122.7122.9123.7124.2124.0124.3124.3124.3124.6125.0125.525.027.626.927.227.227.829.129.930.030.530.530.430.430.330.530.931.532.032.833.935.236.537.840.349.254.958.462.567.075.788.097.4100.0101.1103.3103.7100.0102.6106.3111.6115.8116.5117.4119.0115.7116.0115.9116.4117.3118.2118.3118.1118.5118.6118.3117.9118.3118.7119.0119.4119.7119.9119.4118.8118.8119.4118.8117.950.256.050.549.348.248.248.248.347.448.148.647.848.248.248.548.848.948.950.751.852.453.355.560.568.067.472.475.378.182.589.797.6100.0100.3102.7102.9103.2105.1109.2112.3115.0116.3117.8118.1117.4117.6117.7117.8117.7117.9117.8117.8118.0118.1118.0118.0118.0117.9117.9118.1118.0118.0118.2118.3118.2118.2118.1117.832.937.730.531.029.529.431.231.231.635.934.634.935.334.334.435.939.438.139.341.542.043.450.054.555.256.563.968.376.196.194.799.3100.0103.2109.0108.9113.0120.4131.4136.3141.7138.9140.4143.6138.6139.0139.8139.9140.7140.8140.1140.8140.9141.0140.6142.0143.6142.5142.9143.6143.8143.7143.5143.9144.1143.7143.9144.312.613.013.013.413.213.213.614.313.713.713.914.014.013.913.513.814.114.414.314.615.316.617.119.430.135.438.343.646.558.982.8100.2100.095.994.891.469.870.266.772.982.381.280.480.076.376.875.877.179.783.283.382.884.482.282.179.779.479.279.780.381.983.281.080.280.981.278.374.430.434.833.033.433.833.733.934.634.934.834.834.533.933.533.633.934.034.234.134.235.035.635.637.650.262.064.065.968.076.089.098.4100.0100.3102.9103.7102.6106.4116.3123.0123.6125.6125.9128.2124.6124.5124.4124.8125.2126.0126.4126.7127.0127.1127.5127.0127.6128.1127.8128.6128.2128.5128.2128.3128.2128.3128.5128.01 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 1993 to reflect the availability of late reports and corrections by respondents. All data aresubject to revision 4 months after original publication.344

TABLE B-66.—Producer price indexes for major commodity groups,1950-93—Continued[1982=100]Year or monthIndustrial commodities—ContinuedRubberandplasticproducts35.643.739 636.937.542.443.042.842.842.642.741139.940.139.639.740 541442.843.644.945.245.346.656.462.266.069.472.480.590.196.4100.0100.8102.3101.9101.9103.0109.3112.6113.6115.1115.1116.0114.7114.3114.3114.6114.9115.0115.2115.3115.5115.7115.8115.7115.7115.7115.6116.0115.8115.9115.9116.0116.5116.5116.4116.5Lumberandwoodproducts31.434.133 233.132.534.134.632.832.534.733.532.032.232.833.533.735 235139.844.039.944.750.762.264.562.172.283.096.9105.5101.5102.8100.0107.9108.0106.6107.2112.8118.9126.7129.7132.1146.6174.0137.6142.9145.7147.5147.6146.3145.3145.4148.7148.7149.5154.4160.2169.3176.9181.2179.8174.1171.7171.1173.0173.1177.0180.9Pulp,paper,andalliedproducts25.730 529 729.629.630.432.433.033.433.734.033.033.433.133.033 334.234.635.036.037.538.139.342.352.559.062.164.667.775.986.394.8100.0103.3110.3113.3116.1121.8130.4137.8141.2142.9145.2147.3144.1144.2144.4144.9145.2145.1145.2145.4145.8146.1145.9145.9147.0147.1147.3147.7147.7147.1147.1147.1147.2147.4147.4147.6Metalsandmetalproducts22.024.524 525.325.527.229.630.230.030.630.630.530.230.331.132.032.833.234.036.038.739.440.944.057.061.565.069.375.386.095.099.6100.0101.8104.8104.4103.2107.1118.7124.1122.9120.2119.2119.2118.2118.9119.4119.6119.5119.6120.0120.2119.6118.8118.2118.5118.9119.2119.0118.7118.4118.9119.5119.5119.5119.4119.5120.2Machineryandequipment22.625 325 325.926.327.229.331.432.132.833.033.033.033.133.333 734 735 937.038.240.041.442.343.750.057.961.365.270.376.786.094.4100.0102.7105.1107.2108.8110.4113.2117.4120.7123.0123.4124.0123.3123.5123.6123.4123.4123.2123.1123.2123.2123.3123.4123.5123.9123.9123.9124.0123.9124.0124.0124.0124.1124.1124.1124.2Furnitureandhouseholddurables40.944 443.544.444.945.146.347.547.948.047.847.547.246.947.146.847.448 349.750.751.953.153.855.761.867.570.373.277.582.890.795.9100.0103.4105.7107.1108.2109.9113.1116.9119.2121.2122.2123.6121.8121.8121.9122.0122.1122.2122.2122.2122.4122.3122.6122.6122.6122.9123.0123.2123.4123.6123.8124.0124.0124.2124.4124.5Nonmetallicmineralproducts23.525.025 026.026.627.328.529.629.930.330 430 530.530.330.430.430.731232.433.635.338.239.440.747.854.458.262.669.677.688.496.7100.0101.6105.4108.6110.0110.0111.2112.6114.7117.2117.3120.0117.2117.1117.3116.9116.9117.0117.1117.4117.4117.4117.7117.8118.4118.6118.9119.6119.7120.0120.2120.5120.7121.3121.4121.3TransportationequipmentTotal40.441.944.245.546.150.356.760.564.669.575.382.994.3100.0102.8105.2107.9110.5112.5114.3117.7121.5126.4130.4133.7129.8129.7130.0130.2130.2130.1130.2130.0128.5132.3132.2132.1132.7133.1133.3133.4133.3133.3133.6133.5131.6135.3135.3135.5Motorvehiclesandequipment30.031.633 433.333.434.336.337.939.039.939 339 239.238.939.139.239.239 840.941.743.345.747.047.451.457.661.265.270.075.883.194.6100.0102.2104.1106.4109.1111.7113.1116.2118.2122.1124.9128.0124.8124.6124.9124.8124.7124.3124.4123.9121.3127.1127.1126.9127.1127.8127.8127.7127.6127.7127.8127.7125.0129.7129.9130.0Miscellaneousproducts28.630.330.231.031.331.331.732.633.333.433.633.733.934.234.434.735.336.237.038.139.840.841.543.348.153.455.659.466.775.593.696.1100.0104.8107.0109.4111.6114.9120.2126.5134.2140.8145.3145.5143.9143.9144.0144.8146.4146.2146.3143.8145.3145.5145.8147.3148.6149.4149.4150.4150.7149.6149.6138.9139.3139.2139.5141.0195019511952195319541955195619571958195919601961196219631964196519661967196819691970197119721973197419751976197719781979198019811982198319841985198619871988198919901991199219931992: Jan...Feb...Mar...Apr...May..June.July...Aug...Sept.Oct...Nov...Dec...1993: Jan...Feb...Mar...Apr...May..June.July...Aug 2Sept,Oct..Nov..Dec.Source-. Department of Labor, Bureau of Labor Statistics.345

TABLE B-67.—Changes in producer price indexes for finished goods, 1955-93[Percent change]Year ormonth19551956.....1957.. .19581959196019611962196319641965196619671968196919701971197219731974197519761977.1978197919801981 .198219831984198519861987198819891990199119921993..TotalfinishedgoodsDec toDec 11.04.2343-.3186336332.01 7314.92.13.33911.718.36.63.86.79312.811.8713.6.61 71.82 32^2404^95.7-.11.6.2Year toyear0.3263822-.3903331 83.211283.83.431329115.410.64.56.47911.213.4924.11.62 11.01 42.125524.92.11.21.2FinishedconsumerfoodsDec. toDec 1-3.037516-3.7531961469 11.33468.1-2.3587922 712.85.6-2.56.911 77.47.5152.02.335.628-.2575.22.6-1.51.62.4Year toyear-2.3_ 3336 1-4.72038113406.51 839603.3165420 514.08.4-.35.3909.35.8582.21.044-.8262.128544.8-.2-.61.9Finished goods excluding consumer foodsTotalDec. toDec 1 253.34.320236621.17.26.26.88314.813.4874.20112.24 03.232486.9.31.6-.4Year toyear26283.537204016.212.16.27.17211.816.210 34.61.8141.42 62.124505.03.01.81.1ConsumergoodsDec. toDec 1 1.6251 53.9330o 391.820202.83.8212 17520.36.86.06.78517.614.1864.2— .982.1664.13 1538.7-.71.6-1.4.71.7 1.91.9 1.8CapitalequipmentDec. to Year toDec 1 year0.6 5.6 2.626 81 7725 46 6 1o 1 2 261.2 .9 1.96 3 33o30 3 36o33 9 99 1 5 121.51 823233.0351 84617.010.46.27.37 113.318.510 34.11.2101.14 62.224565.92.91.83.83 130484.8242 15122.78.1657.2808.811.4923.92.01 82.72 11.336383.42.52.435343.54.740263314.315.26.76.47 98.710.710 35.72.8232.22 01.823393.53.1Year toyearFinishedenergygoodsDecDec 116.311.612.08558.127.914 1-.1-9.242-.238 111.2369530.7-9.6-.3-3.8Yearyear17.211.715.76535.049.219 1-1.5-4.842-3.928 1-1.9329.914.24.1_ 4.2Finished goodsexcluding foodsand energyDec toDec. 117.76.05.76.2849.410.87.74.91.9202.7272.1434.23.53.12.0.4Year toyear11.411.45.76.0758.911.28.65.73.0242.5232.4334.43.73.62.41.2Percent change from preceding monthjustedUnadjustedSeasonallyadjustedUnadjustedSeasonallyadjustedUnadjustedSeasonallyadjustedUnadjustedSeasonallyadjustedUnadjustedSeasonallyadjustedUnadjustedSeaallyUnadjustedSeasonallyadjusted1992: JanFebMarAprMayJuneJulyAugSeptOct.NovDec1993: JanFebMarJuneJulyAug 2 ...SeptOctNovDec-0.1.2.1.2.7.6-.2-.1-.2.9-.3-.2.3.2.2.6.2-.2-.2-.9-.2.6-.2-.20.2.2.2.3.20.1.2.1-.20.3.4.3.60-.60-.6.2-.20-.10.2.7-.1_ 4.20-.2.5_ i.4-.3.6.1.2.21.4.3-1.2-.3.3.2-.11.0.4-0.4.4-.1-.3.2_ i.7.4.1-.61.3-.60.21.40-1.0-.2.5.7-.5.81.1-0.2.1.2.4.7.7-.2-.2-.21.1-.3-.4.3.3.2.4.2.1-.2-1.2_ 4.8_ 5-.50.1.2.3.3.4.3.1-.2.2.1-.1-.3.6.5.3.40-.40-1.0.1-.2-.2-.4-0.30.2.51.11.0-.1-.4-.1.7-.5-.5.2.3.2.5.5.1— 3-1.7-.2.5-.7_ 7-0.1.3.3.4.6.4.1-.3.2.2-.2-.6.6.6.5.40-.6-.1-1.5.1-.1-.4-.70.5.1.2.2-.1-.1-.1.1-.61.600.5.2.100-.2.2-.1-.71.6.1.20.5.1.3.2.1-.1.1.20-.2.2.2.5.3.2.2.1-.2.4.20-.4.2.3-3.00.11.33.24.1-.7-.2.7-1.0-2.0-2.6.3.4.81.01.71.1-1.1-.6.5-.8-3.4-3.5-2.01.3.4.7.82.4— 4-.6.11.0-1.3-2.41.01.71.1.3-.5-.5-.9-1.001.3-2.7-3.50.5.1.1.2.1-.1.1-.3-.41.50.1.4.2.1.3-.1-.2.1-1.3-.61.2.1.20.5.1.3.3.4-.2.10.1-.1.2.1.4.2.2.4.1-.4.2-1.0.1-.5.4.21 Changes from December to December are based on unadjusted indexes.2 Data have been revised through August 1993 to reflect the availability of late reports and corrections by respondents. All data aresubject to revision 4 months after original publication.Source: Department of Labor, Bureau of Labor Statistics.346

MONEY STOCK, CREDIT, AND FINANCETABLE B-68.—Money stock, liquid assets, and debt measures, 1959-93[Averages of daily figures; billions of dollars, seasonally adjusted]YearyearandmonthMlSum ofcurrency,demanddeposits,travelerschecks, andothercheckabledeposits(OCDs)M2Ml plusovernightRPs andEurodollars,MMMFbalances(generalpurpose andbroker/dealer),MMDAs, andsavings andsmall timedepositsM3M2 pluslarge timedeposits,term RPs,termEurodollars,andinstitutiononlyMMMFbalancesLMO n|.,c(VIo piUSother liquidassetsDebt 1Debt ofdomesticnonfinancialsectors(monthlyaverage)Percent change from year or 6months earlier 2Ml M2 M3 DebtDecember:195919601961 ... .19621963196419651966196719681969197019711972 .1973197419751976197719781979198019811982198319841985198619871988198919901991199219931992:JanFebMarAprMayJuneJulyAugSeptOctNovDec1993: JanFebMarAprMayJuneJulyAugSeptOctNovDec140.0140.7145 2147.8153 3160.3167 9172.0183 3197.4203.9214.4228.3249.2262.8274.3287.5306 3331.1358.2382.5408.5436.3474 4521.2552 4620.1724 5750.0787.1794.6827.2899.31,026.61,131.2911.5926.2935.1941.2952.2952.5963 2975.5990.11,006.01,019.11,026.61,033.21,033.01,035.21,043.01,066.91,073.31,085 31,094.41,106 81,116.41,125.91,131.2297.8312.3335 5362.7393 2424.8459 3480.0524 3566.3589.5628.0712.6805.1860.9908 41,023.11163 51,286.41,388.51,496.41,629.21,792.61952 72,186.52 376 02,572.42 81612,917.23,078.23,233.33 345 53,445.83,494.83,551.73^451.03,467.73,467 83,464.83,467.83,464.23 465 43,473.63,481.03,491 53,496.23,494.83,485.73,474.13,471.63,473.83,503.03,509.63,515.73,518.93 53103,533.23,545.03,551.7299.8315.33410371.4406 0442.5482 2505.1557 1606.2615.0677.3776.1886 0984.91,070 31,172.1131161,472.31,646.21,802.61,986.82,233.42 440 62,693.12 988 23,203.63 49173,674.83,915.44,056.14 116 74,168.14,163.44,207.74J72.24,189.04 184 84,177.94,180.14,172.5417124,180.64,184.54,180.64,176.64,163.44,138.14,131.84,127.24,137.74,165.44,164.14,162.24,164.34,177.74,184.84,197.84,207.7388.6403 6430 8466.1503 8540.4584 4614.7666 5728.9763.5816.2902.91,022 91,142.51250 21,366.91516 41,705.01,910.32,115.62,323.52,596.02 850 33,154.43 529 53,830.94 13194,333.54,669.44,886.14 966 64,982.35,040.44,978.34,999.15 010.05,009.05,011.45,017.25 014 751027.85,038.95 041.35,049.05,040.45,015.85,011.85,011.05,027.05,065.25,066.75,064.15,075.55,066.25,076.55,093.4687.2723.6766 5819.4874 5938.1100511,072.31 146 61,238.11,329.31,419.61,552.01,707.51,894.12,067.02,251.42 496 32,813.73,192.23,568.23,896.84,278.74 69165,257.56 00616,901.17 778 68,543.39,306.110,030.710,670.111,145.511,721.111,189.911,235.011,284.911,335.611,381.711,434.811494 111,553.411,597.811,625.711,665.611,721.111,757.811,781.611,821.311,867.411,912.711,976.112,033.412,088.312,141.912,179.212,241.80.5321.8374.6472.4667.73.35.16.5925.5444.8658.18.26.86.86.8879.96012.316 83.54.91.04 18.714.210.211.513.414.414.013.711.811.310.611.813.814.115.614.511.89.17.49.49.110.111.913.814.111.110.84.9748.1848.0814.5928.04.16.513.513.06.95.512.613 710.67.97.88.910.08912.037839.53.65.55.03.53.01.41.62.13.02.92.51.91.1.8.3.81.51.61.81.2.0-.5-1.0.4.81.72.63.43.42.42.45.28.28.9939.0904.710.38.81.510.114.614.211.28.79.511.912.311.89.510.212.49.310.311.07.29.05.26.53.61.51.2-.11.1.61.61.71.1.8.2-.0-.4-.0.1-.2-.4-1.6-2.3-2.7-2.1-.5.01.21.62.42.31.62.17.55.35.96.96.77.37.16.76.98.07.46.89.310.010.99.18.910.912.713.511.89.29.89.712.114.214.912.79.88.97.86.44.55.24.24.24.54.54.85.25.45.75.55.15.05.04.64.03.94.24.24.44.75.25.45.35.51 Consists of outstanding credit market debt of the U.S. Government, State and local governments, and private nonfinancial sectors;data derived from flow of funds accounts.2 Annual changes are from December to December; monthly changes are from 6 months earlier at a simple annual rate.Note.—See Table B-69 for components.Data do not reflect revisions of February 3, 1994.Source: Board of Governors of the Federal Reserve System.347

TABLE B-69.—Components of money stock measures and liquid assets, 1959-93[Averages of daily figures; billions of dollars, seasonally adjusted, except as noted]December:195919601961196219631964196519661967196819691970197119721973197419751976197719781979198019811982198319841985198619871988198919901991199219931992: JanFebMarAprMayJuneJulyAugSeptOctNovDec1993:JanFebMarAprMayJuneJulyAugSeptOctNovDecYearandmonthCurrency28.828.729.330.332.233.936.038.040.043.045.748.652.056.260.867.072.879.587.496.0104.8115.4122.6132.5146.2156.1167.9180.8196.9212.3222.7246.7267.2292.3321.5269.0270.8271.9273.6275.1276.6279.5282.4286.3288.0289.8292.3294.8296.9299.0301.4304.0306.8309.6312.6316.4318.2320.0321.5Travelerschecks0.3.3.4.4.4.5.5.6.6.7.8.91.01.21.41.72.12.62.93.33.63.94.14.14.75.05.66.16.67.06.97.87.88.18.07.77.77.77.77.77.77.77.88.18.38.28.18.08.08.08.18.28.07.97.87.87.98.08.0Demanddeposits110.8111.6115.5117.1120.6125.8131.3133.4142.5153.6157.3164.7175.1191.6200.3205.1211.6221.5236.7250.4257.4261.2231.2234.0238.5244.0266.9302.3287.1287.1279.8278.2290.5340.8386.1296.3303.3308.0310.8314.6312.3317.5322.5329.0336.0339.5340.8341.9341.8341.9347.3359.2360.7365.9370.9376.6380.2385.5386.1Othercheckabledeposits(OCDs)0.0.0.0.0.1.1.1.1.1.1.2.1.2.2.3.4.92.74.28.416.828.078.4103.8131.9147.3179.7235.3259.3280.7285.3294.5333.8385.2415.7338.6344.3347.5349.0354.7355.9358.6362.8366.7373.7381.6385.2388.6386.4386.3386.2395.5397.8401.9403.1406.0410.1412.5415.7Overnightrepurchaseagreements(RPs)net, plusovernightEurodollars»NSA0.0.0.0.0.0.0.0.0.0.02.21.32.32.85.35.75.910.714.920.721.728.836.639.955.660.673.582.384.183.277.674.776.374.784.777.977.974.772.869.874.675.278.776.277.175.874.773.374.074.572.870.073.677.278.381.984.384.884.7Money market mutualfund (MMMF)balancesGeneralpurposeandbroker/dealer 20.0.0.0.0.0.0.0.0.0.0.0.0.0.0.01.72.72.42.46.433.461.6150.6185.6139.1168.0177.2209.0222.6242.9317.4350.5363.9342.3336.4360.3362.3358.0354.5354.9353.5350.4348.9343.9346.3343.7342.3340.0333.2332.7331.7335.5334.3333.2331.5329.4330.0333.5336.4Institutiononly 2 0.0.0.0.0.0.0.0.0.0.0.0.0.0.0.0.2.4.6.93.19.515.238.050.041.963.265.586.192.792.0108.8135.9182.1202.3198.8186.1192.0192.2195.9202.2206.3212.5220.9220.7210.9209.2202.3197.7201.9200.9200.4202.8198.1195.0193.3194.1196.6196.7198.8Savingsdeposits,includingmoneymarketdepositaccounts(MMDAs) 3146.5159.1175.5194.7214.4235.3256.9253.2263.7268.9263.6260.9292.2321.4326.8338.4388.8453.0492.1481.7423.6400.1343.9400.0685.0704.7815.1940.9937.6926.6891.0920.81,042.51,186.01,218.61,060.31,080.71,094.31,107.51,119.61,126.01,134.51,145.71,158.91,170.51,180.41,186.01,184.41,182.41,178.81,181.61,193.71,198.81,200.11,205.11,208.71,209.61,214.51,218.61 Includes continuing contract RPs.2 Data prior to 1983 are not seasonally adjusted.3 Data prior to 1982 are savings deposits only; MMDA data begin December 1982.See next page for continuation of table.348

TABLE B-69.—Components of money stock measures and liquid assets, 1959-93—Continued[Averages of daily figures; billions of dollars, seasonally adjusted, except as noted]YearandmonthSmalldenominationtimedeposits 4Largedenominationtimedeposits 4Termrepurchaseagreements(RPs)NSANSASavingsbondsTermEurodollarsShorttermTreasurysecuritiesBankersacceptancesCommercialpaperDecember:19591960196119621963....19641965.19661967.196819691970197119721973197419751976197719781979198019811982 ..1983198419851986 .198719881989199019911992 ..19931992-JanFebMarAprMayJuneJulyAugSept ....OctNovDec1993- JanFebMarAprMayJuneJulyAugSeptOctNovDec11.412.514.820.125.629.234 555.077 8100.6120 4151.1189.7231.6265 8287.9337 9390.8445 5521.0634.4728 7823.2851.0784.1888.9885.5858.9922.81038 31,152.71,172.31,064.7867.3783.51,043.01,021.51,004.0986.1969.6955 7941.0925.7911.0894 4879.3867.3858.3853 1848.1841.2834.4826.9817.8810.3803.7796.1788.8783.51.22.03.97.010.815.221223.130 937.420 445.257.773.4111 1144.8129 7118.1145 2195.7223.3260.5303.1327.2327.6416.5434.1431.3475.4525 4548.8489.6424.7356.1331.5418.9413.6407.4402.2396.0389.4382.7378.5374.3367 3360.8356.1348.8344 3338.4343.5343.4340.0335.6336.1334.8335.6333.0331.50.0.0.0.0.0.00.00.0271.62.73.5677.88113.918 926.229.133.535.333.449.957.662.480.6106.0121899.089.672.581.195.371.072.674.374.176.476 475.276.077.879 981.881.180.182.386.088.989.892.896.596.596.495.194.595.30.7.81.51.61.92.4182.2222.9272.22.73.65.58.19.814.820.231.844.750.367.581.791.582.976.583.891.0105.779.568.757.645.647.855.756.158.054.952.851.951.151.449.448.147.245.643.546.749.848.748.745.541.944.145.245.450.047.846.145.746.546.948.149.049 650.251.251.851.752.054.357.660.463.367.271.876.480.379.672.367.868.071.174.279.591.8100.6109.4117.6126.1138.0156.8139.0140.2141.3142.4143.5144.6145.8147.4149.3151.9154.7156.8158.9161.1162.7163.9164.8165.7166.8167.8168.8169.8170.938.636.737.039.840.738.540 743.238.746.159.548.836.040.749.352.868.469.878.181.1107.8133.5149.4183.6211.9260.9298.2280.0253.1269.2324.9331.1315.0331.4311.9320.0325.1326.0329.4330.1324.9322.9321.0320.2325.1331.4337.5342.9341.6340.7347.1349.1348.5345.7323.8317.6322.30.6.91.11.11.21.31.61.81.82.33.33.53.83.55.012.610.710.814.122.027.232.140.044.545.045.442.037.044.339.940.235.523.420.422.922.622.221.822.022.021.721.120.720.520.320.420.620.119.219.219.418.717.516.416.316.316.23.65.15.26.87.79.110.214.417.822.534.034.532.735.242.851.248.552.564.180.798.498.8105.3113.7133.2160.8207.6231.4260.7335.5347.3357.1337.7368.4332.3327.3336.7341.0336.4348.1351.2355.7363.4368.0372.4368.4360.7355.9360.3365.5368.4369.1369.1381.3379.6388.0386.24 Small denomination and large denomination deposits are those issued in amounts of less than $100,000 and more than $100,000,respectively.Note.—NSA indicates data are not seasonally adjusted.See also Table 6-68.Data do not reflect revisions of February 3, 1994.Source: Board of Governors of the Federal Reserve System.151-444 0 - 9 4 - 1 2349

TABLE B-70.—Aggregate reserves of depository institutions and monetary base, 1939-93[Averages of daily figures l ; millions of dollars; seasonally adjusted, except as noted]Adjusted for changes in reserve requirements 2Reserves of depository institutionsBorrowings of depositoryinstitutions from the FederalReserve, NSAYear and monthTotalNonborrowedNonborrowedplusextendedcreditRequiredMonetarybaseTotalSeasonalExtendedcreditDecember:195911,10910,16810,16810,60340,8809411960196119621963196411,24711,49911,60411,73012,01111,17211,36611,34411,39711,74711,17211,36611,34411,39711,74710,50310,91511,03311,23911,60540,97741,85342,95745,00347,161741332603322641965....1966....1967....1968....1969....12,31612,22313,18013,76714,16811,87211,69012,95213,02113,04911,87211,69012,95213,02113,04911,89211,88412,80513,34113,88249,62051,56554,57958,35761,5694445322287461,1191970197119721973197414,55815,23016,64517,02117,55014,22515,10415,59515,72316,82314,22515,10415,59515,72316,97014,30915,04916,36116,71717,29265,01369,10875,16781,07387,5353321261,0501,298727413214719751976197719781979198019811982198319841985198619871988198919901991199219931992: JanFebMarAprMayJune17,82218,38818,99019,75320,72022,01522,44323,60025,36726,84531,44838,94338,86240,39840,49241,76745,53354,35160,53646,22747,79548,50948,99249,49649,31617,69218,33518,42018,88519,24820,32521,80722,96624,59323,65930,12938,11638,08538,68340,22741,44145,34154,22860,45445,99447,71748,41848,90249,34149,08717,70418,33518,42018,88519,24820,32821,95623,15224,59526,26330,62838,41938,56839,92740,24741,46445,34254,22860,45445,99547,71948,42048,90449,34149,08717,55618,11518,80019,52120,27921,50122,12423,10024,80625,99030,41137,57337,81639,35139,57040,10244,55553,19659,47445,22446,73047,48147,85548,49548,40393,887101,515110,323120,445131,143142,004149,021160,127175,467187,237203,585223,667239,872256,932267,734293,185317,169350,798386,072319,385322,849324,655326,691328,863330,228130535698681,4731,6906366347743,1861,3188277771,716265326192124822337791901552291413551358211654339611356389313076381831172232479814912314818622,6044993034831,2442023110122200JulyAugSeptOctNovDec1993: JanFebMarAprMayJune49,62950,34151,27452,83653,81554,35154,66554,92255,16655,19756,87757,11949,34550,09150,98752,69353,71154,22854,50054,87655,07455,12456,75656,93849,34550,09150,98752,69353,71154,22854,50154,87755,07455,12456,75656,93848,66449,40750,28051,76352,77253,19653,40553,81853,95354,10155,88156,209333,177336,844341,585344,849347,832350,798353,224355,734358,374360,634364,769368,06928425128714310412416545917312118120322319311440181118264184142000001100000JulyAugSeptOctNovDec57,56758,03358,83759,81960,45960,53657,32357,68058,41059,53460,37060,45457,32357,68058,41059,53460,37060,45456,47857,08057,74758,73059,35959,474370,978374,532379,261381,765384,580386,072244352428285898221023423619275310000001 Data are prorated averages of biweekly (maintenance period) averages of daily figures.2 Aggregate reserves incorporate adjustments for discontinuities associated with regulatory changes to reserve requirements. Fordetails on aggregate reserves series see Federal Reserve Bulletin.Note.—NSA indicates data are not seasonally adjusted.Monetary base data do not reflect revisions released on February 3, 1994.Source: Board of Governors of the Federal Reserve System.350

TABLE B-71.—Commercial bank loans and securities, 1972-93[Monthly average; billions of dollars, seasonally adjusted ']Year and monthTotalloansandsecurities2U.S.Govern-OtherTotal 2RealestateLoans and leasessecuri-tiesCommercialandindustrialIndividualSecurityNonbankfinancialinstitutionsAgriculturalStateandpoliticalsubdivisionsForeignbanksForeignofficialinstitutionsLeasefinancing.OtherreceivablesDecember:1972...1973...1974...1975...1976...1977...1978...1979....1980....1981....1982....1983....1984...1985....1986...1987...1988...1989...1990...1991....1992...1993...1992:JanFebMarAprMayJune....JulyAugSept....OctNovDec1993:JanFebMarJuneJulyAugSeptOctNovDec572.5647.8713.7745.1804.6891.51,013.91,135.61,238.61,307.01,400.41,552.21,722.91,910.42,093.72,241.22,422.92,590.82,732.42,836.92,937.63,087.22,846.02,855.42,862.72,874.32,875.32,882.82,886.92,902.22,917.42,926.02,932.42,937.62,935.32,943.92,960.22,970.92,991.23,014.13,037.43,046.63,057"3,056.63,072.63,087.289.088.286.3116.7136.3136.6137.6144.3170.6179.3201.7259.2259.8270.8310.1335.8362.7397.0452.1559.3657.1727.2564.2570.9579.6590.8600.2610.7619.2632.6640.6647.3651.4657.1656.5666.2680.2691.0693.5704.3708.2714.8720.6718.4720.0727.293.499.4107.5111.2113.5122.7129.2141.9154.4160.5164.8169.1140.9179.0193.9195.8193.7182.4178.8179.9176.0181.9179.6180.3178.5178.5176.9175.8177.9178.2178.2178.8177.3176.0174.5176.4179.0181.0181.2179.6181.5182.4182.6180.7180.9181.9390.1460.2519.9517.2554.8632.3747.1849.4913.5967.31,033.91,123.91,322.21,460.61,589.71,709.61,866.52,011.42,101.42,097.82,104.62,178.22,102.22,104.32.104.52,104.92,098.22,096.22,089.82,091.42,098.62,099.82,103.82,104.62,104.42,101.32,101.02,098.92,116."2,130.32,147.82,149.42,153.92,157.52,171.72,178.2137.1165.0196.6189.3190.9211.0•246.2291.4325.7355.4392.5414.2473.2500.2536.7566.4605.3638.4642.6617.0597.6584.2615.4613.5610.8609.0607.6604.6602.5601.4601.2600.8600.5597.6598.0596.7593.1587.5589.9590.9590.2589.6586.2585.7585.4584.298.1117.3130.1134.4148.8175.2210.5241.9262.6284.1299.9331.0376.3425.8494.1587.2670.1760.1843.4871.8892.4927.2873.2876.7879.1881.8883.3881.8881.5883.1886.8890.7892.5892.4890.8890.1891.9892.2898.0904.0907.7910.8914.6918.1921.8927.286.398.6102.4104.9116.3138.3164.7184.5179.2182.5188.2212.9254.2295.0315.4328.2354.8375.2380.3363.9355.5385.6363.4363.8362.3360.8359.2359.0358.6357.4357.0355.8355.4355.5358.4361.9362.3364.4367.5368.8372.5374.7376.0380.3383.2385.615.612.912.713.517.721.019.718.718.021.425.328.035.043.340.334.540.941.344.754.364.886.058.058.960.763.460.963.360.561.664.064.764.264.863.562.864.262.368.671.481.679.982.779.587.086.021.728.534.528.926.425.826.229.329.329.931.230.431.632.835.332.132.534.435.941.443.643.242.143.043.643.243.342.441.542.044.043.944.743.645.144.644.245.045.946.046.546.846.144.944.243.214.317.218.320.123.225.828.231.131.633.136.239.240.136.131.629.429.030.132.334.235.035.434.134.134.334.334.334.634.935.335.235.135.235.034.534.334.034.134.334.334.734.834.835.035.535.446.156.858.452.545.340.034.029.024.821.628.628.328.027.627.326.826.225.925.825.425.124.824.223.823.623.123.022.822.822.722.422.221.821.63.96.28.39.011.713.721.518.623.818.114.713.411.49.710.17.77.68.27.77.37.77.71.62.12.22.42.82.74.96.911.57.25.99.48.46.36.35.15.03.52.92.42.83.32.32.22.12.02.02.02.22.32.52.42.82.82.93.23.23.23.13.23.23.13.43.3.33.31.42.13.24.05.15.77.49.310.912.713.313.716.119.122.524.729.431.932.931.730.932.831.431.531.431.130.931.030.830.831.030.830.930.930.430.630.630.730.931.331.631.731.832.132.532.810.110.211.510.711.913.017.817.821.122.926.831.829.935.539.041.746.548.144.944.749.551.146.545.545.545.142.443.343.244.343.242.645.049.548.844.545.348.046.849.047.946.047.347.349.151.11 Data are prorated averages of Wednesday figures for domestically chartered banks and for foreign-related institutions beginning July1981. Prior to July 1981, data for foreign-related institutions are averages of current and previous month-end data.2 Excludes loans to commercial banks in the United States.Note.—Data are not strictly comparable because of breaks in the series.Source.- Board of Governors of the Federal Reserve System.351

TABLE B-72.—Bond yields and interest rates, 1929-93[Percent per annum]Year andmonthU.S. Treasury securitiesBills(new issues) x3-month6-monthConstant maturities 23-year10-year30-yearCorporatebonds(Nloody's)AaaBaaHighgrademunicipalbonds(Standard&Poor's)Newhomemortgageyields 3Commercialpaper,6months 4Primeratechargedbybanks 5Discountrate,FederalReserveBankof NewYork 5Federalfundsrate 61929...1933...1939...0.515.0234.734.493.015.907.764.964.274.712.765.851.73.595.50-6.001.50-4.001.505.162.561.001940...1941...1942...1943...1944....014.103.326.373.3752.842.772.832.732.724.754.334.283.913.612.502.102.362.061.86.56.53.66.69.731.501.501.501.501.501.001.007 1.007 1.007 1.001945...1946...1947...1948...1949....375.375.5941.0401.1022.622.532.612.822.663.293.053.243.473.421.671.642.012.402.21.75.811.031.441.491.501.501.50-1.751.75-2.002.007 1.007 1.001.001.341.501950...1951...1952...1953...1954...1.2181.5521.7661.931.9532.471.632.852.402.622.862.963.202.903.243.413.523.743.511.982.002.192.722.371.452.162.332.521.582.072.563.003.173.051.591.751.751.991.601955...1956...1957...1958...1959...1.7532.6583.2671.8393.4053.8322.473.193.982.844.462.823.183.653.324.333.063.363.893.794.383.533.884.714.735.052.532.933.603.563.952.183.313.812.463.973.163.774.203.834.481.892.773.122.153.361.782.733.111.573.301960...1961...1962..1963...1964...1965...1966...1967..1968...1969..2.9282.3782.7783.1573.5493.9544.8814.3215.3396.6773.2472.6052.9083.2533.6864.0555.0824.6305.4706.8533.983.543.473.674.034.225.235.035.687.024.123.883.954.004.194.284.925.075.656.674.414.354.334.264.404.495.135.516.187.035.195.085.024.864.834.875.676.236.947.813.733.463.183.233.223.273.823.984.515.815.895.835.816.256.466.977.813.852.973.263.553.974.385.555.105.907.834.824.504.504.504.504.545.635.616.307.963.533.003.003.233.554.044.504.195.165.873.221.962.683.183.504.075.114.225.668.201970...1971...1972...1973...1974...6.4584.3484.0717.0417.8866.5624.5114.4667.1787.9267.295.655.726.957.827.356.166.216.847.568.047.397.217.448.579.118.568.168.249.506.515.705.275.186.098.457.747.607.968.927.715.114.738.159.847.915.725.258.0310.815.954.884.506.447.837.184.664.438.7310.501975..1976..1977..1978..1979..5.8384.9895.2657.22110.0416.1225.2665.5107.57210.0177.496.776.698.299.717.997.617.428.419.447.758.499.288.838.438.028.739.6310.619.758.979.4910.696.896.495.565.906.399.009.009.029.5610.786.325.345.617.9910.917.866.846.839.0612.676.255.505.467.4610.285.825.045.547.9311.191980..1981..1982..1983..1984..11.50614.02910.6868.639.5811.37413.77611.0848.759.8011.5514.4412.9210.4511.8911.4613.9113.0011.1012.4411.2713.4512.7611.1812.4111.9414.1713.7912.0412.7113.6716.0416.1113.5514.198.5111.2311.579.4710.1512.6614.7015.1412.5712.3812.2914.7611.898.8910.1615.2718.8714.8610.7912.0411.7713.4211.028.508.8013.3616.3812.269.0910.231985..1986..1987..1988..1989..7.485.985.826.698.127.666.036.056.928.049.647.067.688.268.5510.627.688.398.858.4910.797.788.598.968.4511.379.029.389.719.2612.7210.3910.5810.8310.189.187.387.737.767.2411.5510.179.319.1910.138.016.396.857.688.809.938.338.219.3210.877.696.335.666.206.938.106.816.667.579.211990..1991..1992..1993..7.515.423.453.027.475.493.573.148.266.825.304.448.557.867.015.878.618.147.676.599.328.778.147.2210.369.808.987.937.256.896.415.6310.059.328.247.207.955.853.803.3010.018.466.256.006.985.453.253.008.105.693.523.021 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.3 Effective rate (in the primary market) on conventional mortgages, reflecting fees and charges as well as contract rate andassuming, 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 theperiod.6 Since July 19, 1975, the daily effective rate is an average of the rates on a given day weighted by the volume of transactions atthese 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.See next page for continuation of table.352

TABLE B-72.—Bond yields and interest rates, 1929-93—Continued[Percent per annum]Year andmonthBills(new issues) l3-monthJ.S. Treasury securities6-monthConstant maturities 23-year10-year30-yearCorporatebonds(Moody's)AaaBaaHighgrademunicipalbonds(Standard&Poor's)Newhomemortgageyields 3Commercialpaper,6months 4Primeratechargedbybanks 5Discountrate,FederalReserveBankof NewYork 5Federalfundsrate 6High-lowHigh-low1989:JanFebMarJay!!!!!!!!!!!!JuneJulyAugSeptOctNovDec1990:JanFebMarAprMayJuneJulyAugSeptOctNovDec1991:JanFebMarAprMayJuneJulyAugSeptOctNovDec1992:JanFebMarAprMayJuneJulyAugSeptOctNovDec1993:JanFebMarAprMayJunJulAug&:::::::::::NovDec8.298.488.838.708.408.227.927.911117.637 657.647 647.767.877.787.787.747 667.447.387.197 076.816.305.955.915 675.515.605.585.395.255 034.604.123.843.844.053.813.663.703.283 142.972.843.143.253.062.952.972.892.963.103.053.052.963.043.123.088.388.498.878.738.398.007.631117 747.617 467.457 521117.837.827.827.647 577.367.337.207 046.766.345.935.915 735.655.765.715.475.295 084.664.163.883.944.193.933.783.813.363 233.012.983.353.393.173.083.083.003.073.233.153.173.063.133.273.259.209.329.619.408.988.377.838.138 268.027 801118 138.398.638.788.698.408 268.228.278.077 747.477.387.087.357 237.127.397.386.806.506 235.905.395.405.726.185.935.815.604.914 724.424.645.145.214.934.584.404.304.404.534.434.364.174.184.504.549.099.179.369.188.868.288.028.118 198.011 SI7.848 218.478.598.798.768.488 478.758.898.728 398.088.097.858.118 048.078.288.277.907.657 537.427.097.037.347.547.487.397.266.846 596.426.596.876.776.606.265.985.976.045.965.815.685.365.335.725.778.939.019.179.038.838.278.088.128158.007 907.908 268.508.568.768.738.468 508.869.038.868 548.248.278.038.298 218.278.478.458.147.957 937.927.707.587.857.977.967.897.847.607 397.347.537.617.447.347.096.826.856.926.816.636.326.005.946.216.259.629.649.809.799.579.108.938.969 018.928 898!868 999.229.379.469.479.269 249.419.569.539 309.059.048.838.938 868.869.019.008.758.618 558.488.318.208.298.358.338.288.228.077 957.927.998.107.987.917.717.587.467.437.337.176.856.666.676.936.9310.6510.6110.6710.6110.4610.039.879.889 919.819 819.829 9410.1410.2110.3010.4110.2210 2010.4110.6410.7410 6210.4310.4510.0710.099 949.869.969.899.659.519 499.459.269.139.239.259.219.139.058.848 658.628.848.968.818.678.398.158.148.218.077.937.607.347.317.667.697.417.477.617.497.256.976.977.081111.111137.017 137.217.297.367.347.227 157.317.407.407 107.047.056.907.077 056.957.097.036.896.806 596.646.636.416.676.696.646.576.506.126 086.246.386.356.246.185.875.655.785.815.735.605.505.315.295.475.359.529.829.9910.1710.1810.4210.4810.2210 2410.1110 0910.079 919.8810.0310.1710.2810.1310 0810.119.909.989 909.769.659.579.439 609.529.469.439.489.309 048.648.538.498.658.518.588.598.438.008 007.937.908.077.887.827.777.467.467.377.237.207.056.956.806.806.929.02 10.50-10.509.35 11.50-10.509.97 11.50-11.509.78 11.50-11.509.29 11.50-11.508.80 11.50-11.008.35 11.00-10.508.32 10.50-10.508 50 10 50-10 508.24 10.50-10.508 00 10 50-10 507.93 10.50-10.507 96 10 50-10 008.04 10.00-10.008.23 10.00-10.008.29 10.00-10.008.23 10.00-10.008.06 10.00-10.007 90 10 00-10 00111 10.00-10.007.83 10.00-10.007.81 10.00-10.007 74 10 00-10 007.49 10.00-10.007.026.416.366 075.946.166.145.765.595 334.934.494.064.134.384.133.973.993.533 443.263.333.673.703.353.273.243.193.203.383.353.333.253.273.433.4010.00- 9.509.50- 9.009.00- 9.009 00- 9 009.00- 8.508.50- 8.508.50- 8.508.50- 8.508.50- 8.008 00- 8 008.00- 7.507.50- 6.506.50-6.506.50-6.506.50-6.506.50-6.506.50-6.506.50-6.506.50-6.006 00-6 006.00-6.006.00-6.006.00-6.006.00-6.006.00-6.006.00-6.006.00-6.006.00-6.006.00-6.006.00-6.006.00-6.006.00-6.006.00-6.006.00-6.006.00-6.006.00-6.006.50-6.507.00-6.507.00-7.007.00-7.007.00-7.007.00-7.007.00-7.007.00-7.007 00-7 007.00-7.007 00-7 007.00-7.007 00-7 007.00-7.007.00-7.007.00-7.007.00-7.007.00-7.007 00-7 007.00-7.007.00-7.007.00-7.007 00-7 007.00-6.506.50-6.506.50-6.006.00-6.006 00-5 505.50-5.505.50-5.505.50-5.505.50-5.505.50-5.005 00-5 005.00-4.504.50-3.503.50-3.503.50-3.503.50-3.503.50-3.503.50-3.503.50-3.503.50-3.003 00-3 003.00-3.003.00-3.003.00-3.003.00-3.003.00-3.003.00-3.003.00-3.003.00-3.003.00-3.003.00-3.003.00-3.003.00-3.003.00-3.003.00-3.003.00-3.003.00-3.009.129.369.859.849.819.539.248.999 028.848 558.458 238.248.288.268.188.298158.138.208.117 817.316.916.256.125 915.785.905.825.665.455 214.814.434.034.063.983.733.823.763.253 303.223.103.092.923.023.033.072.963.003.043.063.033.092.993.022.96Sources: Department of the Treasury, Board of Governors of the Federal Reserve System, Federal Housing Finance Board, Moody'sInvestors Service, and Standard & Poor's Corporation.353

TABLE B-73.—Total funds raised in credit markets by nonfinancial sectors, 1984-93[Billions of dollars; quarterly data at seasonally adjusted annual rates]Item 1984 1985 1986 1987 1988 1989 1990 1991 1992Net credit market borrowing by nonfinancial sectorsTotal net borrowing by domestic nonfinancial sectors764.6934.6855.8739.9752.6723.0631.0475.5582.4U.S. Government197.2225.7216.0143.9155.1146.4246.9278.2304.0Treasury issuesAgency issues and mortgages..197.4-.2225.8-.1215.6.4142.41.5137.717.4144.71.6238.78.2292.0-13.8303.8.2Private domestic nonfinancial sectors-567.4708.9639.9596.0597.5576.6384.1197.3278.4Debt capital instruments329.2523.4478.4497.9436.4408.3293.1313.4254.0Tax-exempt obligations...Corporate bondsMortgages58.748.1222.4178.683.2261.745.7127.1305.683.578.8335.753.7103.1279.665.373.8269.157.347.1188.769.678.8165.165.767.3121.1Home mortgagesMulti-family residential..CommercialFarm136.225.162.3-1.2172.330.365.6-6.6204.236.475.1-10.1241.624.976.2-6.9219.616.148.5-4.6212.512.047.3-2.7177.23.48.9-.8166.0-2.5.9.7176.0-11.1-45.51.6Other debt instruments-238.3185.5161.598.1161.0168.391.0-116.124.4Consumer creditBank loans n.e.cOpen-market paper...Other81.764.021.770.982.343.814.644.857.558.9-9.354.332.914.71.648.950.144.711.954.349.536.421.461.013.44.29.763.6-13.1-46.8-18.4-37.89.3-5.68.612.0By borrowing sector-567.4708.9639.9596.0597.5576.6384.1197.3278.4State and local governmentsHouseholdsNonfinancial business35.7221.2310.5134.0295.6279.359.2266.2314.583.0307.5205.548.9300.1248.463.5276.7236.354.5207.7121.962.3168.4-33.459.4215.04.0FarmNonfarm noncorporate..Corporate-.4123.3187.6-14.5133.2160.6-16.9106.1225.3-11.176.0140.7-10.057.2201.3.549.4186.51.819.4100.72.4-24.5-11.31.5-39.441.8Foreign net borrowing in United States..8.41.29.76.26.410.223.913.924.2BondsBank loans n.e.cOpen-market paperU.S. Government and other loans..3.8-6.66.25.03.8-2.86.2-6.03.1-1.011.5-3.97.4-3.63.8-1.46.9-1.88.7-7.54.9-.113.1-7.621.4-2.912.3-7.014.13.16.4-9.817.32.35.2-.6Total domestic plus foreign773.0935.8865.6746.2758.9733.1654.9489.4606.6Direct and indirect supply of funds to credit marketsTotal funds supplied to domestic nonfinancial sectors764.6934.6855.8739.9752.6723.0631.0475.5582.4Private domestic nonfinancial sectors-446.7487.2329.9405.0421.8285.4259.7-38.467.8Deposits and currency310.1204.0273.0163.3225.7162.896.9-22.3-11.2Checkable deposits and currencyTime and savings depositsMoney market fund sharesSecurity repurchase agreementsForeign deposits37.0221.248.79.8-6.556.9122.62.117.74.7114.186.241.820.010.818.199.425.221.5-1.029.1139.716.932.97.19.670.185.6-2.1-.321.928.454.9-22.113.970.1-104.929.8-14.5-2.8131.0-133.4.8-.5-9.1Credit market instruments-136.6283.256.9241.7196.1122.6162.8-16.179.0Foreign funds76.086.1115.7107.9117.974.8105.92.8149.6At banksCredit market instruments9.067.119.666.512.9102.843.764.29.3108.6-9.584.423.882.1-22.825.648.9100.7U.S. Government and related loans, net..U.S. Government cash balancesPrivate insurance and pension reserves..Other sources16.04.0139.981.937.410.3215.798.017.01.7233.7157.85.6-5.8184.842.4-18.27.3127.796.1-49.9-3.4293.7122.317.35.3146.896.032.85.5297.9175.020.5-5.9167.3183.0354

TABLE B-73.—Total funds raised in credit markets by nonfinancial sectors, 1984-93—Continued[Billions of dollars; quarterly data at seasonally adjusted annual rates]Item1991 1992 1993Net credit market borrowing by nonfinancial sectorsTotal net borrowing by domestic nonfinancialsectors425.5565.4500.0411.4603.3586.2610.8529.1399.3667.5579.7U.S. Government...191.7269.3379.5272.5323.8352.9299.1240.1229.6348.2177.2Treasury issuesAgency issues and mortgagesPrivate domestic nonfinancial sectors...Debt capital instrumentsTax-exempt obligationsCorporate bondsMortgages215.7-24.0233.8371.162.376.7232.2275.5-6.2296.1376.669.696.5210.5408.2-28.8120.5222.868.881.672.3268.73.8138.9283.177.660.2145.2335.0-11.2279.5329.768.076.3185.4352.5.4233.4224.176.677.869.8290.19.0311.7272.275.861.3135.1237.42.7289.0190.142.453.793.9226.43.2169.7237.562.475.0100.2344.14.1319.2266.767.264.9134.5160.916.2402.5317.338.955.2223.2Home mortgagesMulti-family residential..CommercialFarmOther debt instruments167.112.147.75.2160.211.740.1-1.5160.1-34.2-55.62.1176.5.2-28.6-2.9216.511.6-46.94.2-137.3 -80.5 -102.2 -144.2 -50.2111.6-16.9-25.7.89.3203.3-11.2-57.7.839.4172.8-27.9-51.6.6128.4-6.6-21.799.0 -67.7176.2-12.8-29.1.252.5229.7.2-6.985.2Consumer creditBank loans n.e.cOpen-market paperOther-16.1-59.5-25.1-36.7-5.1-30.2-16.5-28.8-20.4-44.0-26.9-10.9-10.7-53.7-5.0-74.9-9.8-47.32.54.5-14.727.7-2.6-1.113.5-24.19.340.848.221.425.43.919.2-39.7-24.2-23.022.931.834.8-37.060.88.124.2-8.0By borrowing sector:233.8296.1120.5138.9279.5233.4311.7289.0169.7319.2402.5State and local governments..HouseholdsNonfinancial businessFarmNonfarm noncorporate...CorporateForeign net borrowing in United States..62.6130.141.09.821.210.059.7195.141.3.220.220.957.8 -60.452.8 74.0154.5 193.8-86.8 -129.04.3-81.5-9.623.8-4.6-57.9-66.534.362.1199.218.24.3-21.835.71.966.9176.5-10.13.6-47.433.757.773.5217.720.5-.1-37.357.937.835.1266.6-12.7-1.6-51.039.9-.671.2137.4-38.9-2.5-36.7.350.368.9215.834.53.4-31.462.526.843.7322.436.44.6-14.146.078.5BondsBank loans n.e.cOpen-market paperU.S. Government and other loans....11.38.146.7-8.410.9-3.5-51.9-15.915.61.416.0-9.218.56.514.9-5.64.91.5-8.03.621.914.127.8-6.120.33.913.1.522.2-10.3-12.1-.475.61.6-21.7-5.330.46.5-.6-9.585.51.0-1.6-6.4Total domestic plus foreign483.3504.9523.7445.6605.3644.0648.7528.5449.5694.2658.2Direct and indirect supply of funds to credit marketsTotal funds supplied to domestic nonfinancialsectors425.5565.4500.0411.4603.3586.2610.8529.1399.3667.5579.7Private domestic nonfinancial sectors38.5133.1 -157.0 -168.2206.659.4-54.159.4382.135.4 -101.5Deposits and currency60.85.4-57.9-97.571.2-91.58.2-32.7-241.3153.553.7Checkable deposits and currencyTime and savings depositsMoney market fund sharesSecurity repurchase agreementsForeign depositsCredit market instrumentsForeign fundsAt banksCredit market instruments..70.9-34.3115.4-47.4-43.9-22.31.5-.537.2-50.3-2.2.7135.5-174.3-13.5-17.137.0-160.819.25.91.219.9 11.6-70.7127.8 -99.133.9-64.2-98.334.240.513.127.4-7.341.3147.9-86.139.3-8.7-21.376.6-175.323.112.9163.9-143.8-23.7-12.424.1-28.8135.5 -62.3150.990.8 158.9219.1-5.796.578.4140.780.778.1135.5-128.6-35.46.2-10.315.7-202.7-45.12.7122.7-30.765.2-4.7126.7-127.051.7-2.2-11.9 .9 4.492.1-140.8 -118.1 -155.2129.754.4 158.1 141.642.287.5-18.873.268.689.5-2.3144.0U.S. Government and related loans, netU.S. Government cash balancesPrivate insurance and pension reservesOther sources46.331.3396.7-88.396.6-23.2117.9305.133.15.2371.3206.9-44.98.7305.5276.4122.9-30.149.8163.2-71.515.7170.8192.7-43.54.4225.8319.474.0-13.5222.956.6-47.51.3359.9413.353.49.0180.6231.0-70.83.6286.6320.3Source: Board of Governors of the Federal Reserve System.355

TABLE B-74.—Mortgage debt outstanding by type of property and of financing, 1940-93[Billions of dollars]End of yearor quarterAllpropertiesFarmpropertiesNonfarm propertiesTotal1- to 4-familyhousesMultifamilypropertiesCommercialpropertiesNonfarm properties by type of mortgageGovernment underwrittenTotal J1- to 4-family housesTotalFHAinsuredVAguaranteedConventional 2Total1- to 4-familyhouses194019411942194319441945194619471948194919501951195219531954195519561957195819591960196119621963196419651966196719681969197019711972197319741975197619771978197919801981198219831984198519861987198819891990199119921991: I...II.IllIV1992: I..IV..1993: I....II...III..36.537.636.735.334.735.541.848.956.262.772.882.391.4101.3113.7129.9144.5156.5171.8190.8207.5228.0251.4278.5305.9333.3356.5381.2411.1441.6473.7524.2597.4672.6732.5791.9878.61,010.31,163.01,328.41,460.41,566.71,641.11,828.82,054.62,312.82,615.42,963.23,248.63,549.63,761.53,923.44,042.93,812.03,874.23,874.63,923.43,959.73,982.94,020.64,042.94,059.24,099.64,160.26.56.46.05.44.94.84.95.15.35.66.16.77.27.78.29.09.810.411.112.112.813.915.216.818.921.223.125.127.529.430.532.435.439.844.949.955.463.972.886.897.5107.2111.3113.7112.4105.995.287.783.080.578.479.180.779.779.379.979.180.280.480.680.780.880.880.930.031.230.829.929.730.836.943.950.957.166.775.684.293.6105.4120.9134.6146.1160.7178.7194.7214.1236.2261.7287.0312.1333.4356.1383.5412.2443.2491.8562.0632.8687.5742.0823.2946.41,090.21,241.71,362.91,459.51,529.81,715.11,942.22,206.92,520.22,875.53,165.73,469.13,683.13,844.23,962.23,732.33,794.93,794.83,844.23,879.53,902.53,940.03,962.23,978.44,018.84,079.317.418.418.217.817.918.623.028.233.337.645.251.758.566.175.788.299.0107.6117.7130.9141.9154.6169.3186.4203.4220.5232.9247.3264.8283.2297.4325.9366.5407.9440.7482.1546.3642.7753.5870.5965.11,039.81,081.71,199.41,335.11,504.71,707.11,936.12,169.32,408.42,615.42,778.82,953.52,649.92,700.12,722.82,778.82,823.12,856.72,911.42,953.52,976.83,026.93,088.55.75.95.85.85.65.76.16.67.58.610.111.512.312.913.514.314.915.316.818.720.323.025.829.033.637.240.343.947.352.260.170.182.893.1100.0100.6105.7114.0124.9134.9142.3142.1145.8160.9185.7215.6251.8276.0293.7306.5309.4306.4295.0312.3314.8305.9306.4309.0304.8302.0295.0293.6290.6290.96.97.06.76.36.26.47.79.110.210.811.512.513.414.516.318.320.723.226.129.232.436.541.146.250.054.560.164.871.476.985.695.9112.7131.7146.9159.3171.2189.7211.8236.3255.5277.5302.2354.8421.4486.6561.3663.4702.7754.2758.3759.0713.7770.1779.9766.0759.0747.4741.0726.6713.7708.1701.3699.92.33.03.74.14.24.36.39.813.617.122.126.629.332.136.242.947.851.655.259.362.365.669.473.477.281.284.188.293.4100.2109.2120.7131.1135.0140.2147.0154.1161.7176.4199.0225.1238.9248.9279.8294.8328.3370.5431.4459.7486.8517.9537.2533.3525.3545.7535.3537.2538.1536.1537.5533.3530.5522.6517.92.33.03.74.14.24.36.19.312.515.018.822.925.428.132.138.943.947.250.153.856.459.162.265.969.273.176.179.984.490.297.3105.2113.0116.2121.3127.7133.5141.6153.4172.9195.2207.6217.9248.8265.9288.8328.6387.9414.2440.1470.9493.3489.8478.0497.3491.4493.3494.3492.4493.9489.8487.0479.0474.22.33.03.74.14.24.13.73.85.36.98.59.710.812.012.814.315.516.519.723.826.729.532.335.038.342.044.847.450.654.559.965.768.266.265.166.166.568.071.481.093.6101.3108.0127.4136.7153.0185.5235.5258.8282.8310.9330.6326.0317.0334.1329.1330.6330.6328.8329.5326.0323.4315.2310.50.22.45.57.28.110.313.214.616.119.324.628.430.730.430.029.729.629.930.930.931.131.332.533.835.737.339.544.750.056.261.667.073.682.092.0101.6106.2109.9121.4129.1135.8143.1152.4155.4157.3160.0162.7163.8161.0163.2162.2162.7163.7163.6164.4163.8163.6163.8163.727.728.227.125.825.526.530.634.137.340.044.749.154.961.569.378.086.894.6105.5119.4132.3148.5166.9188.2209.8231.0249.3267.9290.1312.0333.9371.1430.9497.7547.3595.0669.0784.6913.91,042.71,137.81,220.61,280.91,435.31,647.31,878.62,149.72,444.12,706.02,982.23,165.23,307.03,428.93,206.93,249.23,259.43,307.03,341.53,366.43,402.53,428.93,447.93,496.23,561.415.115.414.513.713.714.316.918.920.822.626.328.933.238.043.649.355.160.467.677.085.595.5107.1120.5134.1147.4156.9167.4180.4193.0200.2220.7253.5291.7319.4354.3412.8501.0600.2697.6769.9832.2863.9950.61,069.21,215.91,378.51,548.21,755.11,968.32,144.52,285.52,463.82,171.92,202.82,231.52,285.52,328.72,364.32,417.62,463.82,489.82,548.02,614.31 Includes FHA insured multifamily properties, not shown separately.2 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.356

TABLE B-75.—Mortgage debt outstanding by holder, 1940-93[Billions of dollars]Major financial institutionsOther holders1940194119421943194419451946194719481949End of yearor quarter195019511952195319541955.19561957195819591960.1961196219631964196519661967 .. .19681969197019711972197319741975197619771978 .. . .197919801981198219831984198519861987198819891990199119921991: 1IIIIIIV1992- 1IIIllIV1993- 1IIIllTotal36.537.636.735.334.735.541.848.956.262.772.882 391.4101.3113.7129 9144.5156.51718190.8207.5228.0251.4278 5305.9333.3356.5381.2411.1441.6473.7524.2597 4672.6732 5791.9 •878 61,010.31,163.01,328.41,460.41,566.71,641.11 828 82,054.62,312.82,615.42 963 23 248 63,549.63,761.53,923.44,042.93,812.03,874.23,874.63,923.43,959.73,982.94,020.64,042.94 059 24,099.64,160.2Total19.520.720.720.220.221.026.031.837.842.951.759 566.975.185.799 3111.2119.71315145.5157.6172.6192.5217 1241.0264.6280.8298.8319.9339.1355.9394.2450 0505.4542 6581.2647 5745.2848.2938.2996.81,040.51,021.31 108 21,245.91,361.51,474.31 665 31 831 51,931.51,914.31,846.71,769.21,902.91,899.41,860.81,846.71,826.71,803.81,793.51,769.21753 01,765.11,770.3Savingsinstitutions*9.09.49.29.09.19.611.513.816.118.321.925 529.834.941.148 955.561.268 978.187.098.0111.1127 2141.9154.9161.8172.3184.3196.4208.3236.2273 7305.0324 2355.8404.6469.4528.0574.6603.1618.5578.1626 7709.7760.5778.0860 5924 6910.3801.6705.4628.0776.5755.4719.7705.4682.3659.6648.2628.0617.2612.4610.1Commercialbanks 24.64.94.74.54.44.87.29.410.911.613.714 715.916.918.621022.723.325 528.128.830.434.539 444.049.754.459.065.770.773.382.599 3119.11321136.21513179.0214.0245.2262.7284.2301.3330 5379.5429.2502.5592 4674 0767.1844.8876.1894.5857.4872.4871.0876.1881.0885.0891.4894.5891.8910.9922.4Lifeinsurancecompanies6.06.46.76.76.76.67.28.710.812.916.119 321.323.326.029 433.035.237 139.241.844.246.950.555.260.064.667.570.072.074.475.576 981.486 289.291696.8106.2118.4131.1137.7142.01510156.7171.8193.8212.4232 9254.2267.9265.3246.7269.0271.7270.1265.3263.3259.3253.9246.7244.1241.7237.8Federalandrelatedagencies3 4.94.74.33.63.02.42.01.81.82.32.8354.14.64.85.36.27.78010.211.512.212.611.812.213.517.520.925.131.138.346.454.664.882 2101.1116.7140.5170.6216.0256.8289.4355.4433.4490.6581.9733.7858.9937.81,067.31,258.91,422.61,558.31,302.31,351.71,389.51,422.61,458.11,497.11,521.51,558.31,587.01,600.51,637.9Individualsandothers 412.012.211.711.511.512.113.815.316.617.518.419 320.421.723.225.327.129.132 335.138.443.146.349.552.755.258.261.466.171.479.483.692.8102.4107.7109.6114.4124.6144.3174.3206.8236.8264.4287.2318.1369.4407.3439.0479.4550.7588.3654.0715.4606.8623.0624.3654.0674.9681.9705.6715.4719.2734.0752.01 Includes savings banks and savings and loan associations. Data reported by Federal Savings and Loan Insurance Corporation-insuredinstitutions include loans in process for 1987 and exclude loans in process beginning 1988.2 Includes loans held by nondeposit trust companies, but not by bank trust departments.3 Includes Government National Mortgage Association (GNMA), Federal Housing Administration, Veterans Administration, Farmers HomeAdministration (FmHA), and in earlier years Reconstruction Finance Corporation, Homeowners Loan Corporation, Federal Farm MortgageCorporation, and Public Housing Administration. Also includes U.S.-sponsored agencies such as Federal National Mortgage Association(FNMA), Federal Land Banks, Federal Home Loan Mortgage Corporation (FHLNIC), and mortgage pass-through securities issued orguaranteed by GNMA, FHLMC, FNMA or FmHA. Other U.S. agencies (amounts small or current separate data not readily available)included with "individuals and others."4 Includes private mortgage pools.Source: Board of Governors of the Federal Reserve System, based on data from various Government and private organizations.357

TABLE B-76.—Consumer credit outstanding, 1952-93[Amount outstanding (end of month); millions of dollars, seasonally adjusted]Year and monthTotalconsumercreditInstallment credit lNoninstallmentTotal Automobile Revolving 2 Other 3 credit 4December-.1952195319541955195619571958195919601961196219631964196519661967196819691970197119721973197419751976197719781979198019811982198319841985198619871988 519891990199119921992:JanFebMarMay!"!!!'.!'.'.!'.'.!JuneJulyAugSeptOctNovDec1993:JanFebMarAprMayJuneJulyAugSeptOctNov "29,76633,76935,02741,88545,50348,13248,35655,87860,03562,34068,23176,60685,98995,948101,839106,716117,231126,928131,600147,058166,009190,601199,365204,963228,162263,808308,272347,507350,269366,869383,132431,170511,314591,291647,982680,036729,121786,732798,274784,061793,175786,081784,884784,676780,983780,283780,163779,563781,043782,778784,113787,521793,175797,126799,251800,930804,514804,406805,691810,546813,472820,017827,318833,43720,12123,87024,47029,80932,66034,91434,73640,42144,33545,43850,37557,05664,67472,81478,16281,78390,11299,381103,905116,434131,258152,910162,203167,043187,782221,475261,976296,483298,154311,259325,805368,966442,602517,660572,006608,675662,553724,353738,765733,510741,093735,406734,225734,434731,736730,612730,866730,496731,023733,023734,195736,023741,093743,583747,228750,131752,193750,293752,428757,465762,503768,573776,234783,1157,6519,7029,75513,48514,49915,49314,26716,64118,10817,65620,00122,89125,86529,37831,02431,13634,35236,94636,34840,52247,83553,74054,24156,98966,82180,94898,739112,475111,991119,008125,945143,560173,564210,238247,772266,295285,364292,536284,739260,898259,627261,553260,666262,087260,746259,844257,989258,259258,827259,433258,208258,860259,627258,737261,434262,313262,463264,007265,388267,468268,784270,650274,600277,5762,0223,5634,9008,2529,39111,31813,23214,507,16,59536,68945,20253,35755,11161,07066,45479,088100,280121,758135,825153,064174,269198,544222,552243,564254,299245,609246,474246,324246,987247,205248,795248,980249,384250,456251,806252,086254,299255,984258,384259,661261,450262,690263,338266,938270,753273,703277,125279,27312,47014,16814,71516,32418,16119,42120,46923,78026,22727,78230,37434,16538,80943,43647,13850,64753,73858,87262,65767,66074,03287,85294,73095,547104,366103,838118,035130,651131,053131,182133,406146,318168,758185,664188,408189,316202,921233,273231,474229,048227,167228,243227,085226,023224,002223,562224,081223,257222,812223,135224,181225,077227,167228,862227,410228,157228,280223,596223,701223,058222,967224,220224,509226,2669,6459,89910,55712,07612,84313,21813,62015,45715,70016,90217,85619,55021,31523,13423,67724,93327,11927,54727,69530,62434,75137,69137,16237,92040,38042,33346,29651,02452,11555,61057,32762,20468,71373,63175,97671,36266,56862,37959,50950,55152,08250,67650,65950,24249,24749,67149,29749,06750,02049,75549,91951,49752,08253,54352,02350,79952,32154,11353,26353,08150,96951,44451,08450,3221 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 excluded.2 Consists of credit cards at retailers, gasoline companies, and commercial banks, and check credit at commercial banks. Excludes 30-day charge credit held by travel and entertainment companies. Prior to 1968, included in "other," except gasoline companies included innoninstallment credit prior to 1971. Beginning 1977, includes open-end credit at retailers, previously included in "other." Also beginning1977, some retail credit was reclassified from commercial into consumer credit.3 Includes mobile home loans and all other installment loans not included in autombile or revolving credit, such as loans foreducation, boats, trailers, or vacations. These loans may be secured or unsecured.4 Noninstallment credit is credit scheduled to be repaid in a lump sum, including single-payment loans, charge accounts, and servicecredit. 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.5 Data newly available in January 1989 result in breaks in many series between December 1988 and subsequent months.Source: Board of Governors of the Federal Reserve System.358

GOVERNMENT FINANCETABLE B-77.—Federal receipts, outlays, surplus or deficit, and debt, selected fiscal years, 1929-95[Billions of dollars; fiscal years]Surplusordeficit07-2.6-2.8-2.9-4.9-20.5-54.6-47.6-47 6-15.94011.8.6-3.16.1-1.5-6.5-1.2-3.03.93.4-2.8-12.83-3.3-7.1-4.8-5.9-1.4-37-8.6-25.23.2-28-23.0-23 4-14.9-6.1-53.2-73.7-14.7-53.7-59.2-40.2-73.8-79.0-128.0-207.8-185.4-212.3-221.2-149.8-155.2-152.5-221.4-269.5-290.4-254.7-234.8-165.15.8"6.08.013.722.942.543 838.137 139.937.737.348.562.665.565.160.468.273.271.671.081982.387.492.496.2100.1111 7124.4128.1157.9159 3151.3167 4184.7209.3216.6231.763.2278.7314.2365.3403.9469.1474.3453.2500.4547.9568.9640.7667.5727.0749.7760.4788.0841.6912.9998.6On-budgeOutlays9.2"9.513.635.178.591.292 655^034 229.438.442.044.266.073.867.964.565.770.674.983.181.393J96.4102.8101.7114 8137.0155.8158.4168 0177.3193 8200.1217.3271.9302.276.6328.5369.1403.5476.6543.1594.4661.3686.0"769.6806.8810.1861.4932.31,027.61,082.11,128.51,141.61,203.01,223.6Surplusordeficit-3.4-3.5-5.6-21.3-55.6-48.7-48 7-17.02910.5— 7-4.74.3-3.4-8.3-2.8-4.12.52.6-3.3-12.15-3.8-5.9-4.0-6.5-1.6-3 1-12.6-27.7-.5-87-26.1-26 4-15.4-8.0-55.3-70.5-13.3-49.8-54.9-38.2-72.7-74.0-120.1-208.0-185.7-221.7-238.0-169.3-194.0-205.2-278.0-321.7-340.5-300.0-290.1-225.00.5.6.7.91.11.3131.21 51.61.72.13.13.64.14.65.16.46.88.08.310 612.112.314.216.416.719 124.424.929.033 535.839 946.153.962.566.418.076.885.498.0113.2130.2143.5147.3166.1186.2200.2213.4241.5263.7281.7293.9302.4311.9336.2355.2Off-budge tOutlays-0.0-.0.0.1.1.11.2.3.4,4.51.31.72.32.94.05.06.07.59.010 911.713.515.015.716.519 720.422.325.227 632.836 945.652.160.469.619.480.789.7100.0114.3135.2151.4147.1165.8176.8183.5193.8202.7210.9225.1241.7252.3266.6280.9295.4Surplusordeficit0.5.6.7.81.01.21 21.01 21.21.31.61.81.91.81.71.11.5.8.5-.7_ 2.4-1.3-.8.6.2- 64.02.63.7593.03 1.51.82.0-3.2-1.4-3.9-4.3-2.0-1.1-5.0-7.9.2.39.416.719.638.852.856.652.250.145.355.359.9Gross Federal debt/pn/j nf narinfi\Total1 16 91 22.548.250.757.579.2142.6204.1260 1271.0257 1252.0252.6256.9255.3259.1266.0270.8274.4272.7272.3279.7287.5290 5292.6302.9310.3316.1322.3328 5340.4368.7365.8380 9408.2435 9466.3483.9541.9629.0643.6706.4776.6828.9908.5994.31,136.81,371.21,564.11,817.02,120.12,345.62,600.82,867.53,206.23,598.34,001.94,351.24,676.04,960.1Held bythepublic41.442.848.267.8127.8184.8235 2241.9224 3216.3214.3219.0214.3214.8218.4224.5226.6222.2219.3226.3234.7236 8238.4248.0254.0256.8260.8263 7266.6289.5278.1283 2303.0322 4340.9343.7394.7477.4495.5549.1607.1639.8709.3784.8919.21,131.01,300.01,499.41,736.21,888.12,050.32,189.32,410.42,687.92,998.63,247.23,472.43,646.11,353.8 1,518.9TotalFiscal yearor period ReceiptsOutlays1929 39 311933 2.0 4.61939 6.3 9.11940194119421943194419451946194719481949195019511952195319541955195619571958195919601961196219631964196519661967196819691970197119721973197419751976Transitionquarter...197719781979198019811982198319841985198619871988198919901991199219931994 21995 2 6.58.714.624.043.745 239.338 541.639.439.451.666.269.669.765.574.680.079.679.292 594.499.7106.6112.6116.8130 8148.8153.0186.9192 8187.1207 3230.8263.2279.1298.181.2355.6399.6463.3517.1599.3617.8600.6666.5734.1769.1854.1909.0990.71,031.31,054.31,090.51,153.51,249.19.513.735.178.691.392 755.234 529.838.842.645.567.776.170.968.470.676.682.492.192 297.7106.8111.3118.5118.2134 5157.5178.1183.6195 6. 210.2230 7245.7269.4332.3371.896.0409.2458.7503 5590.9678.2745.8808.4851.8946.4990.31,003.91,064.11,143.21,252.71,323.81,380.91,408.21,483.8ReceiptsReceiptsAdden-Grossdomesticproduct87.895.4112.5141.8175.4201.7212 0212.5222 9246.7262.7265.8313.5340.5363.8368.0384.7416.3438.3448.1480.2504 6517.0555.2584.5625.3671.0735 4793.3847.2925.7985 41,050.91 147 81,274.01,403.61,509.81,684.2445.01,917.22,155.02,429.52,644.12,964.43,122.23,316.53,695.03,967.74,219.04,452.44,808.45,173.35,481.55,673.35,937.26,294.86,641.27,022.01 Not strictly comparable with later data.2 Estimates.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 l-September 30 basis. The 3-month period from July 1, 1976 through September 30, 1976 is a separate fiscalperiod known as the transition quarter.Refunds of receipts are excluded from receipts and outlays.See Budget of the United States Government, Fiscal Year 1995, February 1994, for additional information.Sources: Department of Commerce (Bureau of Economic Analysis), Department of the Treasury, and Office of Management and359

TABLE B-78.—Federal receipts, outlays, and debt, fiscal years 1982-95[Millions of dollars; fiscal years]DescriptionActual1982 1983 1984 1985 1986 1987 1988RECEIPTS AND OUTLAYS:Total receiptsTotal outlaysTotal surplus or deficit (-)...On-budget receiptsOn-budget outlaysOn-budget surplus or deficit (-)Off-budget receiptsOff-budget outlaysOff-budget surplus or deficit (-)OUTSTANDING DEBT, END OF PERIOD:Gross Federal debtHeld by Government accountsHeld by the publicFederal Reserve SystemOtherRECEIPTS: ON-BUDGET AND OFF-BUDGETIndividual income taxesCorporation income taxesSocial insurance taxes and contributions....On-budget....Off-budget...Excise taxesEstate and gift taxesCustoms duties and feesMiscellaneous receipts:Deposits of earnings by FederalReserve SystemAll otherOUTLAYS: ON-PUDGET AND OFF-BUDGETNational defenseInternational affairsGeneral science, space, and technologyEnergyNatural resources and environmentAgricultureCommerce and housing creditOn-budgetOff-budget....TransportationCommunity and regional developmentEducation, training, employment, andsocial servicesHealthMedicareIncome securitySocial securityOn-budgetOff-budgetVeterans benefits and services-Administration of justiceGeneral governmentNet interestOn-budgetOff-budgetAllowancesUndistributed offsetting receiptsOn-budgetOff-budget617,766745,755-127,989474,299594,351-120,052143,467151,404-7,9371,136,798217,560919,238134,497784,741617,766297,74449,207201,49858,031143,46736,3117,9918,85415,186975745,755185,30912,3007,20013,52712,99815,9446,2566,25620,6258,34727,02927,44546,567107,717155,964844155,12023,9584,71210,91485,04487,114-2,071-26,099-24,453-1,646600,562808,380-207,818453,242661,272-208,030147,320147,1082121,371,164240,1141,131,049155,527975,522600,562288,93837,022208,99461,674147,32035,3006,0538,65514,4921,108808,380209,90311,8487,9359,35312,67222,9016,6816,68121,3347,56026,60628,64152,588122,598170,72419,993150,73124,8465,10511,23589,82891,673-1,845-33,976-32,198-1,778666,457851,846-185,388500,382686,032-185,650166,075165,8132621,564,110264,1591,299,951155,1221,144,829666,457298,41556,893239,37673,301166,07537,3616,01011,37015,6841,347851,846227,41315,8768,3177,08612,59313,6136,9176,91723,6697,67327,57930,41757,540112,668178,2237,056171,16725,6145,66311,817111,123114,432-3,310-31,957-29,913-2,044734,057946,391-212,334547,886769,584-221,698186,171176,8079,3631,816,974317,6121,499,362169,8061,329,556734,057334,53161,331265,16378,992186,17135,9926,42212,07917,0591,480946,391252,74816,1768,6275,68513,35725,5654,2294,22925,8387,68029,34233,54265,822128,200188,6235,189183,43426,2926,27011,588129,504133,622-4,118-32,698-30,189-2,509769,091990,336-221,245568,862806,838-237,976200,228183,49816,7312,120,082383,9191,736,163190,8551,545,308769,091348,95963,143283,90183,673200,22832,9196,95813,32718,3741,510990,336273,37514,152.8,9764,73513,63931,4494,8904,89028,1177,23330,58535,93670,164119,796198,7578,072190,68426,3566,57212,564136,047140,377-4,329-33,007-30,150-2,857854,1431,003,911-149,769640,741810,079-169,339213,402193,83219,5702,345,578457,4441,888,134212,0401,676,094854,143392,55783,926303,31889,916213,40232,4577,49315,08516,8172,4901,003,911281,99911,6499,2164,11513,36326,6066,1826,18226,2225,05129,72439,96775,120123,250207,3534,930202,42226,7827,5537,565138,652143,942-5,290-36,455-33,155-3,300908,9541,064,140-155,187667,463861,449-193,986241,491202,69138,8002,600,760550,5072,050,252229,2181,821,034908,954401,18194,508334,33592,845241,49135,2277,59416,19817,1632,7471,064,140290,36110,47110,8412,29714,60617,21018,81518,81527,2725,29431,93844,48778,878129,332219,3414,852214,48929,4289,2369,464151,838159,253-7,416-36,967-32,585-4,382Note.—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. The 3-month period from July 1, 1976 through September 30, 1976 is a separate fiscalperiod known as the transition quarter.Refunds of receipts are excluded from receipts and outlays.See next page for continuation of table.360

TABLE B-78.—Federal receipts, outlays, and debt, fiscal years 1982-95—Continued[Millions of dollars; fiscal years]DescriptionActual1989 1990 1991 1992 1993Estimates1994 1995RECEIPTS AND OUTLAYS:Total receiptsTotal outlaysTotal surplus or deficit (-)..On-budget receiptsOn-budget outlaysOn-budget surplus or deficit (-)....Off-budget receipts..Off-budget outlays....Off-budget surplus or deficit (-) ..OUTSTANDING DEBT, END OF PERIOD:Gross Federal debtHeld by Government accounts..Held by the publicFederal Reserve SystemOtherRECEIPTS. ON-BUDGET AND OFF-BUDGET..Individual income taxesCorporation income taxesSocial insurance taxes and contributions..On-budgetOff-budgetExcise taxesEstate and gift taxesCustoms duties and feesMiscellaneous receipts:Deposits of earnings by FederalReserve SystemAll otherOUTLAYS: ON-BUDGET AND OFF-BUDGET..National defenseInternational affairsGeneral science, space, and technology..EnergyNatural resources and environmentAgricultureCommerce and housing creditOn-budgetOff-budgetTransportationCommunity and regional developmentEducation, training, employment, and socialservicesHealthMedicareIncome securitySocial securityOn-budgetOff-budgetVeterans benefits and servicesAdministration of justiceGeneral governmentNet interestOn-budgetOff-budgetAllowancesUndistributed offsetting receiptsOn-budgetOff-budget990,6911,143,172-152,481727,026932,261-205,235263,666210,91152,7542,867,493678,1572,189,336220,0881,969,248990,691445,690103,291359,41695,751263,66634,3868,74516,33419,6043,2251,143,172303,5599,57312,8382,70616,18216,91929,21129,520-31027,6085,36236,67448,39084,964136,031232,5425,069227,47330,0669,4749,017169,266180,661-11,395-37,212-32,354-4,858See Budget of the United States Government, Fiscal Year 1995,1,031,3211,252,705-221,384749,6661,027,640-277,974281,656225,06556,5903,206,207795,8412,410,366234,4102,175,9561,031,321466,88493,507380,04798,392281,65635,34511,50016,70724,3193,0111,252,705299,33113,76414,4443,34117,08011,95867,14265,5161,62629,4858,49838,75557,71698,102147,019248,6233,625244,99829,1129,99510,734184,221200,212-15,991-36,615-31,048-5,567Sources: Department of the Treasury and Office of Management and Budget.1,054,2721,323,793-269,521760,3881,082,106-321,719293,885241,68752,1983,598,303910,3622,687,942258,5912,429,3511,054,272467,82798,086396,016102,131293,88542,40211,13815,94919,1583,6961,323,793273,29215,85116,1112,43618,55915,18375,63974,3211,31731,0996,81143,35471,183104,489170,301269,0152,619266,39531,34912,27611,661194,541214,763-20,222-39,356-33,553-5,8041,090,4531,380,856-290,403788,0271,128,518-340,490302,426252,33950,0874,001,9411,003,3022,998,639296,3972,702,2431,090,453475,964100,270413,689111,263302,42645,56911,14317,35922,9203,5381,380,856298,35016,10716,4094,50020,02515,20510,0839,42465933,3336,83845,24889,497119,024196,958287,5856,166281,41834,13814,42612,990199,421223,059-23,637-39,280-33,179-6,101February 1994, for additional information.1,153,5351,408,205-254,670841,6011,141,618-300,017311,934266,58745,3474,351,2231,104,0453,247,178325,6532,921,5261,153,535509,680117,520428,300116,366311,93448,05712,57718,80214,9083,6911,408,205291,08616,82617,0304,31920,23920,443-22,725-24,1661,44135,0049,05150,01299,415130,552207,257304,5856,236298,34935,72014,95513,009198,811225,599-26,788-37,386-30,970-6,4161,249,0711,483,829-234,758912,8921,202,953-290,061336,179280,87655,3034,676,0291,203,6173,472,4121,249,071549,901130,719461,923125,744336,17954,55012,74919,19815,8474,1841,483,829279,82418,96817,2794,98822,28516,868504-1,2451,74837,5829,28250,793112,252143,651214,626320,4605,796314,66338,12916,47914,299203,448232,521-29,073-37,887-31,425-6,4631,353,8151,518,945-165,130998,5941,223,582-224,987355,221295,36459,8574,960,1281,314,0013,646,1271,353,815595,048140,437490,393135,172355,22171,88813,88520,85616,6044,7051,518,945270,72517,79816,9414,56421,81712,795-5,482-8,7413,25938,3689,15453,524123,077156,228221,440337,1686,639330,52939,24717,33113,807212,835244,504-31,669205-42,597-35,841-6,756361

TABLE B-79.—Federal budget receipts, outlays, surplus or deficit, and debt, as percentages oj gross domesticproduct, 1934-93[Percent; fiscal years]Fiscal yearReceipts1934 .19351936 .1937193819391940194119421943 . .194419451946 . .194719481949 .1950195119521953195419551956195719581959 .19601961196219631964196519661967196819691970197119721973197419751976Transition quarter19771978 . .1979198019811982198319841985198619871988198919901991199219931994 l1995 14.95.35.16.27.77.26.97710.313.721.721.318.517.316.815.014.816.519.419.118.917.017.918.317.816.518.318.318.018 218.017.417.818.818.120.219.617.818.118.118.818.517.718.318.518.519.119.620.219 818.118.018 518.219.218 919.218.818.618.418 318.819.3TotalOutlays10.89.310.68.77.810.49.912 124.844.845.343.726.015.512.114.816.014.519.920.919.317.817.017.518.419.218.318.919.219 019.017.618.319.821.019.819.920.020.119.319.222.022.121.621.321.320.722.322.923 924.423.123 923.522.522 122.122.923.323.322 422.321.6Nationaldefense1.75718.138.039.239.120.15.73.75.05.27.513.514.513.411.110.210.410.410.29.59.69.4918.87.57.99.09.78.98.37.56.96.05.75.75.35.05.14.84.85.15.35.96.36.26.46.56.36.05.95.54.85.04.64.23.9Surplus ordeficit ( )-5.9-4.1-5.6-2.5— 1-3^2-3.1-44-14.5-31.1-23.6-22.4-7.51.84.8.2-1.21.9-.4-1.8-.3-.8.9.8-.6-2.7.1-.6-1.3- 8-.9-.2-.5-1.1-3.0.4-.3-2.2-2.0-1.2-.4-3.5-4.4-3.3-2.8-2.7-1.7-2.8-2.7-4.1-6.3-5.0-5.4-5.2-3.4-3.2-2.9-4.0-4.8-4.9-4.0-3.5-2.4Gross Federal debt (period)Total53.151.155.981.3101.2122.7127.5115.4102.296.296.681.476.173.173.671.365.562.162.459.957.656.654.653.150.548.044.742.943.539.538.738.838.036.634.535.937.336.236.836.034.134.433.536.441.342.345.850.352.754.155.458.563.467.469.170.470.6end ofHeld by public44.842.947.872.891.6110.9113.8100.687.781.682.468.463.160.061.058.953.450.050.548.946.946.144.743.541.138.935.933.634.230.028.728.828.126.824.526.128.327.828.628.226.326.826.529.434.135.237.841.242.442.642.344.047.450.551.652.351.91 Estimates.Note.—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, 1976 is a separatefiscal period known as the transition quarter.See Budget of the United States Government, Fiscal Year 1995, February 1994, for additional information.Sources-. Department of the Treasury and Office of Management and Budget.362

TABLE B-80.—Federal and State and local government receipts and expenditures, national income andproduct accou nts, 195 9-93[Biiiions of dollars; quarterly data at seasonally adjusted annual rates]Total governmentFederal GovernmentState and local governmentYearorquarterReceiptsSurplus ordeficit(-),nationalincomeandproductaccountsReceiptsSurplus ordeficitnationalincomeandproductaccountsReceiptsExpendituresExpendituresExpendituresSurplus ordeficit(-).nationalincomeandproductaccounts1959128.8131.9-3.190.693.2-2.645.045.5-0.519601961196219631964196519661967196819691970197119721973197419751976197719781979138.8144.1155.8167.5172.9187.0210.7226.4260.9294.0299.8318.9364.2408.5450.7465.8532.6598.4673.2754.7135.2147.1158.7165.9174.5185.8211.6240.2265.5284.0311.2338.1368.1401.6455.2530.6570.9615.2670.3745.33.6-3.0-2.91.6-1.61.2-1.0-13.7-4.610.0-11.5-19.2-3.96.9-4.5-64.8-38.3-16.82.99.497.099.0107.2115.5116.2125.8143.5152.6176.8199.6195.2202.6232.0263.7294.0294.8339.9384.0441.2504.793.4101.7110.6114.4118.8124.6144.9165.2181.5191.0208.5224.3249.3270.3305.6364.2392.7426.4469.3520.33.5-2.6-3.41.1-2.61.3-1.4-12.7-4.78.5-13.3-21.7-17.3-6.6-11.6-69.4-52.9-42.4-28.1-15.748.352.456.661.167.172.381.589.8102.7114.8129.0145.3169.7185.3200.6225.6253.9281.9309.3330.648.352.756.160.666.172.381.190.9102.6113.3127.2142.8156.3171.9193.5221.0239.3256.3278.2305.4.0-.4.5.41.0.0.5-1.1.11.51.82.513.413.47.14.614.625.631.125.119801981198219831984198519861987198819891990199119921993"1982: IV...1983: IV...1984: IV...1985: IV...1986: IV...1987: IV...1988: IV1989: IV1990:1..IIIllIV1991:1IIIV825.7941.9960.51,016.41,123.61,217.01,290.81,405.21,492.41,622.61,709.11,755.21,849.41,969.1965.91,043.71,147.11,243.81,335.41,445.71,535.81,644.11,676.11,705.11,728.71,726.51,728.11,740.91,765.01,786.8861.0972.31,069.11,156.21,232.41,342.21,437.51,516.91,590.71,700.11,847.51,951.32,118.52,192.71,122.81,180.01,274.91,374.71,461.61,561.51,630.51,744.31,808.01,827.71,848.61,905.81,867.21,941.61,977.22,019.4-35.3-30.3-108.6-139.8-108.8-125.3-146.8-111.7-98.3-77.5-138.4-196.2-269.1-223.7-156.9-136.3-127.8-130.9-126.2-115.8-94.7-100.2-131.9-122.7-119.9-179.3-139.1-200.7-212.2-232.6553.0639.0635.4660.0725.8788.6827.2913.8972.31,059.31,111.41,127.81,183.01,267.6632.3671.1739.8803.6856.8943.51,000.61,068.31,091.31,114.51,123.71,115.81,115.81,120.31,132.61,142.5613.1697.8770.9840.0892.7969.91,028.21,065.61,109.01,181.61,274.91,331.21,459.31,493.4815.7855.7926.6990.81,034.31,096.31,135.51,209.81,257.81,266.51,268.31,306.91,261.01,326.51,350.21,387.2-60.1-58.8-135.5-180.1-166.9-181.4-201.0-151.8-136.6-122.3-163.5-203.4-276.3-225.8-183.4-184.6-186.8-187.2-177.5-152.7-134.9-141.5-166.4-152.0-144.6-191.0-145.2-206.2-217.7-244.7361.4390.8409.0443.4492.2528.7571.2594.3631.3681.5730.0780.5837.8887.3417.9459.5505.1544.8582.4605.1648.2697.7712.5722.4736.9748.3756.2772.0787.0806.6336.6362.3382.1403.2434.1472.6517.0554.2593.0636.7704.9773.2830.6885.2391.4411.1446.1488.4531.1568.1607.9656.4677.9693.1712.2736.5750.1766.5781.5794.524.828.526.940.358.156.154.340.138.444.825.17.37.22.126.548.359.056.351.237.040.241.334.529.324.711.76.15.55.512.11992:1..1993:1..IllIV P1,819.71,837.61,834.41,906.01,902.51,966.31,981.42,083.92,109.72,123.82,156.62,165.32,187.92,195.82,222.1-264.2-272.2-289.5-250.6-262.8-221.5-214.41,165.91,176.11,169.11,221.11,218.41,268.01,275.91,436.11,456.01,459.81,485.31,481.91,490.61,488.51,512.5-270.2-279.9-290.7-264.2-263.5-222.6-212.7817.2833.2839.0861.6860.2881.0894.2811.2825.5837.8848.0859.4880.0895.9905.56.17.81.213.51.1-1.7Note.—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.Source: Department of Commerce, Bureau of Economic Analysis.363

TABLE B-81.—Federal and State and local government receipts and expenditures, national income andproduct accounts, by major type, 1959-93[Billions of dollars; quarterly data at seasonally adjusted annual rates]Year orquarter19591960196119621963196419651966196719681969197019711972197319741975197619771978197919801981198219831984198519861987198819891990199119921993 >>1982: IV1983: IV1984: IV1985: IV1986: IV1987: IV1988: IV1989: IV1990:1IIIllIV1991:1IIIllIV1992:1IIIllIV1993:1IIIllIV "....ReceiptsTotal128.8138.8144.1155.8167.5172.9187.0210.7226.4260.9294.0299.8318.9364.2408.5450.7465.8532.6598.4673.2754.7825.7941.9960.51,016.41,123.61,217.01,290.81,405.21,492.41,622.61,709.11,755.21,849.41,969.1965.91,043.71,147.11,243.81,335.41,445.71,535.81,644.11,676.11,705.11.728.71,726.51,728.11,740.91,765.01,786.81.819.71,837.61,834.41,906.01,902.51,966.31,981.4Parpersonaltaxandnontaxreceipts44.548.750.354.858.056.061.971.077.992.1109.9109.0108.7132.0140.6159.1156.4182.3210.0240.1280.2312.4360.2371.4368.8395.1436.8459.0512.5527.7593.3623.3620.4644.8681.6372.1371.6413.4448.8478.5528.6542.0605.1611.9627.4628.5625.2616.4616.6619.7628.8630.9634.6642.8670.7657.1681.0689.0699.1Corporateprofitstax accruals23.622.722.824.026.228.030.933.732.739.439.734.437.741.949.351.850.964.273.083.588.084.881.163.177.294.096.5106.5127.1137.0141.3138.7129.8146.3171.758.782.283.897.6116.6135.2146.2134.2132.0139.8145.7137.0125.4128.0132.5133.4147.0153.0130.1155.0160.9173.3169.5Indirectbusinesstaxandnontaxaccruals41.945.548.151.754.758.862.765.470.479.086.694.3103.6111.4121.0129.3140.0151.6165.5177.8188.7212.0249.3256.4280.1309.5329.9345.5365.0385.3414.7444.0476.6502.8530 5262.3291.7317.7335.1351.6372.3394.2424.4436.2437.2448.0454.8465.6470.5481.3488.9493.4497.3504.8515.7515.6526.2532.4547.9Contributionsforsocialinsurance18.821.922.925.428.530.131.640.645.550.457.962.268.979.097.6110.5118.5134.5149.8171.8197.8216.6251.3269.6290.2325.0353.8379.8400.7442.3473.2503.1528.4555.6585.3272.8298.3332.2362.3388.7409.6453.5480.4495.9500.7506.4509.5520.7525.7531.5535.7548.5552.7556.6564.6568.9585.9590.5596.0ExpendituresTotal»131.9135.2147.1158.7165.9174.5185.8211.6240.2265.5284.0311.2338.1368.1401.6455.2530.6570.9615.2670.3745.3861.0972.31,069.11,156.21,232.41,342.21,437.51,516.91,590.71,700.11,847.51,951.32,118.52,192.71,122.81,180.01,274.91,374.71,461.61,561.51,630.51,744.31,808.01,827.71,848.61,905.81,867.21,941.61,977.22,019.42,083.92,109.72,123.8.2,156.62,165.32,187.92,195.82,222.1Purchases99.099.8107.0116.8122.3128.3136.3155.9175.6191.5201.8212.7224.3241.5257.7288.3321.4341.3368.0403.6448.5507.1561.1607.6652.3700.8772.3833.0881.5918.7975.21,047.41,099.31,131.81,157.1631.6657.6727.0799.2849.7901.4937.6994.51,027.71,037.31,048.31,076.51,093.01,099.91,104.01,100.21,118.51,125.81,139.11,143.81,139.71,158.61,164.81,165.3Transferpayments27.529.333.634.736.638.141.145.854.562.669.383.899.4110.9126.6150.5189.2206.5220.9238.6266.9317.6360.7402.7433.4447.2479.5509.4531.8566.2615.1679.5721.3853.1903.9428.1439.1456.2488.3518.6542.6578.6639.0660.6671.4682.6703.3647.4708.9749.8779.0829.2845.9857.1880.1886.2896.6910.1922.8Net interest paidTotal6.36.96.46.97.47.98.18.58.910.311.512.412.512.915.216.318.522.824.426.528.733.448.155.561.879.188.390.695.4101.8112.4125.2140.5141.1135.356.667.786.789.290.5101.3105.0114.8118.4124.9132.4125.1134.6141.1140.9145.5143.0144.4141.6135.6132.8137.2137.0134.3Interestpaid10.19.910.811.612.513.214.515.718.119.822.323.124.829.633.637.743.647.956.868.683.9110.2130.6146.6174.6195.9207.9215.9229.9251.0269.6284.4286.1286.2135.6156.1186.5201.6208.7222.9236.0256.0260.0266.1274.1278.3280.3284.2285.2287.8285.4287.8287.6283.5281.8287.4288.9286.8Less:Interestreceivedbygovernment23.33.53.94.24.65.16.06.87.78.39.910.611.914.417.319.220.923.530.339.950.562.175.084.895.6107.6117.3120.5128.1138.6144.5143.9144.9150.979.088.499.8112.3118.2121.6131.0141.2141.6141.2141.7153.2145.7143.1144.3142.3142.4143.4146.0147.9149.0150.2151.9152.5Less:Dividendsreceivedbygovernment2b'i*.2.2.3.3.5.9.9.91.31.72.01.92.32.93.43.94.55.15.96.98.19.09.510.21073.13.54.14.75.46.17.28.58.79.09.09.39.39.59.59.79.810.210.310.510.510.710.810.9Subsi-Hiocoieslocclesscurrentsurplusofgovernmententerprises-0.9-.8.2.3-.3.1.31.41.21.21.52.62.43.42.6.42.61.43.33.62.94.84.76.211.79.56.49.714.110.95.44.5-.32.77.29.619.29.72.68.222.016.54.49.93.0-5.610.41.8.8-8.04.33.03.9-3.77.717.16.1-5.310.7SurplusorHofiritOcllCIl( —)>nationalincomeandproductaccounts-3.13.6-3.0-2.91.6-1.61.2-1.0-13.7-4.610.0-11.5-19.2-3.96.9-4.5-64.8-38.3-16.82.99.4-35.3-30.3-108.6-139.8-108.8-125.3-146.8-111.7-98.3-77.5-138.4-196.2-269.1-223.7-156.9-136.3-127.8-130.9-126.2-115.8-94.7-100.2-131.9-122.7-119,9-179.3-139.1-200.7-212.2-232.6-264.2-272.2-289.5-250.6-262.8-221.5-214.4Addendum:Grantsin-aidtoStateandlocalgovernments6.86.57.28.09.110.411.114.415.918.620.324.429.03*7.540.643.954.661.167.577.380.588.787.983.987.094.4100.3107.6102.8111.3118.2132.3153.0171.4185.884.386.997.7104.5103.8102.9113.0121.9127.7131.9131.9137.6143.8151.5154.6162.3163.4171.8173.7176.7176.1182.8188.6195.81Includes an item for the difference between wage accruals and disbursements, not shown separately.2Prior to 1968, dividends received is included in interest received.Source: Department of Commerce, Bureau of Economic Analysis.364

TABLE B-82.—Federal Government receipts and expenditures, national income and product accounts,1976-93[Billions of dollars; quarterly data at seasonally adjusted annual rates]Year or quarterTotalPersonaltax andnontaxreceiptsReceiptsCorporateprofitstaxaccrualsIndirectbusinesstax andnontaxaccrualsTotal»PurchasesTotalContributionsforsocialinsuranceNationaldefenseExpendituresTransferpaymentsTo restof theworld(net)TopersonsGrantsin-aidtoStateandlocalgovernmentsNetinterestpaidSubsidieslesscurrentsurplusofgovernmententerprisesSurplusordeficit(-),nationalincomeandproductaccountsFiscal: 2197619771978197919801981198219831984198519861987198819891990199119921993Calendar:197619771978197919801981198219831984198519861987198819891990199119921993 P1982: IV1983: IV1984.1V1985: IV1986.1V1987: IV1988: IV1989: IV1990: IIIIIIIV1991: IIIIllIV1992:1IIIllIV1993:1IIIllIV "322 0375 4423 8490 5538.1623.0642.7646.47117777.0813.8899.1955.11,050.11,092.01,121.41,165.61,249.3339.9384.0441.2504.7553.0639.0635.4660.0725.8788.6827.2913.8972.31,059.31,111.41 127 81,183.01,267.6632.3671.1739.8803.6856.8943.51,000.61,068.31,091.31,114.51,123.71,115.81,115.81,120.31,132.61,142.51,165.91,176.11,169.11,221.11,218.41,268.01,275.9136.5165.2185 5221.6249.1287.9308.4290.7300.4337.0353.1396.3403.8456.9475.2475.7484.0511.7146.6169.1193.8229.7256 2297.2302 9292.6308.0342.8357.4400.6410.1461.9484.3474 9490.8521.2301.6290.5323.5351.8371.7414.8420.0470.1476.0489.5487.9483.9474.1472.4474.5478,5479.7482.0489.5511.8502.1520.7527.1535.051759 867 475 370.469.351.656.475175.080.499.4107.6119.2115 4108.4116.3135.654.661.671.474.470.365.749 061.375.276.383.8103.2111.0117.1116.4107 1120.2141.145.565.467.077.091.4109.7118.5111.3110.8117.2122.3115.1103.7105.7109.2109.8121.1125.8107.0127.1132.4142.4139.324 625 027 929 936.254.351.552.057 059.153.857.859.662.263.176.780.886.023.825.628.930.139.657.349 753.557.858.653.558.460.961.965.879181.387.449.255.458.256.854.859.561.462.265.364.965.967.177.777.979.581.380.480.281.183.581.586.286.795.2109 2125 4143 0163 7182.3211.5231.2247.3279 3305.9326.5345.5384.1411.8438.3460.6484.5516.0115.0127.7147.1170.4186.8218.8233 8252.6284.8310.9332.5351.5390.4418.5444.8466 7490.7517.9235.9259.8291.1318.0338.8359.4400.7424.7439.2442.9447.6449.7460.3464.4469.4472.8484.7488.1491.4498.7502.3518.7522.8527.6379 0417 1458 0505 4587.1679.9747.6829.2875.3952^91,017.61,051.01,098.51,164.51,250.01,309.21,436.01,484.5392.7426.4469.3520.36131697 8770 9840.0892.7969.91,028.21,065.61,109.01,181.61,274.9133121,459.31,493.4815.7855.7926.6990.81,034.31,096.31,135.51,209.81,257.81,266.51,268.31,306.91,261.01,326.51,350.21,387.21,436.11,456.01,459.81,485.31,481.91,490.61,488.51,512.5132 6144 71581174 5201.0232.9259.5289.8302.2335.2363.7379.9386.3399.4418.1446.0444.9445.0135.8147.9162.2179.3209.1240.8266 6292.0310.9344.3367.8384.9387.0401.6426.5445 9448.8443.4281.4289.7324.7356.9373.1392.5392.0405.1422.7423.6423.2436.5450.2449.4446.8437.4445.5444.6452.8452.4442.7447.5443.6439.791.599.2106.3117 7136.9160.9187.3210.2228.2251.7274.3287.6295.1299.5309.0325.8311.7306.893.4100.9108.9121.9142.7167.5193 8214.4233.1258.6276.7292.1295.6299.9314.0322 5313.8303.6205.5222.8242.9268.6278.6295.8296.8302.5312.1312.5309.1322.5331.4326.3321.2311.2312.3310.4316.7315.7304.8307.6301.9300.0154.3167.1179.3198 5235.4274.6305.6339.8342.4360.7380.6399.4420.7449.6491.3535.9595.8630.2159.3170.1182.4205.7247.0282.1316 4340.2344.3366.8386.2401.8425.9460.2500.9550 0608.2635.8337.8340.0346.2370.3391.4405.1429.4473.7493.6494.9501.1514.1537.5545.6551.3565.4598.4605.8611.6617.1628.9632.7639.1642.53.13.43.5404.35.25.86.58.711.512.59.910.211.614.4-26.111.516.23.73.43.84.15.05.0647.39.411.412.310.410.411.313.2-27 916.314.28.211.013.913.512.814.615.115.111.615 313.412.4-76.9-32.0-5.12.212.615.012.824.613.112.913.717.257.566.374.779186.790.183.486.291.598.6108.3103.4108.4115.8128.3147.0167.4182.161.167.577.380.588.787.983 987.094.4100.3107.6102.8111.3118.2132.3153.0171.4185.884.386.997.7104.5103.8102.9113.0121.9127.7131.9131.9137.6143.8151.5154.6162.3163.4171.8173.7176.7176.1182.8188.6195.825.128.533.140 250.166.181.889.6107.5125.2130.5133.6143.8160.5175.1183.2189.7181.326.829.134.642.152.771.784 492.7113.1127.0131.0136.6146.0164.8176.5187 6187.1180.686.899.2122.3129.2131.1143.1151.2168.9171.5176.9183.1174.4182.6188.3187.6191.9189.3190.4187.4181.3178.3182.5182.2179.36.5 -57.07.2 -41.79.4 -34.191 -14 99.6 -49.011.0 -56.911.5 -105.016.8 -182.823 0 163 621.6 -175.922.1 -203.924.9 -151.928.9 -143.327.6 -114.322.8 -157.923.3 -187.826.7 -270.429.7 -235.26.2 -52.98.4 -42.49.2 -28.18.7 -15.710.6 -60110.3 -58.813 3 -135 520.4 -180.120.8 -166.919.9 -181.423.4 -201.029.1 -151.828.4 -136.625.5 -122.325.6 -163.522 6 -203 427.5 -276.333.6 -225.817.3 -183.428.8 -184.622.2 -186.816.4 -187.222.1 -177.537.8 -152.734.9 -134.925.0 -141.530.7 -166.423.9 -152.015.7 -144.632.0 -191.023.9 -145.223.4 -206.215.1 -217.727.9 -244.727.0 -270.228.5 -279.921.4 -290.733.2 -264.242.9 -263.532.3 -222.621.4 -212.738.01 Includes an item for the difference between wage accruals and disbursements, not shown separately.2 Through fiscal year 1976, the fiscal year was on a July 1-June 30 basis; beginning October 1976 (fiscal year 1977), the fiscal yearis on an October 1-September 30 basis. The 3-month period from July 1, 1976 through September 30, 1976 is a separate fiscal periodknown as the transition quarter. Data are not seasonally adjusted.Sources: Department of Commerce (Bureau of Economic Analysis) and Office of Management and Budget.365

TABLE B-83.—State and local government receipts and expenditures, national income and product accounts,1959-93[Billions of dollars; quarterly data at seasonally adjusted annual rates]YearorquarterReceiptsTotalPersonaltax andnontaxreceiptsCorporateprofitstaxaccrualsIndirectbusinesstax andnontaxaccrualsContributionsforsocialinsuranceFederalgrants-inaidExpendituresTotal 1PurchasesTransferpaymentstopersonsNetinterestpaidlessdividendsreceivedSubsidieslesscurrentsurplusofgovernmententerprisesSurplusordeficit(-),nationalincomeandproductaccounts19591960196119621963196419651966196719681969197019711972197319741975197619771978197919801981198219831984198519861987198819891990199119921993 p1982: IV1983: IV1984: IV1985: IV1986: IV1987: IV1988: IV1989: IV1990:1II1991: I..IIIllIV1992:1...IIIllIV1993:1..IIIllIV "45.048.352.456.661.167.172.381.589.8102.7114.8129.0145.3169.7185.3200.6225.6253.9281.9309.3330.6361.4390.8409.0443.4492.2528.7571.2594.3631.3681.5730.0780.5837.8887.3417.9459.5505.1544.8582.4605.1648.2697.7712.5722.4736.9748.3756.2772.0787.0806.6817.2833.2839.0861.6860.2881.0894.24.65.25.76.36.77.58.19.510.612.715.216.718.724.226.328.231.035.841.046.350.556.263.068.576.287.194.0101.6111.8117.6131.4138.9145.5154.0160.370.581.189.997.0106.8113.8122.0135.0135.9137.8140.6141.3142.3144.2145.2150.2151.2152.6153.3158.8155.0160.3162.0164.11.21.21.31.51.71.82.02.22.63.33.63.74.35.36.06.77.39.611.412.113.614.515.414.015.918.820.222.723.926.024.222.322.726.030.513.116.816.820.625.225.527.722.821.222.623.421.921.722.423.323.625.927.223.127.928.530.830.129.332.034.437.039.442.646.149.753.960.867.474.883.191.299.5107.2115.8127.8139.9148.9158.6172.3192.0206.8226.6251.7271.4292.0306.5324.5352.8378.2397.5421.5443.1213.1236.3259.6278.3296.8312.8332.7362.2370.9372.3382.1387.7387.9392.6401.8407.5413.0417.1423.7432.2434.1440.0445.7452.63.13.43.73.94.24.75.05.76.77.28.39.210.211.513.014.616.819.522.124.727.429.732.535.837.740.242.847.349.251.954.858.361.764.967.436.838.441.144.349.850.252.855.856.757.858.959.760.561.462.162.963.864.665.265.966.567.267.768.36.86.57.28.09.110.411.114.415.918.620.324.429.037.540.643.954.661.167.577.380.588.787.983.987.094.4100.3107.6102.8111.3118.2132.3153.0171.4185.884.386.997.7104.5103.8102.9113.0121.9127.7131.9131.9137.6143.8151.5154.6162.3163.4171.8173.7176.7176.1182.8188.6195.845.548.352.756.160.666.172.381.190.9102.6113.3127.2142.8156.3171.9193.5221.0239.3256.3278.2305.4336.6362.3382.1403.2434.1472.6517.0554.2593.0636.7704.9773.2830.6885.2391.4411.1446.1488.4531.1568.1607.9656.4677.9693.1712.2736.5750.1766.5781.5794.5811.2825.5837.8848.0859.4880.0895.9905.541.844.548.451.455.860.966.874.682.792.3101.3112.6124.3134.7149.2170.7192.0205.5220.1241.4269.2298.0320.3341.1360.3389.9428.1465.3496.6531.7573.6620.9653.4683.0713.7350.3367.9402.2442.4476.6509.0545.7589.3605.0613.7625.1640.0642.9650.5657.3662.8673.0681.2686.2691.4697.0711.1721.2725.65.65.96.57.07.58.210.112.114.516.720.124.027.530.432.338.943.647.452.457.265.773.679.985.993.5101.2110.9119.6130.0143.6165.4199.2228.6253.982.188.096.1104.5114.4122.9134.2150.2155.4161.3168.1176.8186.7195.3203.5211.4218.3225.1232.8238.4244.1251.0257.2263.1-.3-.6-.9-1.1-1.3-2.0-1.6-1.8-3.3-5.2-5.4-5.0-6.0-9.8-15.3-21.2-25.9-31.8-34.3-37.9-43.2-45.6-47.0-51.1-60.4-60.3-56.5-56.2-56.0-33.2-35.1-39.7-44.7-45.9-48.0-53.4-62.6-61.8-61.0-59.7-58.7-57.3-56.6-56.2-56.0-56.1-56.2-56.1-56.2-56.0-56.0-55.9-56.0-2.0-2.2-2.3-2.5-2.8-2.8-3.0-3.0-3.1-3.2-3.3-3.6-3.7-4.2-4.3-4.4-4.5-4.8-5.1-5.6-5.7-5.8-5.6-7.1-8.7-11.4-13.5-13.7-14.9-17.5-20.1-21.1-22.9-24.8-26.5-7.7-9.6-12.5-13.8-13.9-15.8-18.5-20.6-20.7-20.9-21.2-21.6-22.1-22.6-23.1-23.6-24.0-24.6-25.1-25.5-25.8-26.2-26.7-27.3-0.5.0-.4.5.41.0.0.5-1.1.11.51.82.513.413.47.14.614.625.631.125.124.828.526.940.358.156.154.340.138.444.825.17.37.22.126.548.359.056.351.237.040.241.334.529.324.711.76.15.55.512.16.17.81.213.51.1-1.71 Includes an item for the difference between wage accruals and disbursements, not shown separately.Source-. Department of Commerce, Bureau of Economic Analysis.366

TABLE B-84.—State and local government revenues and expenditures, selected fiscal years, 1927-91[Millions of dollars]Fiscal year l General revenues by source 2TotalPropertytaxesSalesandgrossreceiptstaxesIndividualincometaxesCorporationnetincometaxesRevenuefromFederalGovernmentGeneral expenditures by function 2AllEducatiowayswelfare otherHigh-Public Allother 3 Total4192719321934193619381940194219441946194819501952195319541955195619571958195919601961196219631962-63.1963-64.1964-65.1965-66.1966-67.1967-68.1968-69.1969-70.1970-71.1971-72.1972-73.1973-74.1974-75.1975-76.1976-77.1977-78.1978-79.1979-80.1980-81.1981-82.1982-83.1983-84.1984-85.1985-86.1986-87.1987-88.1988-89.1989-90.1990-91.7,2717,2677,6788,3959,2289,60910,41810,90812,35617,25020,91125,18127,30729,01231,07334,66738,16441,21945,30650,50554,03758,25262,89062,26968,44374,00083,03691,197101,264114,550130,756144,927167,541190,222207,670228,171256,176285,157315,960343,236382,322423,404457,654486,753542,730598,121641,486686,860726,762786,129849,502902,2074,7304,4874,0764,0934,4404,4304,5374,6044,9866,1267,3498,6529,3759,96710,73511,74912,86414,04714,98316,40518,00219,05420,08919,83321,24122,58324,67026,04727,74730,67334,05437,85242,87745,28347,70551,49157,00162,52766,42264,94468,49974,96982,06789,10596,457103,757111,709121,203132,212142,400155,613167,9994707521,0081,4841,7941,9822,3512,2892,9864,4425,1546,3576,9277,2767,6438,6919,4679,82910,43711,84912,46313,49414,45614,44615,76217,11819,08520,53022,91126,51930,32233,23337,51842,04746,09849,81554,54760,64167,59674,24779,92785,97193,613100,247114,097126,376135,005144,091156,452166,336177,8857074801532182242763424225437889981.0651,1271,2371,5381,7541,7591,9942,4632,6133,0373,2693,2673,7914,0904,7605,8257,3088,90810,81211,90015,22717,99419,49121,45424,57529,24633,17636,93242,08046,42650,73855,12964,52970,36174,36583,93588,35097,806105,6409279491131651562724514475925938468177787448909841,0181,0011,1801,2661,3081,5051,5051,6951,9292,0382,2272,5183,1803,7383,4244,4165,4256,0156,6427,2739,17410,73812,12813,32114,14315,02814,25817,14119,15219,99422,42523,66325,92623,5661162321,0169488009458589548551,8612,4862,5662,8702,9663,1313,3353,8434,8656,3776,9747,1317,8718,7228,66310,00211,02913,21415,37017,18119,15321,85726,14631,34239,26441,82047,03455,58962,44469,59275,16483,02990,29487,28290,00796,935106,158113,099114,857117,602125,824136,8021,7931,6431,4491,6041,8111,8722,1232,2692,6613,6854,5415,7636,2526,8977,5848,4659,2529,69910,51611,63412,56313,48914,85014,55615,95117,25019,26921,19723,59826,11829,97132,37436,16240,21046,54151,73557,19161,12468,43679,82195,466111,599128,926138,008153,570172,317187,314200,350208,482227,838249,9967,2107,7657,1817,6448,7579,2299,1908,86311,02817,68422,78726,09827,91030,70133,72436,71140,37544,85148,88751,87656,20160,20664,81663,97769,30274,67882,84393,350102,411116,728131,332150,674168,549181,357198,959230,721256,731274,215296,984327,517369,086407,449436,733466,516505,008553,899605,623657,134704,921762,360834,8182,2352,3111,8312,1772,4912,6382,5862,7933,3565,3797,1778,3189,39010,55711,90713,22014,13415,91917,28318,71920,57422,21623,77623,72926,28628,56333,28737,91941,15847,23852,71859,41365,81469,71475,83387,85897,216102,780110,758119,448133,211145,784154,282163,876176,108192,686210,819226,619242,683263,898288,148185,570 109,341 22,242 154,099 262,956 908,108 309,3021,8091,7411,5091,4251,6501,5731,4901,2001,6723,0363,8034,6504,9875,5276,4526,9537,8168,5679,5929,4289,84410,35711,13611,15011,66412,22112,77013,93214,48115,41716,42718,09519,02118,61519,94622,52823,90723,05824,60928,44033,31134,60334,52036,65539,41944,98949,36852,35555,62158,10561,05764,9371514448898271,0691,1561,2251,1331,4092,0992,9402,7882,9143,0603,1683,1393,4853,8184,1364,4044,7205,0845,4815,4205,7666,3156,7578,2189,85712,11014,67918,22621,11723,58225,08528,15532,60435,90639,14041,89847,28854,10557,99660,90666,41471,47975,86882,65089,09097,879110,518130,4023,0153,2692,9523,2153,5473,8623,8893,7374,5917,1708,86710,34210,61911,55712,19713,39914,94016,54717,87619,32521,06322,54924,42323,67825,58627,57930,02933,28136,91541,96347,50854,94062,59769,44678,09692,180103,004112,472122,477137,731155,277172,957189,935205,079223,068244,745269,568295,510317,528342,479375,095403,4671 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. Intergovernmentalreceipts and payments between State and local governments are also excluded.3 Includes other taxes and charges and miscellaneous revenues.4 Includes expenditures for libraries, hospitals, health, employment security administration, veterans' services, air transportation,water transport and terminals, parking facilities, and transit subsidies, police protection, fire protection, correction, protective inspectionand regulation, sewerage, natural resources, parks and recreation, housing and community development, solid waste management,financial administration, judicial and legal, general public buildings, other government administration, interest on general debt, andgeneral expenditures, n.e.c.Note.—Data for fiscal years listed from 1962-63 to 1990-91 are the aggregations of data for government fiscal years that ended inthe 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.Source: Department of Commerce, Bureau of the Census.367

TABLE B-85.—Interest-bearing public debt securities by kind of obligation, 7967-93[Millions of dollars]End of yearor monthTotalinterestbearingpublicdebtsecuritiesTotal >MarketableTreasurybillsTreasurynotesTreasurybondsTotalU.S.savingsbondsNonmarketableForeigngovernmentandpublicseries 2GovernmentaccountseriesOther =Fiscal year:1967196819691970197119721973197419751976197719781979322,286344,401351,729369,026396,289425,360456,353473,238532,122619,254697,629766,971819,0074 210,672226,592226,107232,599245,473257,202262,971266,575315,606392,581443,508485,155506,69358,53564,44068,35676,15486,67794,648100,061105,019128,569161,198156,091160,936161,37849,10871,07378,94693,489104,807113,419117,840128,419150,257191,758241,692267,865274,24297,41891,07978,80562,95653,98949,13545,07133,13736,77939,62645,72456,35571,073111,614117,808125,623136,426150,816168,158193,382206,663216,516226,673254,121281,816312,31451,21351,71251,71151,28153,00355,92159,41861,92165,48269,73375,41179,79880,4401,5143,7414,0704,7559,27018,98528,52425,01123,21621,50021,79921,68028,11556,15559,52666,79076,32382,78489,598101,738115,442124,173130,557140,113153,271176,3602,7312,8283,0514,0685,7593,6543,7014,2893,6444,88316,79727,06727,40019801981198219831984198519861987198819891990..1991..1992..1993..1992: JanFebMar....AprMay....June...July....Aug....Sept...OctNov....Dec...1993:JanFebMar...AlfayZJune..July...Aug....Sept..Oct....Nov...Dec...906,402996,4951,140,8831,375,7511,559,5701,821,0102,122,6842,347,7502,599,8772,836,3093,210,9433,662,7594,061,8014,408,5673,806,5263,814,1473,878,4943,889,2113,919,0963,981,7914,007,7784,046,0654,061,8014,050,8144,130,0344,173,8854,150,0594,180,2544,227,6284,251,1644,279,2214,349,0114,333,5074,400,3134,408,5674,403,7594,490,6394,532,325594,506683,209824,4221,024,0001,176,5561,360,1791 1,564,3291 1,675,9801 1,802,9051 1,892,7631 2,092,7591 2,390,6601 2,677,4761 2,904,9101 2,486,0971 2,493,4161 2,552,2611 2,554,1751 2,572,9611 2,605,0581 2,637,9181 2,672,2251 2,677,4761 2,661,3741 2,734,6421 2,754,1131 2,732,9621 2,760,5331 2,807,0921 2,808,8591 2,821,9331 2,860,6221 2,852,0731 2,917,1961 2,904,9101 2,892,5211 2,977,8231 2,989,475199,832223,388277,900340,733356,798384,220410,730378,263398,451406,597482,454564,589634,287658,381586,759591,223615,818598,383620,107618,218632,322637,025634,287627,762644,964657,661647,041648,459659,877642,189657,491659,280671,190677,030658,381668,723709,212714,631310,903363,643442,890557,525661,687776,449896,8841,005,1271,089,5781,133,1931,218,0811,387,7171,566,3491,734,1611,448,8691,443,4001,477,6531,497,0031,483,5591,517,5481,536,3061,558,3591,566,3491,556,7851,602,1531,608,9291,598,3981,616,9231,652,0681,671,5221,661,8341,698,7361,678,2771,727,7991,734,1611,711,4321,757,7551,763,98983,77296,178103,631125,742158,070199,510241,716277,590299,875337,974377,224423,354461,840497,367435,470443,793443,791443,789454,295454,292454,289461,841461,840461,827472,525472,524472,523480,151480,148480,147487,608487,606487,606497,368497,367497,366495,856495,855311,896313,286316,461351,751383,015460,831558,355671,769796,972943,5461,118,1841,272,0991,384,3251,503,6571,320,4291,320,7311,326,2331,335,0361,346,1351,376,7331,369,8611,373,8401,384,3251,389,4411,395,3921,419,7721,417,0981,419,7221,420,5361,442,3061,457,2881,488,3891,481,4341,483,1161,503,6571,511,2391,512,8171,542,85072,72768,01767,27470,02472,83277,01185,55197,004106,176114,025122,152133,512148,266167,024137,293138,656139,924141,320142,217143,215144,503146,083148,266151,147153,528154,955157,647159,888161,441162,644163,550164,424165,319166,181167,024168,155168,993169,42525,15820,49914,64111,4508,8066,6384,1284,3506,3206,81836,04141,63937,03942,45942,02541,97141,96642,16442,25938,69838,45637,02337,03936,52637,37037,34837,16737,00637,03843,79143,22142,96443,00742,49642,45943,77743,59643,480189,848201,052210,462234,684259,534313,928365,872440,658536,455663,677779,412908,4061,011,0201,114,289954,823952,963956,123961,491970,9571,002,534999,9571,002,9691,011,0201,016,3801,019,9791,043,5081,043,0621,042,7601,039,9951,053,0801,066,3941,097,7511,094,8151,095,5481,114,2891,120,8221,120,3451,150,04124,16423,71824,08535,59341,84363,255102,804129,758148,023159,025180,581188,541188,000179,886186,287187,140188,219190,060190,702192,285186,945187,765188,000185,388184,516183,960179,222180,066182,062182,791184,123183,251178,293178,892179,886178,485179,883179,9041 Includes Federal Financing Bank securities, not shown separately, in the amount of 15,000 million dollars.2 Nonmarketable certificates of indebtedness, notes, bonds, and bills in the Treasury foreign series of dollar-denominated and foreigncurrencydenominated issues.3 Includes depository bonds, retirement plan bonds, Rural Electrification Administration bonds, State and local bonds, and specialissues 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.368

TABLE B-86.—Maturity distribution and average length of marketable interest-bearing public debt securitiesheld by private investors, 1967-93End of year or monthAmountoutstanding,privatelyheldWithinlyearIto5yearsMaturity class5 to 10years10 to 20years20 yearsand overAverage lengthMillions of dollarsYearsMonthsFiscal year:196719681969150,321159,671156,00856,56166,74669,31153,58452,29550,18221,05721,85018,0786,1536,1106,09712,96812,67012,33754419701971197219731974157,910161,863165,978167,869164,86276,44374,80379,50984,04187,15057,03558,55757,15754,13950,1038,28614,50316,03316,38514,1977,8766,3576,3588,7419,9308,2727,6456,9224,5643,4813333222233343444555666555655655555555555555555551 5286311975...1976...1977...1978...1979...210,382279,782326,674356,501380,530115,677150,296161,329163,819181,88365,85290,578113,319132,993127,57415,38524,16933,06733,50032,2798,8578,0878,42811,38318,4894,6116,65210,53114,80520,3041187113790111619801981198219831984463,717549,863682,043862,6311,017,488220,084256,187314,436379,579437,941156,244182,237221,783294,955332,80838,80948,74375,74999,174130,41725,90132,56933,01740,82649,66422,67930,12737,05848,09766,6581985....1986....1987....1988....1989....1,185,6751,354,2751,445,3661,555,2081,654,660472,661506,903483,582524,201546,751402,766467,348526,746552,993578,333159,383189,995209,160232,453247,42862,85370,66472,86274,18680,61688,012119,365153,016171,375201,53211399010111019901991199219931,841,9032,113,7992,363,8022,562,336626,297713,778808,705858,135630,144761,243866,329978,714267,573280,574295,921306,66382,71384,90084,70694,346235,176273,304308,141324,4791992:JanFebMarAprMayJuneJulyAugSeptOctNovDec1993: Jan....Feb...Mar...Apr...,May..June.JulyAugSeptOctNovDec2,201,6422,211,9632,266,8062,268,3752,284,8662,310,3212,344,0942,372,7642,363,8022,362,0752,425,5502,434,3332,419,5612,443,0202,484,6282,486,2312,496,6152,515,5012,521,2492,578,5012,562,3362,552,8802,626,0852,628,352749,495758,592786,988769,874786,584784,194800,084811,729808,705806,345825,445843,416832,988833,583849,766833,935854,658849,639864,355874,599858,135866,988898,241905,311806,162785,152812,043828,118816,200845,264861,247868,080866,329860,918893,133890,778881,132894,130922,468937,347919,114949,127940,460976,547978,714968,7941,008,4681,011,213278,275291,657291,507293,819295,318294,745296,644297,830295,921299,422303,863301,395303,279308,058306,175308.094313,037309,295304,447308,413306,663298,460308,219304,86387,29785,79885,70885,79885,78885,79385,79385,57284,70685,52992,79891,44192,35689,37688,62688,83485,27384,23785,70894,48794,34694,43687,13186,143280,413290,764290,559290,766300,976300,326300,326309,553308,141309,861310,312307,304309,807317,874317,593318,022324,532323,204326,279324,455324,479324,203324,025320,82211111110111011111111101011101010101010101098Note.—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 ison an October 1-September 30 basis.Source: Department of the Treasury.369

TABLE B-87.—Estimated ownership of public debt securities by private investors, 7976-93[Par values; l billions of dollars]Held by private investorsNonbank investorsEnd of monthTotalCommercialbanks 2TotalTotalIndividuals 3Savingsbonds 4MoneymarketfundsOthersecuritiesInsurancecompaniesCorporations5State andlocalgovernments6Foreignandinternational7Otherinvestors81976: JuneDec376.4409.592.5103.8283.9305.796.1101.669.672.026.529.610.712.70.81.123.323.532.739.369.878.150.549.41977: JuneDec421.0461.3102.9102.0318.1359.3104.9107.874.476.730.531.113.015.1.8.922.118.249.659.187.9109.639.848.61978: JuneDec477.8508.699.695.3378.2413.3109.0114.079.180.729.933.314.215.31.31.517.317.369.681.1119.5133.147.351.01979-. JuneDec516.6540.594.695.6422.0444.9115.5118.080.679.934.938.116.015.63.85.618.617.086.286.2114.9119.067.083.51980: JuneDec1981: JuneDec558.2616.4651.2694.598.5111.5115.0113.8459.7504.9536.2580.7116.5117.1107.4110.873.472.569.268.143.144.638.242.715.318.119.921.65.33.59.021.514.019.319.917.9•85.190.395.999.9118.2129.7136.6136.6105.3126.9147.5172.41982: JuneDec740.9848.4114.7134.0626.2714.4114.1116.567.468.346.748.224.430.622.442.617.624.5106.0118.6137.2149.5204.5232.11983: JuneDec948.61,022.6167.4179.5781.2843.1121.3133.469.771.551.661.937.846.028.322.832.839.7138.1153.0160.1166.3262.8281.91984: JuneDec1,102.21,212.5180.6181.5921.61,031.0142.2143.872.974.569.369.351.264.514.925.945.350.1168.5188.4171.6205.9327.9352.41985: JuneDec1,292.01,417.2195.6189.41,096.41,227.8148.7154.876.779.872.075.069.180.524.825.154.959.0213.4303.6213.8224.8371.7380.01986: JuneDec1987: JuneDec1988: MarJuneSeptDec1989: MarJuneSeptDec1990: MarJuneSeptDec1,502.71,602.01,658.11,731.41,779.61,786.71,821.21,858.51,903.41,909.11,958.32,015.82,115.12,141.82,207.32,288.3194.3197.5192.3194.2195.6190.7191.2184.9192.0178.0166.6164.9178.4176.9179.5171.51,308.41,404.51,465.81,537.21,584.01,596.01,630.01,673.61,711.41,731.11,791.71,850.91,936.71,964.92,027.82,116.8159.5162.7165.6172.4178.1182.0186.8190.4204.2211.7213.5216.4222.8229.6232.5233.883.892.396.8101.1104.0106.2107.8109.6112.2114.0115.7117.7119.9121.9123.9126.275.770.468.871.374.175.879.080.892.097.797.898.7102.9107.7108.6107.687.9101.6104.7108.1110.2111.0115.9118.6119.7120.3121.4125.1134.9137.6141.2142.022.828.620.614.615.213.411.111.813.011.312.914.931.328.034.045.561.268.879.784.686.387.685.986.089.491.090.993.494.996.9102.0108.9319.5346.6383.9418.4432.5446.9457.7471.6477 9483.5487.1487.5493.8494.5492.1490.4250.9263.4281.1299.7332.5345.4345.9362.2376.6369.1394.9429.6421.8427.3440.3458.4406.6432.8430.2439.4429.2409.7426.7433.0430.6444.2471.0484.0537.2551.0585.7637.71991: MarJuneSeptDec2,360.62,397.92,489.42,563.2188.5197.3218.6233.42,172.12,200.62,270.82,329.8238.3243.5257.5263.9129.7133.2135.4138.1108.6110.3122.1125.8147.2156.7171.2181.865.455.464.580.0114.9130.8142.0150.8510.4510.8512.9520.3464.3473.6477.3491.7631.6629.8645.5641.31992: MarJuneSeptDec2,664.02,712.42,765.52,839.9256.6267.3287.4294.02,407.42,445.12,478.12,545.9268.1275.1281.2289.2142.0145.4150.3157.3126.1129.7130.9131.9187.4190.9194.9197.584.879.479.479.7166.0175.0180.8192.5521.8528.5529.5534.8507.9529.6535.2549.7671.5666.7677.0702.41993-. MarJuneSept2,895.02,938.42,983.0310.0305.9306.02,585.02,632.52,677.0297.7303.0305.8163.6166.5169.1134.1136.4136.7205.0208.1210.077.776.275.2199.3206.1215.6541.0553.9558.0565.5568.2592.3698.8717.0720.01 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 30, 1970.5 Exclusive of banks and insurance companies.6 Includes State and local government series (SLGs) as well as State and local pension funds.7 Consists of the investments of foreign and international accounts (both official and private) in U.S. public debt issues. Reflects 1978 benchmark throughDecember 1984 and 1984 benchmark to date.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 enterprises.Source: Department of the Treasury.370

CORPORATE PROFITS AND FINANCETABLE B-88.—Corporate profits with inventory valuation and capital consumption adjustments, 1959-93[Billions of dollars; quarterly data at seasonally adjusted annual rates]Year or quarterCorporateprofits withinventoryvaluationand capitalconsumptionadjustmentsCorporateprofits taxliabilityCorporate profits after tax with inventoryvaluation and capital consumption adjustmentsTotallendsUndistributedprofits withinventoryvaluationand capitalconsumptionadjustments195952.323.628.612.715.9196019611962196319641965196619671968196950.751.659.665.172.182.988.686.092.689.622.722.824.026.228.030.933.732.739.439.728.028.835.638.944.152.054.953.353.249.913.414.015.016.118.020.220.922.124.625.214.614.820.622.826.131.834.031.228.624.7197019711972197319741975197619771978197977.590.3103.2116.4104.5121.9147.1175.7199.7202.534.437.741.949.351.850.964.273.083.588.043.152.661.367.152.771.082.8102.6116.2114.523.723.725.828.130.430.135.640.745.952.419.428.835.539.022.340.947.261.970.362.119801981198219831984198519861987198819891990199119921993 ".1982: IV1983: IV1984: IV1985: IV1986: IV1987: IV1988: IV1989: IV177.7182.0151.5212.7264.2280.8271.6319.8365.0362.8380.6369.5407.2150.3229.1261.3284.9264.6343.3378.3354.584.881.163.177.294.096.5106.5127.1137.0141.3138.7129.8146.358.782.283.897.6116.6135.2146.2134.292.9100.988.4135.4170.2184.2165.1192.8228.0221.5241.9239.7260.991.7146.9177.5187.2148.1208.1232.2220.359.069.270.081.282.792.4109.8106.2115.3134.6153.5137.4150.5169.072.584.283.497.4111.0106.3121.0141.333.931.718.454.287.591.955.486.5112.686.988.5102.3110.419.262.794.189.937.1101.8111.279.01990:1IIIllIV382.6409.3367.5362.8132.0139.8145.7137.0250.6269.5221.8225.8149.9154.6155.7153.7100.7115.066.172.11991:1....IV..369.3370.8359.0378.8125.4128.0132.5133.4243.9242.8226.5245.4145.9136.2133.4133.998.0106.693.1111.51992:1..IIIllIV409.9411.7367.5439.5147.0153.0130.1155.0262.9258.7237.4284.5138.0146.1155.2162.9124.9112.682.3121.71993:1IIIllIV "...432.1458.1468.5160.9173.3169.5271.2284.8299.1167.5168.5169.7170.4103.7116.3129.3Source: Department of Commerce, Bureau of Economic Analysis.371

TABLE B-89.—Corporate profits by industry, 1959-93[Billions of dollars; quarterly data at seasonally adjusted annual rates]Corporate profits with inventory valuation adjustment and without capital consumption adjustmentDomestic industriesYear orquarterTotalTotalTotalFinancial 1FederalReservebanksOtherTotalManufacturing2NonfinancialTransportationand publicutilitiesWholesaleand retailtradeOtherRestof theworld195953.150.47.00.76.343.426.57.16.23.62.71960196119621963196451.051.356.461.267 547.848.052.657.163 07.77.57.67.375.9.8.91.01 16.76.86.86.46440.240.445.049.855 523.823.426.329.632 47.57.98.59.510 25.25.56.36.4793.63.63.94.45 13.13.33.84.1451965196619671968196977.683.080.386.983.272.978.575.581.376.67.99.29.510.911.61.31.72.02.53.16.57.57.68.48565.069.366.070.465.039.742.439.041.737.011.011.910.911.010.68.68.89.710.911.25.66.26.46.86.24.74.54.85.66.61970197119721973197471.885.597.9110.9103 464.777.788.496.085 913.115.216.417.516 23.53.33.34.5579.611.913.113.010 551.662.572.078.569 727.134.841.446.740 78.28.99.49.07610.312.314.114.613 75.96.67.18.2777.17.99.514.917 519751976197719781979129.4158.8186.7212.8219 8114.8142.3167.7190.2185 615.919.925.731.831 65.65.96.17.69410.314.019.624.122 298.9122.4142.0158.4153 954.570.778.589.688 310.915.318.521.716 921.923.127.827.728 311.613.317.119.420 514.616.518.922.634.319801981198219831984197.8203.2166.4202.2236.4162.9174.0138.6171.9205.224.318.715.624.520.311.814.415.214.616.412.64.3.49.93.9138.5155.3123.0147.4185.075.887.463.171.486.718.320.120.828.939.922.831.631.938.749.721.616.27.28.48.735.029.227.830.431.219851986198719881989225.3227.6273.4320.3325 4194.5194.6233.9271.2266 028.735.836.441.850 616.315.515.717.620 112.420.320.724.230 5165.8158.9197.5229.4215 380.159.087.0117.5108 034.136.543.447.542 143.146.339.937.139 78.517.127.227.325 530.832.939.549.159.41990199119921993 "354.7367.3390.1286.7300.4327.8377 765.780.778.198 721.420.217.816 144.360.460.382 5221.1219.7249.8279 0109.189.8115.5128 544.054.452.057 337.247.446.353 430.828.236.039 867.966.962.31982- IV1983: IV1984: IV1985- IV1986: IV1987: IV1988: IV1989: IV160.0216.2223.6228.0225.0293.4340.5320.6130.8182.6192.9193.5192.5246.3285.9254.823.022.120.329.034.739.446.152.514.615.217.216.015.216.118.920.48.36.93.213.019.523.327.232.1107.8160.5172.6164.5157.8207.0239.7202.350.190.579.283.363.998.7129.394.518.219.133.531.334.243.147.638.833.840.750.839.043.139.339.339.25.710.29.011.016.625.823.529.829.233.630.734.532.647.054.665.81990: 1IIIllIV346.8377.9344.7349.3282.2310.1280.9273.860.967.367.866.620.721.322.221.440.246.145.645.2221.3242.8213.1207.2108.3117.4112.398.545.049.742.538.738.444.929.436.229.730.828.833.864.667.863.875.51991:1IIIllIV364.6370.1359.0375.4291.9303.6299.3306.875.981.084.281.621.020.220.019.754.860.864.261.9216.0222.6215.1225.291.589.689.388.950.057.153.157.446.549.645.647.828.026.327.231.172.866.559.768.51992: 1IIIllIV399.7395.7350.1414.8328.5334.2288.6360.197.987.744.682.018.818.317.116.779.169.427.565.3230.5246.5244.0278.198.9115.7119.3128.057.651.348.750.440.046.041.357.734.033.434.642.071.261.561.554.71993: 1IIIll407.0433.4444.8348.0375.3382.192.396.499.316.616.216.075.780.283.3255.7278.9282.8118.9132.5126.753.353.959.046.055.455.137.537.242.159.058.162.71 Consists of the following industries: Depository institutions; nondepository credit institutions; security and commodity brokers-,insurance carriers; regulated investment companies; small business investment companies; and real estate investment trusts.2 See Table B-90 for industry detail.N Ote.—The industry classification is on a company basis and is based on the 1987 Standard Industrial Classification (SIC) beginning1987, and on the 1972 SIC for earlier years shown.Source: Department of Commerce, Bureau of Economic Analysis.372

TABLE B-90.—Corporate profits of manufacturing industries, 1959-93[Billions of dollars; quarterly data at seasonally adjusted annual rates]Corporate profits with inventory valuation adjustment and without capital consumption adjustmentDurable goodsNondurable goodsYear or quarterTotalTotalmanufacturingPrimarymetalindustriesFabricatedmetalproductsIndustrialmachineryandequipmentElectronicandotherelectricequipmentMotorvehiclesandequipmentOtherTotalFoodandKindredproductsChemicalsandalliedproductsPetroleumandcoalproductsOther195926.513.72.31.12.21.73.03.512.82.53.52.64.31960196119621963196423.823.426.329.632.411.711.414.116.418.02.01.61.62.02.51.01.21.31.41.81.92.42.53.31.31.31.51.61.73.02.54.04.94.62.83.13.54.04.512.112.012.213.214.42.22.42.42.72.73.13.33.23.74.12.62.22.22.22.34.24.24.44.75.31965196619671968196939.742.439.041.737.023.223.921.222.419.03.13.62.71.91.42.12.42.52.32.04.04.54.14.13.72.73.03.02.92.36.25.14.05.54.85.25.35.05.74.916.418.417.819.218.02.83.33.23.23.04.64.94.35.24.62.93.43.93.73.36.16.86.47.07.01970197119721973197427.134.841.446.740.710.416.622.625.015.11.62.35.01.11.52.22.61.83.03.04.34.73.11.31.92.83.21.35.15.95.93.04.25.76.34.116.818.218.821.725.73.23.52.92.52.63.94.55.26.15.23.63.73.25.210.76.16.57.57.97.21975197619771978197954.570.778.589.688.320.331.237.645.036.52.72.11.03.63.53.23.94.55.05.24.86.78.310.49.12.63.85.86.65.42.27.49.38.94.64.87.48.610.58.634.139.541.044.651.88.67.16.86.15.86.38.27.78.27.19.813.312.915.524.59.411.013.614.814.61980198119821983198475.887.463.171.486.717.918.14.818.437.22.63.0-4.7-4.9-.44.34.42.63.14.57.58.23.44.46.35.04.91.33.44.8-4.3.2— 45^28.92.8-2.72.67.213.157.869.358.353.049.56.09.07.25.87.35.57.64.76.87.333.638.631.622.115.912.914.214.818.319.11985198619871988198980.159.087.0117.5108.029.030.042.252.249.3-.9.92.65.96.14.75.35.26.46.65.33.27.310.510.32.42.66.27.69.37.34.43.75.72.310.113.717.316.114.651.129.044.865.358.88.47.511.411.810.76.08.015.119.318.517.1-8.5-3.610.45.719.721.921.923.823.91990199119921993 »1982: IV1983: IV1984: IV1985: IV1986: IV1987: IV1988: IV1989: IV109.189.8115.5128.550.190.579.283.363.998.7129.394.539.230.948.358.0-5.333.434.228.834.235.256.443.03.31.2.61.2-5.2-3.7-1.0-1.31.73.36.54.16.15.67.46.41.14.95.24.04.76.06.45.39.65.26.67.51.06.55.07.02.66.38.012.67.98.612.114.3-1.06.64.12.03.32.99.710.9-2.2-5.63.57.6-2.99.48.57.34.5.69.6-3.114.615.918.121.11.79.712.49.717.416.216.213.269.959.067.270.555.557.145.054.529.763.472.951.614.016.617.015.66.76.17.37.88.213.412.39.816.214.515.716.23.17.76.03.59.518.524.015.017.35.86.111.129.024.113.024.1-13.37.414.24.622.522.128.527.616.619.218.619.225.324.122.422.21990:1IIIllIV108.3117.4112.398.544.342.440.529.54.73.42.13.07.66.35.45.011.29.79.87.69.68.77.85.4-4.1-.3.7-5.315.314.614.513.864.074.971.969.19.114.915.716.217.319.915.612.013.716.217.322.023.923.923.218.91991:1IIIllIV91.589.689.388.924.832.431.534.71.51.1.21.93.96.06.06.57.15.82.06.07.58.57.810.4-9.6-6.4-2.8-3.714.417.418.313.566.757.257.854.216.816.518.814.412.812.514.817.817.15.9-.2.419.922.324.421.71992:1IIIllIV98.9115.7119.3128.039.445.849.958.0.91.0.3.06.88.18.06.65.56.66.57.810.08.712.217.61.94.82.44.914.416.620.521.059.669.969.470.014.519.618.515.215.314.815.017.74.97.76.75.024.927.829.232.11993:1118.9132.5126.748.058.459.9-.52.51.15.56.96.35.76.28.814.912.114.43.110.08.119.420.721.370.974.266.818.014.814.618.416.314.67.213.512.027.329.525.6Note.—The industry classification is on a company basis and is based on the 1987 Standard Industrial Classification (SIC) beginning1987 and on the 1972 SIC for earlier years shown. In the 1972 SIC, the categories shown here as "industrial machinery and equipmentand "electronic and other electric equipment" were identified as "machinery, except electrical" and "electric and electronic equipment,"respectively.Source: Department of Commerce, Bureau of Economic Analysis.151-444 0 - 9 4 - 1 3373

TABLE B-91.—Sales, profits, and stockholders' equity, all manufacturing corporations, 1952-93[Billions of dollars]All manufacturing corporationsDurable goods industriesNondurable goods industriesYear orquarterSales(nat\Beforeincometaxes*ProfitsAfterincometaxesMOCKholders'equity 2Sales(net)Beforeincometaxes lProfitsAfterincometaxesQtnrkMOCKholders'equity 2Sales(net)Beforeincometaxes»ProfitsAfterincometaxesMOCKholders'equity 21952195319541955195619571958195919601961196219631964196519661967196819691970197119721973250.2265.9248 5278.4307.3320.0305.3338.0345.7356 4389.4412 7443.1492 2554.2575 4631.9694.6708 8751.1849 51,017.222.924.420 928.629.828.222.729.727.527 531.934 939.646 551.847 855.458.148152.963 281.410.711.311215.116.215.412.716.315.215 317.719 523.227 530.929 032.133.228 631.036 548.1103.7108.2113 1120.1131.6141.1147.4157.1165.4172 6181.4189 7199.8211 7230.3247 6265.9289.9306 8320.8343 4374.1122.0137.9122 8142.1159.5166.0148.6169.4173.9175 2195.3209 0226.3257 0291.7300 6335.5366.5363 1381.8435 8527.312.914.011416.516.515.811.415.814.013 616.818 521.226 229.225 730.631.523 026.533 643.65.55.8568.18.37.95.88.17.0698.69511.614 516.414 616.516.912 914.518 424.849.852.454 958.865.270.572.877.982.384 989.193 398.5105 4115.2125 0135.6147.61551160.41714188.7128.0128.0125 7136.3147.8154.1156.7168.5171.81812194.1203 6216.8235 2262.4274 8296.4328.1345 7369.3413 7489.910.010.49612.113.212.411.313.913.513 915.116 418.320 322.622 024.826.625 226.529 637.85.25.5567.07.87.56.98.38.2859.210 011.613 014.614 415.516.415 716.518 023.353.955.758 261.366.470.674.679.283.187 792.396 3101.3106 3115.1122 6130.3142.31517160.5172 0185.41973: IV275.121.413.0386.4140.110.86.3194.7135.010.66.7191.7New series:1973: IV236.620.613.2368.0122.710.16.2185.8113.910.57.0182.119741975197619771978197919801981198219831984198519861987198819891990199119921991:1IIIllIV1992: I 3IIIllIV1993: IIIIll1,060.61,065.21,203.21,328.11496 41,741.81912 82,144.72,039.42,114.32 335 02 33142,220.92,378.22 596.22,745.12,810.72,761.12,890.3655.1698.8698.7708.4679.6733.6729.9747.2717.7766.5752.592.179 9104.9115.1132 5154.2145 8158.6108.2133.1165.6137 0129.3173 02161188.8159.699.833.427.032.827.812.2-65.142.237.318.916.637.737.758.749164.570.481198.792 6101.370.985.8107.687 683.1115 6154 6136.3111.667.524.018.323.117.68.5-44.230.027.710.414.025.325.1395.0423.4462.7496.7540 5600.56681743.4770.2812.8864.2866 2874.7900 9957 6999.01,043.81,064.11,036.81,050.41,057.61,069.11,079.41,015.01,035.41,056.81,039.81,031.51,047.61,056.1529.0521 1589.6657.3760 7865.7889 1979.5913.1973.51,107.61 142 61,125.51,178 01,284.71,356.61,357.21,304.01,389.9303.9335.3328.0336.7325.4355.9346.2362.4349.5380.8368.341.135.350.757.969 672.457 467.234 748.775.561 552.178 091775.257.614.1-33.23.410.73.2-3.2-59.015.310.9-.5-1.915.716.124.721430.834.841845.235 641.621.730.048.938 632.653 067155.740.97.4-23.51.47.61.1-2.8-40.211.28.9-3.4.39.311.5196.02081224.3239.9262 6292.5317 7350.4355.5372.4395.6420 9436.3444 3468 7501.3515.0506.8473.9503.5507.8505.9509.8462.0475.5487.4470.9467.7483.1492.9531.6544.1613.7670.8735 7876.11023 71,165.21,126.41,140.81,227.51188 81,095.41,200.31,311.51,388.51,453.51,457.11,500.4351.2363.5370.7371.7354.2377.7383.7384.8368.3385.8384.251.044 654.357.262 981.888 491.373.684.490 075 677.295.1124 4113.5102.085.766.623.622.124.615.3-6.126.926.519.418.522.021.634.111133.735.539 353.556 959.649.355.858 849150.562.687 580.670.660.147.516.815.416.511.3-4.018.918.813.813.715.913.6199.0215.3238.4256.8277 9308.0350 4393.0414.7440.4468 5445 3438.4456.6488 9497.7528.9557.4562.8546.8549.8563.2569.6553.0560.0569.4568.9563.7564.5563.1Addendum: Impact of Accounting Change 3 —First quarter 19921992:I -99.2 -68.9 -69.2 -69.9 -48.0 -48.1 -29.3 -21.0 -21.11 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).3 Data for the first quarter of 1992 were revised significantly as a result of the early adoption of Financial Accounting StandardsBoard Statement 106 (Employer's Accounting for Post-Retirement Benefits Other Than Pensions) by a large number of companies duringthe fourth quarter of 1992. Corporations must show the cumulative effect of a change in accounting principle in the first quarter of theyear in which the change is adopted.Note.—Data are not necessarily comparable from one period to another due to changes in accounting principles, 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.Source-. Department of Commerce, Bureau of the Census.374

TABLE B-92.—Relation of profits after taxes to stockholders' equity and to sales, all manufacturingcorporations, 1947-93Year or quarterRatio of profits after income taxes (annualrate) to stockholders' equity—percent xAllmanufacturingcorporationsDurablegoodsindustriesNondurablegoodsindustriesProfits after income taxes per dollar ofsales—centsAllmanufacturingcorporationsDurablegoodsindustriesNondurablegoodsindustries1947194819491950 .1951195219531954 .1955195619571958 ..195919601961196219631964196519661967.. .19681969 . ..1970 . .1971197219731973: IVNew series:1973: IV19741975197619771978197919801981198219831984 . .198519861987198819891990 .. . . .199119921991: I . .||IIIIV1992-1 2IIIllIV1993:1II . . . . .Ill15.616.011.615 412.110.310.59912.612 310.98610.49.2899.810 311.613 013.411712.111.5939.710 612.813.414.314.911.613 914.215.016.413.913.69.210.612 51019.512.816113.610.7632.37.0876.632-17 411.610 54.05.4979.514.415.712.116913.011.111.110 313.812 811.38010.48.5819.610111.713 814.211712.211.4839.010.813.112.913.312.610.313 714.516.015.411.211.96.18.112.4927.511.914.311.18.01.5-5.01.26.0.9-2.2-34.89.47.3-2.9.37.79.31 Annual ratios based on average equity for the year (using four end-of-quarter figures). Quarterly ratios based on equity at end ofquarter only.2 See footnote 3, Table B-91.Note.—Based on data in millions of dollars.See Note, Table B-91.Source: Department of Commerce, Bureau of the Census.16.616.211.214 111.29.79.99611.411810.69210.49.8969.910 411.512 212.711811.911.510 310.310.512.614.015.317.112.914 213.814.217.416.315.211.912.712.511.011.513.717.916.213.410.88.412.311.211.78.0-2.913.513.29.79.711.39.66.77.05.8714.94.34.3455.4534.8424.84.44.34.54.75.25.65.65.05.14.84.04.14.34.74.75.65.54.65.45.35.45.74.84.73.54.14.63.83.74.96.05.04.02.4.82.83.32.51.2-6.54.13.81.42.03.33.36.77.16.4775.34.54.24.65.75.24.83.94.84.03.94.44.55.15.75.64.84.94.63.53.84.24.74.55.04.74.15.25.35.55.24.04.22.43.14.43.42.94.55.24.13.0.6-1.7.52.3.3-.8-12.43.12.6.9.12.53.16.76.85.46.54.54.14.34.45.15.34.94.44.94.84.74.74.95.45.55.65.35.25.04.54.54.44.85.06.16.45.15.55.35.36.15.65.14.44.94.84.14.65.26.75.84.94.13.24.84.24.43.0-1.15.04.93.63.74.13.5375

TABLE B-93.—Sources and uses of funds, nonfarm nonfinancial corporate business, 1947-93[Billions of dollars; quarterly data at seasonally adjusted annual rates]Yearortprlei1947....1948....1949....1950....1951 ...1952....1953....1954....1955....1956....1957....1958....1959....I960....1961....1962....1963....1964....1965....1966....1967....1968....1969....1970....1971....1972....1973....1974....1975....1976....1977....1978....1979....1980....1981....1982....1983....1984....1985...1986....1987....1988....1989....1990 ....1991...1992....1991:1IIIII....IV....1992:1IIIII....IV....1993:1 IIIII....SourcesTotal27.329.721.342.937.331.129.330.353.746.744.843.557.250.456.262.270.476.394.8101.197.0115.6122.9107.5131.8160.2222.8190.6157.3210.8260.1319.3336.5334.7390.7330.8439.8501.0486.3531.9540.5610.9562.3522.8473.2586.6450.9473.4480.9487.4560.4600.8588.2597.0468.3593.6611.4InternalTotal13.319.720.018.520.822.722.624.730.330.532.431.237.036.437.544.047.853.060.164.365.366.766.564.076.188.195.591.0125.0140.5162.7183.6198.5199.7238.9247.5292.3336.3351.9336.7375.9404.3399.9409.4437.8462.7433.0440.9426.9450.5454.6452.2468.5475.4460.6471.4485.8II

TABLE B-94.—Common stock prices and yields, 1955-93Year or monthCommon stock prices *New York Stock Exchange indexes (Dec. 31, 1965=50) 2CompositeIndustrialTransportationUtility 3FinanceDowJonesindustrialaverage 2Common stock yields(S&P) (percent) 4Standard& Poor'scompositeindex(1941-Dividendpriceratio 5Earningspriceratio 61955195619571958195919601961196219631964196519661967196819691970197119721973197419751976197719781979198019811982198319841985198619871988198919901991199219931992:JanFebMarAprMayJuneJulyAugSeptOctNovDec1993: JanFebMarAprMayJuneJulyAugSeptOctNovDec21.5424.4023.6724.5630.7330.0135.3733.4937.5143.7647.3946.1550.7755.3754.6745.7254.2260.2957.4243.8445.7354.4653.6953.7058.3268.1074.0268.9392.6392.46108.09136.00161.70149.91180.02183.46206.33229.01249.58229.34228.12225.21224.55228.61224.68228.17230.07230.13226.97232.84239.47239.67243.41248.12244.72246.02247.16247.85251.93254.86257.53255.93257.7346.1851.9758.0057.4448.0357.9265.7363.0848.0850.5260.4457.8658.2364.7678.7085.4478.18107.45108.01123.79155.85195.31180.95216.23225.78258.14284.62299.99286.62286.09282.36281.60285.25279.54281.90284.44285.76279.70287.30294.86292.11294.40298.75292.19297.83298.78295.34298.83300.92306.61310.84313.2250.2653.5150.5846.9632.1444.3550.1737.7431.8931.1039.5741.0943.5047.3460.6172.6160.4189.3685.63104.11119.87140.39134.12175.28158.62173.99201.09242.49201.55205.53204.07201.28207.93202.02198.36191.31191.61192.30204.78212.35221.00226.96229.42237.97237.80234.30238.30250.82248.15254.04262.96268.1190.8190.8688.3885.6074.4779.0576.9575.3859.5863.0073.9481.8478.4476.4174.6977.8179.4993.9992.89113.49142.72148.57143.53174.87181.20185.32198.91228.90198.61192.35188.31189.83196.52194.46202.35206.83204.52203.24202.26207.69211.04218.89225.07227.56222.41226.53232.55237.44244.21240.97230.12229.9544.4549.8265.8570.4960.0070.3878.3570.1249.6747.1452.9455.2556.6561.4264.2573.5271.9995.3489.28114.21147.20146.48127.26151.88133.26150.82179.26216.42174.50174.08173.49171.10175.90174.82181.00180.47178.27181.36189.27196.87203.38209.93217.01216.02209.40209.75218.94224.96229.35228.18214.08216.00442.72493.01475.71491.66632.12618.04691.55639.76714.81834.05910.88873.60879.12906.00876.72753.19884.76950.71923.88759.37802.49974.92894.63820.23844.40891.41932.92884.361,190.341,178.481,328.231,792.762,275.992,060.822,508.912,678.942,929.333,284.293,522.063,227.063,257.273,247.423,294.083,376.793,337.793,329.413,307.453,293.923,198.703,238.493,303.153,277.723,367.263,440,743,423.633,478.173,513.813,529.433,597.013,592.293,625.813,674.703,744.1040.4946.6244.3846.2457.3855.8566.2762.3869.8781.3788.1785.2691.9398.7097.8483.2298.29109.20107.4382.8586.16102.0198.2096.02103.01118.78128.05119.71160.41160.46186.84236.34286.83265.79322.84334.59376.18415.74451.41416.08412.56407.36407.41414.81408.27415.05417.93418.48412.50422.84435.64435.23441.70450.16443.08445.25448.06447.29454.13459.24463.90462.89465.954.084.094.353.973.233.472.983.373.173.013.003.403.203.073.243.833.142.843.064.474.313.774.625.285.475.265.205.814.404.644.253.493.083.643.453.613.242.992.782.902.943.013.022.993.063.002.973.003.072.982.902.882.812.762.822.802.812.812.762.732.722.722.727.957.557.896.235.785.904.625.825.505.325.596.635.735.676.086.455.415.507.1211.599.158.9010.7912.0313.4612.6611.9611.608.0310.028.126.095.488.017.416.474.814.224.01Tl84.38"4"39"4.29"4.461 Averages of daily closing prices, except NYSE data through May 1964 are averages of weekly closing prices.2 Includes stocks as follows: for NYSE, all stocks listed (more than 2,000); for Dow-Jones industrial average, 30 stocks; and for S&Pcomposite index, 500 stocks.3 Effective April 1993, the NYSE doubled the value of the utility index to facilitate trading of options and futures on the index. Allindexes shown here reflect the doubling.4 Based on 500 stocks in the S&P composite index.5 Aggregate cash dividends (based on latest known annual rate) divided by aggregate market value based on Wednesday closingprices. Monthly data are averages of weekly figures; annual data are averages of monthly figures.6 Quarterly data are ratio of earnings (after taxes) for 4 quarters ending with particular quarter to price index for last day of thatquarter. Annual data are averages of quarterly ratios.Note.—All data relate to stocks listed on the New York Stock Exchange.Sources: New York Stock Exchange (NYSE), Dow Jones & Co., Inc., and Standard & Poor's Corporation (S&P).377

TABLE B-95.—Business formation and business failures, 7930-93Year or monthIndexnt notOT netbusiness(°1967= n100)Newbusinessincorporations(number)Businessfailurerate 2TotalNumber offailuresBisiness failures'Liability size classUnder$100,000$100,000and overAmount of current liabilities(millions of dollars)TotalLiability size classUnder$100,000$100,000and over195019511952195319541955195619571958195919601961196219631964196519661967196819691970197119721973197419751976197719781979198019811982198319841985198619871988198919901991199219931992: JanFebMarMay!!!!!!!.!!!!!!JuneJulyAugSeptOctNovDec1993: JanFeb. .MarMay'!!!!!!!!!!!!!!JuneJulyAugSeptOctNovDec87.786.790.889.788.896.694.690.390.297.994.590.892.694.498.299.899.3100.0108.3115.8108.8111.1119.3119.1113.2109.9120.4130.8138.1138.3129.9124.8116.4117.5121.3120.9120.4121.2124.1124.8120.7115.2116.393,09283,77892,946102,706117,411139,915141,163137,112150,781193,067182,713181,535182,057186,404197,724203,897200,010206,569233,635274,267264,209287,577316,601329,358319,149326,345375,766436,170478,019524,565533,520581,242566,942600,400634,991662,047702,738685,572685,095676,565647,366628,604666,800Seasonally adjusted117.2116.0116.4115.4113.2117.4116 6114.1118 5116.41153119.0119.3121.1121.8120.8117.5120.6122.5123.1120 9121.4123 758,14155,09257,44954,47448,68858,73056 94251,2455917952,49255 39261,69555,68959,69161,00259,64851,76560,42258,34157,90934.330.728.733.242.041.648.051.755.951.857.064.460.856.353.253.351.649.038.637.343.841.738.336.438.442.634.828.423.927.842.161.388.4109.7107.0115.0120.0102.098.065.074.0107.0110.09,1628,0587,6118,86211,08610,96912,68613,73914,96414,05315,44517,07515,78214,37413,50113,51413,06112,3649,6369,15410,74810,3269,5669,3459,91511,4329,6287,9196,6197,56411,74216,79424,90831,33452,07857,25361,61661,11157,09750,36160,74788,14097,06985,5658,5888,0939,1438,7047,8038,4628 6377,9817 5988,0147 1676,8797,6547,0628,4227,8277,5307,1316,7667 1097 5106,5706 2005,7848,7467,6267,0818,07510,22610,11311,61512,54713,49912,70713,65015,00613,77212,19211,34611,34010,83310,1447,8297,1928,0197,6117,0406,6276,7337,5046,1764,8613,7123,9305,6828,23311,50915,57233,52736,55138,90838,94938,30033,31240,83360,61268,26461,0916,0405,6976,3656,0595,4196,05061375,5875 3925,6215 0924,8055,39851035,9555,5045,2925,0854,83151735 5554,7194 4284,0484164325307878608561,0711,1921,4651,3461,7952,0692,0102,1822,1552,1742,2282,2201,8071,9622,7292,7152,5262,7183,1823,9283,4523,0582,9073,6346,0608,56113,39915,76218,55120,70222,70822,16218,79717,04919,91427,52828,80524,4742,5482,3962,7782,6452,3842,4122 5002,3942 2062,3932 0752,0742,2561,9592,4672,3232,2382,0461,9351,93619551,85117721,736248.3259.5283.3394.2462.6449.4562.7615.3728.3692.8938.61,090.11,213.61,352.61,329.21,321.71,385.71,265.2941.01,142.11,887.81,916.92,000.22,298.63,053.14,380.23,011.33,095.32,656.02,667.44,635.16,955.215,610.816,072.929,268.636,937.444,724.034,723.839,573.042,328.856,130.196,825.394,317.548,914.16,356.09,857.86,322.27,907.013,842.413,665.13 272 09,056.23 220 78,383.63 98418,450.56,174.92 406.74,343.02,973.46,634.42,675.45,496.47 382.03 062 62,222.12 99102,552.3151.2131.6131.9167.5211.4206.4239.8267.1297.6278.9327.2370.1346.5321.0313.6321.7321.5297.9241.1231.3269.3271.3258.8235.6256.9298.6257.8208.3164.7179.9272.5405.8541.7635.1409.8423.9838.3746.0686.9670.5735.61,044.91,096.7941.693.194.7106.697.288 697.297 289.487 787.984173.080.376 890.994.584.379.676.478.874 972.467 864.997.1128.0151.4226.6251.2243.0322.9348.2430.7413.9611.4720.0867.11,031.61,015.61,000.01,064.1967.3699.9910.81,618.41,645.61,741.52,063.02,796.34,081.62,753.42,887.02,491.32,487.54,362.66,549.315,069.115,437.828,858.836,513.543,885.733,977.838,886.141,658.255,394.595,780.493,220.847,972.56,263.09,763.16,215.67,809.713,753.813,567.83174 88,966.83132 98,295.73 900 08,377.56,094.62,329.94,252.12,878.96,550.12,595.85,420.07,303.22 987 62,149.82 923 22,487.41 Commercial and industrial failures only through 1983, excluding failures of banks, railroads, real estate, insurance, holding, andfinancial companies, steamship lines, travel agencies, etc.Data beginning 1984 are based on expanded coverage and new methodology and are therefore not generally comparable with earlierdata. Data for 1992 and 1993 are subject to revision due to amended court filings.2 Failure rate per 10,000 listed enterprises.Sources: Department of Commerce (Bureau of Economic Analysis) and The Dun & Bradstreet Corporation.378

AGRICULTURETABLE B-96.—Farm income, 1940-93[Billions of dollars; quarterly data at seasonally adjusted annual rates]Income of farm operators fromarmingGross farm incomeNet farm incomeYear or quarterTotal»TotalCash marketing receiptsLivestockandproductsCropsValue ofinventorychanges 2ProductionexpensesCurrentdollars1987dollars 3194019411942194319441945 . .1946 .. ..1947194819491950195119521953195419551956195719581959 .1960 .. .1961196219631964196519661967 . .1968196919701971197219731974 . .197519761977 .1978197919801981198219831984198519861987198819891990199119921991-1II . ...IllIV1992:1II.. .IllIV1993-1 ||III"..11.314.319.923.324.025.429.632.436.530.833138 337.834.434.233.534.034.839.037.938.640.542.343.442 346.550.550 551.856.458.862171.198.998 2100.6102.9108.8128.4150.7149.3166 3164.1153 9168.01612156.1168 5175.8190.9196.4190.3197.7190 5191.2186.8192.7199.6202 8197.3191.3197.0203 7188.18.411.115.619.620.521.724.829.630.227.828 532 932.531.029.829.530.429.733.533.634.035.236.537.537 339.443.442 844.248.250.552 761.186.992 488.995.496.2112.4131.5139.71416142.6136 8142.81441135.41418151.2161.2170.0168.7171.2166.5166.8172.2169.4167.1174 2178.9164.5169.9180 5175.44.96.59.011.511.412.013.816.517.115.416119 618.216.916.316.016.417.419.218.919.019.520.220.019 921.925.024 425.528.629.530 535.645.841343.146.347.659.269.268.069 270.369 672.969 871.676 079.484.189.886.886.489 687.684.985.084.286 085.389.986.292 290.73.54.66.58.19.29.711.013.113.112.412 413 214.314.113.613.514.012.314.214.715.015.716.317.417 417.518.418 418.719.621.022 325.541.151145.849.048.653.262.371.772 572.367 269.974 363.865 971.777.080.181.984.876 979.287.384.482.988.193.674.683.788 284.70.3.41.1-.1-.4-.4.0-1.81.7-.9812.9-.6.5.2-.5.6.8.0.4.3.6.681.0— 17.1.1.014.93.41 63.4-1.51.11.95.0-6.365-1.410 96.0-23-2.2-23-3.44.83.433.81.2.6.1-3.14.74.33.52.536-34-2.76.97.810.011.612.313.114.517.018.818.019 522 322.821.521.822.222.723.725.827.227.428.630.331.631833.636.538 239.542.144.547 151.764.671075.082.788.9103.3123.3133.1139 4140.3139 6141.9132 4125.1128 8137.0144.0149.9150.3149.1147.5149.8151.7152.2146.3148.6150.4151.0148.2150.5152.44.56.59.911.711.712.315.115.417.712.813 615 915.013.012.411.311.311.113.210.711.212.012.111.810 512.914.012 312.314.314.415.019.534.427 325.520.219.925.227.416.126.923.814.226.128.831.139.738.846.946.540.048.643.041.435.240.553.354.246.840.348.853.235.740.755.580.193.992.992.690.282.188.364.267.674.869.659.055.749.447.745.452.941.943.145.544.843.337.945.447.540.738.842.840.840.550.183.260.751.938.635.641.841.922.534.128.416.328.730.532.039.737.343.241.034.040.237.035.329.834.144.444.838.633.039.542.928.7'Cash 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 GDP implicit price deflator (Department of Commerce).Note.—Data include net Commodity Credit Corporation loans and operator households.Source: Department of Agriculture, except as noted.379

19481949195019511952195319541955195619571958195919601961196219631964196519661967196819691970197119721973197419751976197719781979198019811982198319841985198619871988198919901991YearTABLE B-97.—Farm output and productivity indexes, 1948-91Total»48474749515151545452555859606263636665696971717676797580828686928798100829810410010295105112110Livestockandproducts2 3 545760636465687071707276757879818382838686869091929392879193939399101100102100103103105108110112114[1982 = 100]Total 4 46403939424239434240444648475051495652575761586564706576758281917896100679510495978399111106FarmoutputFeedcropsCrops 23317222022222830283736344437384234524460545749776771537875899195641021003110812511910163117114114Foodgrains403432324236343435304638464240404746485457545058576366797774677986102100849387777770779915141715151416192221272425293031323640434850535256675467587886104808910075879688887187879276Oil cropsProductivityindicators 5Farmperoutputunitof totalfactorinput5251505153535454555459596063656767717174757777818386788484908588829510086100110109114109120126124Farmoutputperunit offarmlabor1 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 Horses and mules excluded.4 Includes items not included in groups shown.8 See Table B-98 for farm inputs.Source: Department of Agriculture.1919202123232426272932333637384143475055555860646568667074808086819310086101117115121111127128125380

TABLE B-98.—Farm input use, selected inputs, 1948-92YearFarm population,April xNumber(thousands)Aspercentof totalpopulation2TotalFarm employment(thousands) 3FamilyworkersHiredworkersCropsharvested(millionsofacres) 4TotalFarmlaborSelected indexesof input use (1982 = 100)FarmrealestateDurableequipmentEnergyAgriculturalchemicals5Feed,seed,andlivestockpurchases6Otherpurchasedinputs1948..1949..1950..1951..1952..1953..1954..1955..1956..1957..1958..1959..1960...1961...1962...1963...1964...1965...1966...1967...1968...1969...1970...1971...1972..1973..1974..1975..1976..1977...1978..1979..1980..1981..1982..1983..1984..1985..1986..1987..1988..1989..1990..1991..1992..24,38324,19423,04821,89021,74819,87419,01919,07818,71217,65617,12816,59215,63514,80314,31313,36712,95412,36311,59510,87510,45410,3079,7129,4259,6109,4729,2648,2537 6,1947 6,5017 6,2417 6,0517 5,8507 5,6287 5,7875,7545,3555,2264,9864,9514,8014,5914,63216.616.215.214.213.912.511.711.511.110.39.89.38.78.17.77.16.76.45.95.55.25.14.74.54.64.54.34.13.87 2.87 2.97 2.87 2.77 2.57 2.47 2.52.42.22.22.12.12.01.91.910,3639,96419,9269,546 j9,149!8,8648,65118,3817,8527,6007,5037,3427,0576,9196,7006,5186,1105,6105,2144,9034,7494,5964,5234,4364,3734,3374,3894,3314,3634,1433,9373,7653,6998 3,5828 3,4668 3,3498 3,2333,1162,9122,8972,9542,8632,8912,8752,8108,0267,7127,5977,3107,0056,7756,5706,3455,9005,6605,5215,3905,1725,0294,8734,7384,5064,1283,8543,6503,5353,4193,3483,2753,2283,1693,0753,0212,9922,8522,6802,4952,4018 2,3248 2,2488 2,1718 2,0952,0181,8731,8461,9671,9352,0001,9641,9442,3372,2522,3292,2362,1442,0892,0812,0361,9521,9401,9821,9521,8851,8901,8271,7801,6041,4821,3601,2531,2131,1761,1751,1611,1461,1681,3141,3101,3711,2911,2561,2701,2988 1,2588 1,2188 1,17881,1381,0981,0391,0511,037928892911356360345344349348346340324324324324324302295298298298294306300290293305294321328336337345338348352366362306348342325302297318322318320939796949493939293929393939192979697961011041061031009698959289878789251-241237228222220216211197183176173163161159153145141128124125123119118117117115114111107107107108105100959789878486828738455290 5892 6395 6696 6998 7099 7199 6999 6899 6899 6997 6895 6796 6795 6795 6994 7197 7395 7694 7894 7896 7994 7998 8199 8598 8999 9199 9498 9699 99101 102101 102100 10092 95918680747066646334364342434243455049495682 5884 6185 5586 6188 6889 7390 8390 8090 6892 7392 7690 8089 8590 9486 99101 91113 100119 98125 108113 118110 131106 122100 10097 93100 10690 10184 11193 10093 9091 9390 9089 948477919710298100991011061051019899105104747778808382818381858199999810010097969697979390878591979499100118127116111100107108998992909697100J 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. Series discontinued in 1992.2 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 onagricultural employment by the Department of Labor (see Table B-33) 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.6 Nonfarm 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 totalpopulation) for 1977, 1978, 1979, 1980, 1981, 1982, and 1983 is 7,806 and 3.6; 8,005 and 3.6; 7,553 and 3.4; 7,241 and 3.2; 7,014and 3.1; 6,880 and 3.0; 7,029 and 3.0, respectively.8 Basis for farm employment series was discontinued for 1981 through 1984. Employment is estimated for these years.Note.—Population includes Alaska and Hawaii beginning 1960.Sources-. Department of Agriculture and Department of Commerce (Bureau of the Census).381

TABLE B-99.—Indexes of prices received and prices paid by jarmers, 1930-93[1977 = 100]Year or monthPrices received by farmersCropsAllfarmproductsLivestockandproductsAllcommodities,services,interest,taxes,andwagerates»Total 2Prices paid by farmersProduction itemsFuelsandenergyWageratesTractorsandselfpropelledmachineryFertilizerAddendum-.Averagefarmrealestatevalueperacre 319501951195219531954195519561957195819591960196119621963196419651966196719681969197019711972197319741975197619771978197919801981198219831984198519861987198819891990199119921993 *1992: Jan..Feb..Mar..Apr..May.June.July..Aug..Sept.Oct..Nov..Dec.1993: Jan..Feb..Mar..fcJune.July.Aug.SeptOct.Nov.Dec.5666635654515051555352535353525458555659606269981051011021001151321341391331351421281231271381471491461391431381431441411411401381381381381361371381401411461441401411441451451441455461625556535452525151525455555355525250525660911171051021001051161251341211281381201071061261341271291211231241291321261231211171161161161151171171181161251201131211251281301281335870645652494751575353525351495460576067676777104949810110012414714414314514114613613814615016017016115716215215615515615815715816015815815615615916216616716816616116216015915815637414240404040424343444445454547494951535558627181899510010812313815015916116416215916216917718318718919518818919019019219619519642474744444343444646464647474748505050525457617383919710010812513814815315215515114414815716517117317417917117417517517618017918139404244474951545868829110010912213615216517418117817417418119320221121922721654575959595857585857575858575757565552484851525692120102100100108134144144137143135124118130136131134131128132494950505152535357798893100105137188213210202201201162164167180204203199201192217 132 194217 132 206224 128 205224 128 199223 129 201223"237129 199•"204222526272727282930323333343536384144485357606369798593100107118127138144148152154160166171186192201210217216212212201217223221••2061416181818191921222324252627293133353840424347536675861001091251451581571481461281121031061111121151151171151171 Includes items used for family living, not shown separately.2 Includes other production items not shown separately.3 Average for 48 States. Annual data are for March 1 of each year through 1975, February 1 for 1976-81, April 1 for 1982-85,February 1 for 1986-89, and January 1 for 1990-93.Source: Department of Agriculture.382

TABLE B-100-—U.S. exports and imports of agricultural commodities, 1940-93[Billions of dollars]ExportsImportsYearTotal»FeedgrainsFoodgrains 2Cot-OilseedsandproductsTo-AnimalsandproductsTotal»Crops,fruits,andvegetables3AnimalsandproductsCoffeeCocoabeansandproductsAgriculturaltradebalance19401941194219431944194519461947194819491950195119521953195419551956195719581959196019611962196319641965196619671968196919701971197219731974197519761977197819791980198119821983198419851986198719881989199019911992Jan-Nov:199219930.5.71.22.12.12.33.14.03.53.62.94.03.42.83.13.24.24.53.94.04.85.05.05.66.36.26.96.46.36.07.37.79.417.721.921.923.023.629.434.741.243.336.636.137.829.026.228.737.139.939.439.242.939.138.51.11.31.1.9.91.11.01.53.54.65.26.04.95.97.79.89.46.47.38.16.03.13.85.97.77.05.75.75.24.51.21.41.31.51.71.41.81.51.41.21.41.31.84.75.46.24.73.65.56.37.99.67.97.47.54.53.83.85.97.14.84.25.44.95.1().2.3.2.3.2.2.3.4.5.4.6.6.6.7.81.01.21.21.31.31.31.92.22.44.35.74.55.16.68.28.99.49.69.18.78.45.86.56.47.76.35.76.47.26.56.50.2.1.1.2.1.3.5.4.5.91.01.1.9!8.5.71.0.7.41.0.9.5.6.7.5.4.5.5.3.4.6.5.91.31.01.01.51.72.22.92.32.01.82.41.6.81.62.02.32.82.52.01.81.4.2.1.2.4.3.2.3.3.3.2.3.3.4.3.4.4.3.4.4.4.4.4.4.5.5.5.6.5.5.7.7.8.9.91.11.41.21.31.51.51.51.51.51.21.11.31.31.41.41.71.51.20.1.3.81.21.3.9.9.7.5.4.3.5.3.4.5.6.7.7.5.6.6.6.6.7.8.7.7.7.8.91.01.11.61.81.72.42.73.03.83.84.23.93.84.24.14.55.26.46.46.77.07.97.37.21.31.71.31.51.81.72.32.83.12.94.05.24.54.24.04.04.04.03.94.13.83.73.94.04.14.14.54.55.05.05.85.86.58.410.29.311.013.414.816.717.416.915.316.519.320.021.520.421.021.722.822.724.622.622.6.91.21.51.71.72.02.32.33.13.53.63.63.84.24.94.84.94.44.50.2.3.5.4.3.4.4.4.6.4.71.1.7.6.5.5.4.5.7.8.6.7.9.9.8.91.21.11.31.41.61.51.82.62.21.82.32.33.13.93.83.53.73.84.14.24.54.95.25.15.65.55.75.25.40.1.2.2.3.3.6.7.81.11.41.41.51.51.41.41.41.21.11.01.01.01.01.21.11.11.01.2.91.21.21.31.71.61.72.94.24.04.24.22.92.92.83.33.34.62.92.52.41.91.91.71.51.4-0.8-1.0_ j.6.3.5.8.2 1.2.2 .3.1 .7.2 -1.1.2 -1.1.2 -1.1.2 -1.3.3 -.9.2 -.8.2 .2.2 .6.2.2.2 1.0.2 1.3.2 1.2.2 1.6.2 2.3.1 2.1.1 2.4.2 1.9.2 1.3.2 1.1.3 1.5.2 1.9.2 2.9.3 9.311.7.5 12.6.6 12.01.0 10.21.4 14.61.2 18.0.9 23.8.9 26.4.7 21.3.8 19.61.1 18.51.4 9.11.1 4.71.2 8.31.0 16.11.0 18.21.1 16.61.1 16.51.1 18.31.0 16.5.9 15.91 Total includes items not shown separately.2 Rice, wheat, and wheat flour.3 Includes nuts, fruits, and vegetable preparations.Hess than $50 million.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.Source: Department of Agriculture.383

TABLE B-101.— Farm business balance sheet, 1950-92[Billions of dollars]AssetsClaimsPhysical assetsFinancial assetsEnd of yearTotalassetsestateNonreal estateLivestockandpoultry»MachineryandmotorCrops :vehiclesPurchasedinputs3Other *TotalclaimsRealestatedebt 5InvestmentsincooperativesNonrealestatedebt 6Proprietors'equity195019511952195319541955195619571958 .1959196019611962196319641965196619671968196919701971197219731974'197519761977197819791980198119821983198419851986198719881989199019911992121.6136.1133.0128.7132.6137.0145.7154.5168.7173.0174.2181.4188.7196.5204.0220.6233.8245.8257.0267.3278.7301.5339.7418.3449.2510.7590.7651.5767.3898.1983.2982.3944.5943.3857.0772.7724.4772.6801.1829.7848.3842.2861.575.483.885.184.387.893.0100.3106.4114.6121.2123.3129.1134.6142.4150.5161.5171.2180.9189.4195.3202.4217.6243.0298.3335.6383.6456.5509.3601.8706.1782.8785.6750.0753.4661.8586.2542.3578.9595.5615.7628.2623.2633.117.119.514.811.711.210.611.013.917.715.215.616.417.315.914.417.619.018.820.222.523.727.333.742.424.629.429.031.950.161.460.653.553.049.549.546.347.858.062.266.270.968.171.312.314.315.015.615.716.316.917.018.119.319.119.319.920.421.222.424.126.327.728.630.432.434.639.748.557.463.369.368.575.480.385.586.085.885.082.981.580.081.285.185.485.885.67.18.27.96.87.56.56.86.46.96.26.26.36.37.26.87.77.97.77.28.18.59.712.721.222.520.520.620.523.829.932.729.525.823.626.122.916.317.523.323.422.822.024.12.01.22.13.23.52.62.82.63.92.72.93.23.33.53.74.04.24.54.84.24.54.65.05.25.45.75.86.16.47.27.98.79.711.213.014.313.516.118.119.320.621.922.824.324.324.425.325.126.327.528.729.77.07.37.17.06.96.96.76.66.96.25.85.95.95.75.86.06.06.16.36.46.56.76.97.16.96.96.97.07.17.37.47.67.88.18.39.010.09.910.310.510.911.813.6121.6136.1133.0128.7132.6137.0145.7154.5168.7173.0174.2181.4188.7196.5204.0220.6233.8245.8257.0267.3278.7301.5339.7418.3449.2510.7590.7651.5767.3898.1983.2982.3944.5943.3857.0772.7724.4772.6801.1829.7848.3842.2861.55.25.76.26.67.17.88.59.09.710.611.312.313.515.016.918.920.722.624.726.427.529.332.036.140.845.350.558.466.779.789.798.8101.8103.2106.7100.190.482.477.675.474.174.575.05.76.97.16.36.77.37.48.29.410.711.111.813.214.615.316.918.519.619.220.021.224.026.731.635.139.745.652.460.771.877.183.687.087.987.177.566.662.061.761.963.264.363.6110.7123.7119.7115.7118.9121.9129.8137.3149.7151.7151.7157.3162.0166.9171.8184.8194.6203.6213.0220.8229.9248.3281.0350.7373.3425.7494.7540.7639.9746.6816.4799.9755.7752.2663.3595.1567.5628.2661.7692.4710.9703.5722.91 Excludes commercial broilers; excludes horses and mules beginning 1959; excludes turkeys beginning 1986.2 Non-Commodity Credit Corporation (CCC) crops held on farms plus value above loan rate for crops held under CCC.3 Includes fertilizer, chemicals, fuels, parts, feed, seed, and other supplies.4 Sum of currency, demand deposits, time deposits, and U.S. savings bonds.5 Includes CCC storage and drying facilities loans.6 Does not include CCC crop loans.7 Beginning 1974, data are for farms included in the new farm definition, that is, places with sales of $1,000 or more annually.Note.—Data exclude operator households.Beginning 1959, data include Alaska and Hawaii.Source: Department of Agriculture.384

INTERNATIONAL STATISTICSTABLE B-102.—International investment position of the United States at year-end, 1984-92[Billions of dollars]Type ofinvestment1984 1985 1986 1987 1988 1989 1990 1991 1992NET INTERNATIONAL INVESTMENT POSITION OF THEUNITED STATES:With direct investment at current costWith direct investment at market value234.2177.3139.1142.319.2109.7-34.046.8-140.35.4-288.5-128.9-291.9-269.7-364.9-396.4-521.3-611.5U.S. ASSETS ABROAD:With direct investment at current costWith direct investment at market value1,178.91,083.11,252.61,244.61,410.71,508.21,557.31,641.01,698.01,860.91,857.02,114.71,924.82.018.41,998.42,152.62,003.42,113.3U.S. official reserve assetsGold 1Special drawing rightsReserve position in the International MonetaryFundForeign currencies105.081.25.611.56.7117.985.87.311.912.9139.9102.48.411.717.3162.4127.610.311.313.1144.2107.49.69.717.4168.7105.210.09.044.6174.7102.411.09.152.2159.292.611.29.545.9150.390.08.511.840.0U.S. Government assets other than official reservesU.S. credits and other long-term assetsRepayable in dollarsOtherU.S. foreign currency holdings and U.S. shorttermassets85.082.981.11.82.187.885.884.11.71.989.688.787.11.688.988.186.51.686.185.483.91.5.784.583.982.41.5.682.281.580.11.3.779.177.576.31.21.680.879.177.71.41.7U.S. private assets:With direct investment at current costWith direct investment at market value988.9893.11,047.01,038.91,181.21,278.71,306.11,389.71,467.71,630.61,603.81,861.51,668.01,761.61,760.01,914.21,772.31,882.3Direct investment abroad:At current costAt market valueForeign securitiesBondsCorporate stocksU.S. claims on unaffiliated foreignersreported by U.S. nonbanking concernsU.S. claims reported by U.S. banks,not included elsewhere361.6265.888.862.826.092.9445.6387.2379.1112.871.841.099.6447.4421.2518.7142.079.063.0110.7507.3493.3577.0153.784.169.6109.6549.5515.7678.6176.690.686.0122.2653.2560.0817.8216.096.2119.9113.9713.8622.7716.3229.3119.2110.0120.3695.7655.3809.6294.2135.4158.8118.6691.9666.3776.3327.4149.5178.0111.7666.9FOREIGN ASSETS IN THE UNITED STATES:With direct investment at current costWith direct investment at market value944.7905.91,113.61,102.31,391.51,398.61,591.41,594.11,838.31,855.52,145.52,243.62,216.72,288.02,363.22,549.02,524.72,724.8Foreign official assets in the United StatesU.S. Government securitiesU.S. Treasury securitiesOtherOther U.S. Government liabilitiesU.S. liabilities reported by U.S. banks, notincluded elsewhereOther foreign official assets199.7144.7138.26.515.026.114.0202.5145.1138.46.615.826.714.9241.2178.9173.35.618.027.916.4283.1220.5213.76.815.731.815.0322.0260.9253.08.015.231.514.4341.9263.7257.36.415.436.526.3375.6295.0287.97.117.539.923.2402.1315.9307.18.819.138.428.7443.4335.7323.012.721.654.831.3Other foreign assets in the United States:With direct investment at current costWith direct investment at market value745.0706.2911.1899.81,150.21,157.41,308.31,311.11,516.31,533.41,803.61,901.81,841.11,912.41,961.12,146.92,081.42,281.5Direct investment in the United States:At current costAt market valueU.S. Treasury securitiesU.S. securities other than U.S. Treasury securitiesCorporate and other bondsCorporate stocksU.S. liabilities to unaffiliated foreigners reportedby U.S. nonbanking concernsU.S. liabilities reported by U.S. banks, not includedelsewhere211.2172.462.1128.532.496.131.0312.2231.3220.088.0207.982.3125.629.5354.5265.8273.096.1309.8140.9168.926.9451.6313.5316.282.6341.7166.1175.629.8540.7374.3391.5100.9392.3191.3201.035.0613.7436.6534.7166.5482.9231.7251.240.5677.1468.2539.6162.4469.0247.2221.748.0693.4487.2673.0189.5556.3284.4271.946.1682.1492.3692.3224.9617.3317.2300.246.3700.71 Valued at market price.Note.—For details regarding these data, see Survey of Current Business, June 1991, June 1992, and June 1993.Source: Department of Commerce, Bureau of Economic Analysis.385

TABLE B-103.—U.S. international transactions, 1946-93[Millions of dollars-, quarterly data seasonally adjusted, except as noted. Credits ( + ), debits (-)]Year orquarter194619471948194919501951195219531954195519561957195819591960196119621963196419651966196719681969197019711972197319741975197619771978197919801981198219831984198519861987198819891990199119921991:1IIIllIV1992:1 IIIllIV1993:1 IIIll p. Merchandise 1Exports11,76416,09713,26512,21310,20314,24313,44912,41212,92914,42417,55619,56216,41416,45819,65020,10820,78122,27225,50126,46129,31030,66633,62636,41442,46943,31949,38171,41098,306107,088114,745120,816142,075184,439224,250237,044211,157201,799219,926215,915223,344250,208320,230362,116389,303416,937440,138101,333104,206103,764107,634108,347108,306109,493113,992111,530113,118111,912Imports-5,067-5,973-7,557-6,874-9,081-11,176-10,838-10,975-10,353-11,527-12,803-13,291-12,952-15,310-14,758-14,537-16,260-17,048-18,700-21,510-25,493-26,866-32,991-35,807-39,866-45,579-55,797-70,499-103,811-98,185-124,228-151,907-176,002-212,007-249,750-265,067-247,642-268,901-332,418-338,088-368,425-409,765-447,189-477,365-498,336-490,739-536,276-120,123-120,525-123,404-126,687-126,110-133,107-137,105-139,954-140,839-147,502-148,1912Net6,69710,1245,7085,3391,1223,0672,6111,4372,5762,8974,7536,2713,4621,1484,8925,5714,5215,2246,8014,9513,8173,8006356072,603-2,260-6,416911-5,5058,903-9,483-31,091-33,927-27,568-25,500-28,023-36,485-67,102-112,492-122,173-145,081-159,557-126,959-115,249-109,033-73,802-96,138-18,790-16,319-19,640-19,053-17,763-24,801-27,612-25,962-29,309-34,384-36,279Netmilitarytransactions3 4-424-358-351-410-561695281,753902-113-221-423-849-831-1,057-1,131-912-742-794-487-1,043-1,187-596-718-6416531,0727401651,4619311,731857-1,313-1,822-844112-563-2,547-4,390-5,181-3,844-6,315-6,726-7,833-5,851-2,751-2,532-1,402-1,164-755-571-727-617-836-145-226-341ServicesNettravelandransportationreceipts733946374230-12029883-238-269-297-361-189-633-821-964-978-1,152-1,309-1,146-1,280-1,331-1,750-1,548-1,763-2,038-2,345-3,063-3,158-3,184-2,812-2,558-3,565-3,573-2,935-997144-992-4,227-8,438-9,798-7,382-6,481-1,5115,0718,97917,93319,7182,9264,2995,2285,4815,0115,2014,8824,6245,0145,3725,279Otherservices,net3101451752082422543093073052994474824865736397329121,0361,1611,4801,4971,7421,7591,9642,3302,6492,9653,4064,2314,8545,0275,6806,8797,2518,91212,55213,20914,09514,27714,26618,85517,90019,96126,55829,50533,79939,4447,9358,3978,6608,8099,6089,17711,0169,6419,7559,3139,169Investment incomeReceiptson U.S.assetsabroad7721,1021,9211,8312,0682,6332,7512,7362,9293,4063,8374,1803,7904,1324,6164,9995,6186,1576,8247,4377,5288,0219,36710,91311,74812,70714,76521,80827,58725,35129,37532,35442,08863,83472,60686,52986,20084,77899,05689,48987,49795,129122,275144,904151,201127,292110,61236,01832,05730,07429,14429,02828,64127,19525,74926,07827,87628,695Paymentsonforeignassets inU.S.-212-245-437-476-559-583-555-624-582-676-735-796-825-1,061-1,238-1,245-1,324-1,560-1,783-2,088-2,481-2,747-3,378-4,869-5,515-5,435-6,572-9,655-12,084-12,564-13,311-14,217-21,680-32,961-42,532-53,626-56,412-53,700-69,572-68,314-74,736-87,403-109,653-130,091-130,853-114,272-104,391-30,247-29.147-28,447-26,431-24,609-27,734-25,492-26,555-26,115-27,829-26,947Net5608571,4841,3551,5092,0502,1962,1122,3472,7303,1023,3842,9653,0713,3793,7554,2944,5965,0415,3505,0475,2745,9906,0446,2337,2728,19212,15315,50312,78716,06318,13720,40830,87330,07332,90329,78831,07829,48321,17512,7617,72612,62114,81320,34813,0216,2225,7712,9101,6272,7134,4199071,703-806-37471,748Balanceon goods,services,andincome7,87611,7147,3906,7222,6975,8385,7275,3715,8615,5167,7209,5255,4313,1406,8867,9497,6648,80611,06310,0147,9877,8786,2406,1358,4865,9692,74914,05311,21025,1919,982-9,109-9,3556,30810,66616,7325,632-26,719-79,716-100,920-126,028-144,256-102,203-75,532-58,034-14,899-33,505-4,690-2,115-5,289-2,805704-10,243-10,628-13,339-14,722-19,878-20,424Unilateraltransfers,net 4-2,991-2,722-4,973-5,849-4,537-4,954-5,113-6,657-5,642-5,086-4,990-4,763-4,647-4,422-4,062-4,127-4,277-4,392-4,240-4,583-4,955-5,294-5,629-5,735-6,156-7,402-8,544-6,9135 -9,249-7,075-5,686-5,226-5,788-6,593-8,349-11,702-17,075-17,741-20,612-22,950-24,176-23,052-24,965-26,092-33,8276,575-32,89514,0963,884-6,564-4,839-7,389-8,010-7,147-10,348-7,586-7,294-7,562Balanceoncurrentaccount4,8858,9922,417873-1,840884614-1,2862194302,7304,762784-1,2822,8243,8223,3874,4146,8235,4313,0312,5836113992,331-1,433-5,7957,1401,96218,1164,295-14,335-15,143-2852,3175,030-11,443-44,460-100,328-123,870-150,203-167,308-127,168-101,624-91,861-8,324-66,4009,4061,769-11,853-7,644-6,685-18,253-17,775-23,687-22,308-27,172-27,9861 Excludes military.2 Adjusted from Census data for differences in valuation, coverage, and timing.3 Quarterly data are not seasonally adjusted.4 Includes transfers of goods and services under U.S. military grant programs.See next page for continuation of table.386

TABLE B-103.—U.S. international transactions, 1946-93—Continued[Millions of dollars; quarterly data seasonally adjusted, except as noted]Year or quarterTotalU.S. assets abroad, net[increase/capital outflow (-)]U.S.officialreserveassets 36OtherU.S.GovernmentassetsU.S.privateassetsForeign assets in the U.S., net[increase/capital inflow ( + )]TotalForeignofficialassets 3OtherforeignassetsAllocationsofspecialdrawingrights(SDRs)StatisticaldiscrepancyTotal(sum oftheitemswith signreversed)Ofwhich:Seasonaladjustmentdiscrepancy1946194719481949. .1950195119521953195419551956195719581959196019611962196319641965196619671968196919701971197219731974197519761977197819791980198119821983198419851986 ..1987198819891990199119921991:1IIIllIV1992:IIIIll .IV1993:1 ..IIIll >>-4,099-5,538-4,174-7,270-9,560-5,716-7,321-9,757-10,977-11,585-9,337-12,475-14,497-22,874-34,745-39,703-51,269-34,785-61,130-66,054-86,967-114,147122,335-58,735-29,654-34,687-91,260-61,254-91,423-129,33144,132-59,974-50,961-5,555-875-15,672-37,870-1,029-8,695-10,798-30,438-12,358-29,34143,961-623-3315-1,736-2661,758-33-4151,256480182-869-1,1652,2921,0352,1456071,5353781711,22557053-870-1,1792,4812,349-4158-1,467-849-2,558-375732-1,133-8,155-5,1754,965-1,196-3,131-3,8583129,149-3,912-25,2932,1585,7633,901-3531,0143,8771,225-1,0571,4641,9521,542-983822-545-1,100-910-1,085-1,662-1,680-1,605-1,543-2,423-2,274-2,200-1,589-1,884-1,568-2,6445 366-3,474-4,214-3,693-4,660-3,746-5,162-5,0976,131-5,006-5,489-2,821-2,0221,0062,9671,2592,3072,905-1,609559-4193,224-459-275293-305737535-275-86-5,144-5,235-4,623-5,986-8,050-5,336-6,347-7,386-7,833-8,206-10,229-12,940-12,925-20,388-33,643-35,380-44,498-30,717-57,202-61,176-73,651-103,875-111,239-52,533-21,035-28,00989,551-71,408-90,477-105,29744,280-68,643-53,253-5,761-1,470-22,11*-38,6373039,866-12,44531,243-11,91029,888-43,3312,2942,7051,9113,2173,6437423,6617,3799,92812,7026,35922,97021,46118,38834,24115,67036,51851,31964,03638,75258,11283,03292,41883,380102,010130,966223,191229,972219,489213,571105,17383,439129,579-207,12023,51452,82619,83444,45026,45038,84525,71842,38066,4521,4737651,2701,9861,660134-6723,451-774-1,3016,90826,87910,4756,02610,5467,02717,69336,81633,678-13,66515,4974,9603,5935,8453,140-1,11935,64845,38739,7588,50334,19817,56440,6845,604-4,9243,85513,02921,12421,008-7,3785,93110,92917,69919,6468211,9396411,2311,9836074,3333,92810,70314,002-550-3,90910,98612,36223,6968,64318,82614,50330,35852,41642,61578,07288,82677,53498,870132,084187,543184,585179,731205,06870,97565,87588,895-5,62412,04419,65939,798-1,29023,44233,82832,91414,78924,68146,806867717710U39"1,1521,093-1,019-989-1,124-360907-457629-205438-1,516-219-9,779-1,879-2,654-1,4585 91710,455-219912,23626,44925,38624,99241,35919,81527,97227,59218,272-1,41089917,38430,820-15,140-12,218-3,831-8,0144,011-7,312-12,12017,5022,12315,2808,94814,1335,4954,710-120-6,5061,9114,878653-6,7541,2225,814681-7,6055 Includes extraordinary U.S. Government transactions with India.6 Consists of gold, special drawing rights, foreign currencies, and the U.S. reserve position in the International Monetary Fund (IMF).Source: Department of Commerce, Bureau of Economic Analysis.387

TABLE B-104.—U.S. merchandise exports and imports by principal end-use category, 1963-93[Billions of dollars; quarterly data seasonally adjusted]ExportsImportsYear orquarterTotalTotalNonagricultural productsAgriculturalproductsIndustrialsuppliesandmaterialsOtherTotalTotalNonpetroleum productsCapitalgoodsexceptautomotiveAutomotivePetroleumandproductsIndustrialsuppliesandmaterialsCapitalgoodsexceptautomotiveAutomotiveOther1965196619671968196926.529.330.733.636.46.36.96.56.36.120.222.424.227.330.37.68.28.59.610.38.18.99.911.112.41.92.42.83.53.92.62.93.03.23.721.525.526.933.035.82.02.12.12.42.619.523.424.830.633.29.110.210.012.011.81.52.22.52.83.40.91.82.44.04.98.09.29.911.813.01970197119721973197442.543.349.471.498.37.47.89.518.022.435.135.539.953.475.912.310.911.917.026.314.715.416.922.030.93.94.75.56.98.64.34.55.67.610.039.945.655.870.5103.82.93.74.78.426.636.941.951.162.177.212.413.816.319.627.84.04.35.98.39.85.57.48.710.312.015.016.420.223.927.51975197619771978 »1979107.1114.7120.8142.1184.422.223.424.329.935.584.891.496.5112.2149.026.828.429.834.252.236.639.139.847.560.210.612.113.415.217.910.811.713.515.318.798.2124.2151.9176.0212.027.034.645.042.660.471.289.7106.9133.4151.624.029.835.740.747.510.212.314.019.324.611.716.218.625.026.625.331.438.648.452.819801981198219831984224.3237.0211.2201.8219.942.044.137.337.138.4182.2193.0173.9164.7181.565.163.657.752.756.876.384.276.571.777.017.419.717.218.522.423.425.522.421.825.3249.8265.1247.6268.9332.479.578.462.055.158.1170.2186.7185.7213.8274.453.056.148.653.766.131.637.138.443.760.428.331.034.343.056.557.462.464.373.391.419851986198719881989215.9223.3250.2320.2362.129.627.229.838.842.2186.3196.2220.4281.4319.954.859.463.782.691.979.382.892.7119.1139.624.925.127.633.434.927.228.936.446.353.5338.1368.4409.8447.2477.451.434.342.939.650.9286.7334.1366.8407.6426.462.669.970.883.184.261.372.085.1102.2112.564.978.185.287.987.497.9114.2125.7134.4142.4199019911992389.3416.9440.140.240.144.0349.1376.8396.197.1101.8101.8153.3167.0176.936.540.047.162.367.970.3498.3490.7536.362.351.851.6436.0439.0484.782.580.988.6116.0120.7134.288.585.791.8149.0151.7170.11991: IIIIllIV101.3104.2103.8107.69.99.69.910.791.594.693.896.926.325.425.125.039.142.541.743.89.09.910.610.517.016.716.517.7120.1120.5123.4126.713.113.113.212.3107.0107.5110.2114.320.120.019.920.829.930.130.230.520.720.222.322.436.437.137.740.61992: IIIIllIV108.3108.3109.5114.010.810.711.211.497.597.798.3102.624.925.225.626.144.343.743.345.510.811.612.012.717.517.117.518.3126.1133.1137.1140.010.513.114.313.7115.6120.0122.8126.221.222.022.123.431.432.934.535.422.322.822.923.840.842.343.343.71993: I....II...III..111.5113.1111.910.810.810.6100.7102.3101.325.625.926.144.545.844.712.812.812.117.817.818.4140.8147.5148.212.814.312.6128.1133.2135.623.524.725.935.737.738.225.125.525.043.845.346.51 End-use categories beginning 1978 are not strictly comparable with data for earlier periods. See Survey of Current Business, June 1988.Note.—Data are on an international transactions basis and exclude military.In June 1990, end-use categories for merchandise exports were redefined to include reexports; beginning with data for 1978,reexports (exports of foreign merchandise) are assigned to detailed end-use categories in the same manner as exports of domesticmerchandise.Source-. Department of Commerce, Bureau of Economic Analysts.388

TABLE B-105.—U.S. merchandise exports and imports by area, 1984-93[Billions of dollars]Item1984198519861987198819891990199119921993 first3 quartersat annualrate 1Exports219 9215.9223 3250 2320 23621389 3416 94401448.7Industrial countriesCanada .JapanWestern Europe 2Australia, New Zealand,and South Africa141.053.023.256.97.8140.555.422.156.07.0150.356.526.460.47.1165.662.027.668.67.4207 374.337.286.49.4234.281.143.998.410.9253.883.547.8111.411.2261.385.947.2116.811.4264.991.146.9114.512.4267.299.447.2109.211.4Australia495 15 153688 183838780Other countries, exceptEastern EuropeOPEC 3Other 4 .74.613.860 871.911.460 571.010.460 682.310.7716109.113.895 3122.213.3108 9130.613.4117 2150.418.51319169.520.7148 8175.818.7157.1Eastern Europe 2 ;4.33.22.12.33.85.54.34.85.65.7Internationalorganizations andunallocated0212641Imports332 43381368 4409 8447 2477 4498 3490 7536 3582.0Industrial countries205.5219.0245.4259.7283.2292.5299.9294.2316.2342.2CanadaJapan....Western Europe 2Australia, New Zealand,and South Africa67.660.272.15.670.265.777.55.669.780.889.05.973.684.696.15.484.689.8102.66.289.993.5102.46.693.190.4109.27.393.092.3101.97.0100.997.4111.36.6112.5105.2118.06.5Australia282726303539444 13733Other countries, exceptEastern Europe124 7117 31211148 21618182 8196 1194 82181236 6OPEC 3Other 426.997 822.894 518.9102 224.4123 823.0138 830.7152 138.2157 933.4161433.7184 435.02017Eastern Europe 22.21.82.01.92.22.12.31.82.03.2Internationalorganizations andunallocatedBalance (excess ofexports -+-)-112.5-122.2-145.1-159.6-127.0-115.2-109.073.8-96.1-133.3Industrial countries-64.5-78.4-95.1-94.1-75.9-58.3-46.1-32.8-51.3-75.0CanadaJapanWestern Europe 2Australia, New Zealand,and South Africa-14.6-37.0-15.22.2-14.8-43.5—21.41.4-13.2-54.4-28.61.1-11.6-56.9-27.52.0-10.3-52.6-16.23.2-8.9-49.7-4.04.2-9.6-42.62.23.9-7.1-45.014.94.4-9.7-50.53.25.8-13.0-58.0-8.94.9Australia2.12.42.52.33.34.23.94.25.04.7Other countries, exceptEastern Europe-50.1-45.350.165.8-52.7-60.6-65.6-44.4-48.6-60.9OPEC 3Other 4Eastern Europe 2-13.1-37 02.1-11.4-33.91.4-8.5-41.6.1-13.7-52.1.3-9.2-43.51.6-17.4-43.23.5-24.840.72.1-15.0-29.43.0-13.0-35.63.7-16.3-44.52.6Internationalorganizations andunallocated.0.2.1.2.6.4.11 Preliminary; seasonally adjusted.2 The former German Democratic Republic (East Germany) included in Western Europe beginning fourth quarter 1990 and in EasternEurope prior to that time.3 Organization of Petroleum Exporting Countries, consisting of Algeria, Ecuador (through 1992), Gabon, Indonesia, Iran, Iraq, Kuwait,Libya, Nigeria, Qatar, Saudi Arabia, United Arab Emirates, and Venezuela.4 Latin America, other Western Hemisphere, and other countries in Asia and Africa, less members of OPEC.Note.—Data are on an international transactions basis and exclude military.Source: Department of Commerce, Bureau of Economic Analysis.389

TABLE B-106.—U.S. merchandise exports, imports, and trade balance, 1972-93[Billions of dollars; monthly data seasonally adjusted]Year ormonthTotal 2IMerchandise exports (f.a.s. /alue)'Principal end-use commodity categoryFoods,feeds,beveragesIndustrialsuppliesandmaterialsCapitalgoodsceptautomotiveAutomotivevehicles,parts,andenginesConsumergoods(nonfood)Other 2exceptautomotiveGenera merchandise imports (customs value) 3TotalPrincipal end-use commodity categoryFoods,feeds,beveragesIndustrialsuppliesandmaterialsCapitalgoodsceptautomo-ii veAutomotivevehicles,parts,andenginesConsumergoods(nonfood)OtherexceptautomotivePeneralmerchandiseimports(ci.f.value) 4Trade balanceEx-•ip\(f.a.s.)lessim-(customsval-Exports(f.a.s.)lessimports(ci.f.)197219731974197519761977 ....1978197919801981198219831984198519861987198819891990199119921992:JanFebMarAprMayJuneJulyAugSeptOctNovDec1993:JanFebMarAprMayJuneJulyAugSeptOctNov49.971.999.4108 9116.8123.2145 8186 4225.6238 7216.4205.6224.07 218.87 227.2254.1322.4363.8393.6421.7448.235.637.637.236.436.038.037.436.437.738.937.839.237.536.938.938.538.937.637.138.138.940.140.131.330.931.524.022.324.332.337.235.135.740.23.13.63.33.43.03.13.43.33.53.63.43.43.33.43.53.43.33.23.23.13.43.53.461.756.761.758.557.366.785.199.3104.4109.7109.3F.a.s. value 59.28.98.88.89.09.49.68.99.09.69.09.29.48.79.29.19.78.89.39.09.69.99.67?.767.272.073.975.886.2109.2138.8152.7166.7176.714.015.215.114.413.915.414.414.014.815.314.515.814.514.315.615.215.315.314.315.315.015.615.515.716.820.622.921.724.629.334.837.440.047.13.43.83.73.93.93.83.94.14.03.84.44.64.14.44.34.44.34.13.84.24.14.54.714.313.413.312.614.217.723.136.443.345.950.43.94.14.13.94.14.24.24.14.44.54.54.34.34.24.44.24.54.34.44.54.64.64.820.720.524.027.335.934.643.417.220.723.724.52.02.12.22.02.12.22.02.02.02.12.01.92.01.92.02.11.92.02.02.12.22.02.055 669.5103 399 3124 61515176 1210 3245.3261 0244.0258.06 330.76 336.5365.4406.2441.0473.2495.3488.5532.741.641.042.743.443.644.944.945.146.046.145.646.145.244.849.348.747.349.747.548.149.551.050.217.118.221.021.924.424.824.825.126.626.527.92.32.22.32.42.32.52.52.32.22.32.22.32.32.22.42.22.32.32.32.32.42.62.3Customs valueF.a.s. value 5Customs value112.0107.0123.7113.9101.3111.0118.3132.3143.2131.6138.310.610.310.611.211.512.012.011.912.012.511.811.511.611.112.612.612.312.812.111.712.212.512.235.440.959.865.171.884.5101.4113.3116.4120.7134.210.310.310.610.910.911.111.311.411.611.811.611.911.711.712.412.412.313.112.812.513.013.713.733.3 39.740.8 44.953.5 60.066.8 68.378.2 79.485.2 88.787.7 95.986.1 102.987.3 105.785.7 108.091.8 123.07.57.17.67.67.67.67.47.77.87.58.08.27.98.38.88.88.28.67.88.58.79.08.89.59.710.09.910.110.110.310.310.910.510.310.710.310.311.511.110.711.311.011.711.611.711.56.56.37.89.410.412.112.813.616.115.917.61.31.51.51.41.41.51.51.31.41.51.71.51.41.31.61.51.61.61.51.41.51.51.758 973.2110.9105 9132.5160.4186 0222 2257.0273 4254.9269.9346.4352.5382.3424.4459.5493.2517.0508.4554.043.442.744.545.245.446.646.746.847.847.947.447.947.046.651.350.649.151.649.450.051.553.052.2-572.4-3996-7.8-28.4-30 223 9-19.7-22 3-27.5-52.4-106.7-6.0-3.4-5.5-7.0-7.7-6.8-7.5-8.7-8.3-7.2-7.8-7.0-7.7-7.9-10.5-10.2-8.4-12.1-10.4-10.0-10.6-10.9-10.2-90-1.3-11430-15.7-37 2-40 235 9-31.434 6-38.4-64.2-122.4-117.7 -133.6-138.3 -155.1-152.1 -170.3-118.5 -137.1-109.4 -129.4-101.7 -123.4-66.7 -86.6-84.5 -105.9-7.8-5.1-7.3-8.8-9.4-8.6-9.3-10.5-10.1-9.1-9.6-8.8-9.5-9.6-12.4-12.1-10.2-14.0-12.3-11.9-12.6-12.S-12.21 Department of Defense shipments of grant-aid military supplies and equipment under the Military Assistance Program are excludedfrom total exports through 1985 and included beginning 1986.2 Includes undocumented exports to Canada through 1988. Beginning 1989, undocumented exports to Canada are included in theappropriate end-use category.3 Total arrivals of imported goods other than intransit shipments.4 Ci.f. (cost, insurance, and freight) import value at first port of entry into United States. Data for 1967-73 are estimates.5 F.a.s. (free alongside ship) value basis at U.S. port of exportation for exports and at foreign port of exportation for imports.6 Total includes revisions not reflected in detail.7 Total exports are on a revised statistical month basis; end-use categories are on a statistical month basis.Note.—Data are as reported by the Bureau of the Census adjusted to include silver ore and bullion reported separately prior to 1969.Trade in gold is included beginning 1974. Export statistics cover all merchandise shipped from the U.S. customs area, except 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 beginning 1974 include trade of the U.S. Virgin Islands.Source.- Department of Commerce, Bureau of the Census.390

TABLE B-107.—International reserves, selected years, 1952-93[Millions of SDRs; end of period]Area and country 1952 1962 1972 1982 1990 1991 1992Oct1993NovAll countries49,38862,851146,658361,253670,678704,672725,652760,728765,608Industrial countries *39,28053,502113,362214,014441,946428,438424,229439,197442,458United StatesCanadaAustraliaJapanNew ZealandAustriaBelgiumDenmarkFinlandFrance24,7141,9449201,1011831161,13315013268617,2202,5611,1682,0212511,0811,7532562374,04912,1125,5725,65616,9167672,5053,5647876649,22429,9183,4286,05322,0015775,5444,7572,1111,42017,85059,95813,06011,71056,0272,9027,3059,5997,5026,84928,71655,76911,81611,83751,2242,0627,9249,5735,2345,38924,73552,9958,6628,42952,9372,2399,70310,9148,0903,86222,52254,7479,2568,31871,3462,52510,0668,8436,4483,47254,6798,7298,34110,3819,0056,4563,650GermanyGreeceIcelandIrelandItalyNetherlands9609483187229536,958287323594,0681,94321,908950781,0385,6054,40743,9099161332,39015,10810,72351,0602,5173083,68446,56513,82747,3753,7473164,02636,36513,98069,4893,3693642,51422,43817,49259,0114,4763214,68523,00124,08960,1102884,69323,73524,072NorwayPortugalSpainSwedenSwitzerlandUnited Kingdom1646031345041,6671,9563046801,0458022,9193,3081,2202,1294,6181,4536,9615,2016,2721,1797,4503,39716,93011,90410,81910,73636,55512,85623,45625,8649,29214,97746,56213,02823,19129,9488,72514,47433,64016,66727,10027,30014,28430,14214,39925,18614,44830i22525,463Developing countries: Total 29,6489,34933,295147,239228,732276,234301,423321,531323,149By area:AfricaAsia 2EuropeMiddle EastWestern Hemisphere1,7863,7932691,1832,6162,1102,7723811,8052,2823,9628,1292,6809,4369,0897,73444,4905,35964,09425,56312,053128,82615,53537,95634,36114,587157,53515,82341,77746,51213,095164,41715,17143,87764,86113,452175,19116,32145,15571,41213,230176,55716,37145,29671,696Memo:Oil-exporting countriesNon-oil developing countries1,6997,9492,0307,3199,95623,33967,16380,07643,875184,85748,883227,35145,871255,55245,534275,99745,280277,8691 Includes data for Luxembourg.2 Includes data for Taiwan Province of China.Note.—International reserves is comprised of monetary authorities' holdings of gold (at SDR 35 per ounce), special drawing rights(SDRs), reserve positions in the International Monetary Fund, and foreign exchange. Data exclude U.S.S.R., other Eastern Europeancountries, and Cuba (after 1960).U.S. dollars per SDR (end of period) are: 1952 and 1962—1.00000; 1972—1.08571; 1982—1.10311; 1990—1.42266; 1991—1.43043; 1992—1.37500; October 1993—1.39293; and November 1993—1.38389.Source: International Monetary Fund, International Financial Statistics.391

TABLE B-108.—Industrial production and consumer prices, major industrial countries, 1967-93Year or quarterUnitedStatesCanadaJapanEuropeanCommunity1FranceGermany 2ItalyUnitedKingdomIndustrial production (1987= LOO)^19671968196919701971197219731974197519761977 .. . .19781979 .. .1980..19811982198319841985198619871988198919901991 . .19921993" .. ..1992:1II . .IlIV ..1993:1 ||IIV57.560.763.561.462.268.373.872.766.372.478.282.685.784.185 781.984992.894 495.3100.0104.4106.0106.01041106.5111.0105.1106 3106.5108 3109.7110 4111.1113.151.154.358.158.862.066.773.876.171.676.079.382.186.182.884576.281291.096195.4100 0105.3105.2101.898198.597.598 098.5100 0101.8102 6103.636.241.748.355.056.559.667.966.459.466.068.673.078.181.782 682.985 593.496 896.6100 0109.3115.9121.4123 7116.5119.7116 9116.5113 5114.1112 2112.059.363.769.673.174.778.083.784.378.784.586.695.493.192.891 189.990 892.895 898.0100 0104.2108.2110.31102108.9106.8109 5108.6106 6105.16162697277818790839092949998.998.397.396.597.197.298.0100.0104.6108.9111.0110.9109.8110.41104110.3107.3104.8104 9Consumer prices (1982-84=100)57.662.970.975.577.079.985.084.879.686.888.090.494.795.093 290.390.993.597.799.6100.0103.9108.8114.1117.4116.0119.2117.3115.7110.3106.9106.9106.958.561.964.268.368.070.877.781.273.782.983.885.491.196.294 791.788 991.892.996.2100.0105.9109.2109.4107.1106.5110.3107.2104.7104.0105.2102.0103.070.575.978.578.978.579.987.085.480 883.487.690.193.686.984 185.788 989.093.996.2100.0104.8107.0106.7102.5102.0101.4101.3102.5103.1103.2104.3105.31967 . ...196819691970197119721973197419751976197719781979198019811982 . .. .19831984 .. .1985198619871988198919901991199219931992-1 ||IlIV1993-1IIIll.IV33.434.836.738.840.541.844 449.353.856.960.665.272.682 490.996 599.6103 9107.6109 61136118.3124.0130.7136.2140 3144.5138 7139.8140 9141.9143.1144.2144.8145.831.332.534.035.136.137.940 745.250.153.858.163.369.176185.694 9100.4104 8108.9113.4118 4123.2129.3135.5143.1145.2147.9144 2144.9145 6146.1147.2147.5148.1148.832.234.035.838.540.942.947 959.065.972.278.181.484.491095.398 099.81021104.1104.8104 9105.7108.0111.4115.0116.91159117.51170117.4117.4118.5119.123.524.325.326.628.330.132 737.442.847.953.858.765.174 083.292 2100.2107.4114.0118.2122 2126.7133.3140.8147.9154.31521154.0154 8156.2157.5159.2160.124.625.727.428.730.332.234 539.343.948.152.757.563.672.382.091.6100.5107.9114.2117.2120.9124.2128.6133.0137.2140.6139 5140.6140 6141.3142.5143.4143.749.350.151.052.955.658.762.867.271.274.276.979.082.386.892.297.0100.3102.7104.8104.7104.9106.3109.2112.1116.0120.6125.51191120.4121.0122.1124.2125.5126.0126.616.016.216.616.817.618.720.624.628.833.640.145.152.163.275.487.7100.8111.5121.1128.5134 4141.1150.4159 6169.8178 9186.4175 9178.2179.4181.7183.5185.5187.3189.218.519.420.421.823.825.527.932.340.246.854.258.766.678.587.995.499.8104.8111.1114.9119 7125.6135.4148.2156.9162.7165.3160 0163.5163.4164.0162.9165.6166.0166.61 Consists of Belgium-Luxembourg, Denmark, France, Greece, Ireland, Italy, Netherlands, United Kingdom, Germany, Portugal, andSpain. Industrial production prior to July 1981 excludes data for Greece, which joined the EC in 1981. Data for Portugal and Spain,which became members on January 1, 1986 are excluded prior to 1982.2 Former West Germany.3 All data exclude construction. Quarterly data are seasonally adjusted.Sources: National sources as reported by Department of Commerce (International Trade Administration, Office of Trade and EconomicAnalysis, Trade and Industry Statistics Division), Department of Labor (Bureau of Labor Statistics), and Board of Governors of theFederal Reserve System.

TABLE B-109.—Civilian unemployment rate, and hourly compensation, major industrial countries,1967-93[Quarterly data seasonally adjusted]Year or quarterUnitedStates Canada Japan FranceGermany*ItalyUnitedKingdom1967196819691970197119721973197419751976197719781979198019811982198319841985198619871988198919901991199219931992:1....II...III..IV..1993:1....II...IV..1967..1968..1969..1970..1971..1972..1973..1974..1975..1976..1977..1978..1979..1980..1981..1982..1983..1984..1985..1986..1987..1988..1989..1990..1991..1992..3.83.63.54.95.95.64.95.68.57.77.16.15.87.17.69.79.67.57.2.7.06.25.55.35.56.77.46.87.37.57.57.37.07.06.76.562.867.974.483.391.5100.0102.7105.9111.2115.8118.4123.0127.9134.7141.9148.13.84.54.45.76.26.25.55.36.97.18.18.37.47.57.511.011.811.210.59.58.87.87.58.110.311.311.210.711.311.511.511.011.411.411.1Civilian unemployment rate (percent) 21.31.21.11.21.31.41.31.41.92.02.02.32.12.02.22.42.72.82.62.82.92.52.32.12.12.22.12.12.22.32.32.42.62.12.72.32.52.82.92.82.94.24.65.25.46.16.57.68.38.610.010.510.610.810.39.69.19.6"10.410.210.210.310.610.811.211.51.31.1.6.5.6.7.71.63.43.43.43.32.92.84.05.63 6.97.17.26.66.36.35.7"5.0"4.4"4.74.44.64.85.05.45.86.13.43.53.53.23.33.83.73.13.43.94.14.14.44.44.95.45.95.96.037.57.97.97.8"7.03 "6.9"7.36.97.07.08.339.410.810.6Manufacturing hourly compensation in U.S. dollars (1982=100) 426.128.230.433.937.741.344.352.257.367.769.569.874.883.093.1100.0106.2105.9105.6107.8116.3130.9143.2155.5167.8165.710.512.214.617.420.727.337.445.652.156.268.694.095.598.3107.6100.0107.7111.0115.0171.2204.2234.4231.2237.5270.8300.617.920.220.521.624.429.438.442.158.259.966.181.497.5113.3101.8100.095.390.295.0128.4153.4160.6158.1192.4193.5213.515.216.318.122.927.032.544.251.659.762.974.592.8109.1119.3102.2100.099.993.996.0135.6171.4182.1178.4222.2230.6260.017.718.920.625.129.434.941.248.160.559.065.778.897.4111.1100.9100.0104.3103.5107.0142.7173.3179.9188.5241.0257.5277.13.33.23.13.13.94.23.23.14.65.96.46.35.47.010.511.311.811.811.211.210.38.67.36.9"8.8"10.0"10.49.69.810.210.510.610.410.410.116.915.817.219.923.527.731.035.644.942.346.259.277.9103.7104.8100.093.288.894.7113.7138.9158.6167.3191.4210.8228.41 Former West Germany.2 Civilian unemployment rates, approximating U.S. concepts. Quarterly data for France, Germany, and United Kingdom should beviewed as less precise indicators of unemployment under U.S. concepts than the annual data. Many Italians reported as unemployed didnot actively seek work in the past 30 days, and they have been excluded for comparability with U.S. concepts. Inclusion of such personswould about double the unemployment rate for Italy through 1985, and increase it to 11-12 percent for 1986-92 and 13 percent in1993.3 There are breaks in the series for Germany (1983) and Italy (1986, 1991, and 1993). Based on the prior series, the rate forGermany was 7.2 percent in 1983, and the rate for Italy was 6.3 percent in 1986 and 6.6 in 1991. The break in 1993 raised Italy's rateby approximately 1.1 percentage points.4 Hourly compensation in manufacturing, U.S. dollar basis. Data relate to all employed persons (wage and salary earners and the selfemployed)in the United States and Canada, and to all employees (wage and salary earners) in the other countries. For France andUnited Kingdom, compensation adjusted to include changes in employment taxes that are not compensation to employees, but are laborcosts to employers.Source.- Department of Labor, Bureau of Labor Statistics.393

TABLE B-110.—Foreign exchange rates, 1969-93[Currency units per U.S. dollar, except as noted]PeriodMarch 197319691970197119721973197419751976197719781979198019811982198319841985198619871988198919901991199219931992: 1IIIllIV1993:1 IIIllIVMarch 197319691970197119721973197419751976197719781979198019811982198319841985198619871988198919901991199219931992:1IIIllIV1993:1IIIllIVBelgium(franc)39.40850.14249.65648.59844.02038.95538.95936.80038.60935.84931.49529.34229.23837.19545.78151.12357.75259.33744.66437.35836.78539.40933.42434.19532.14834.58133.34733.22030.17031.91533.68633.31135.44735.857Netherlands(guilder)2.87143.62403.61663.49533.20982.79462.68792.52932.64492.45482.16432.00731.98752.49992.67192.85443.20853.31852.44852.02641.97782.12191.82151.87201.75871.85851.82431.81821.65061.74481.83871.81801.88611.8907Canada(dollar)0.99671.07691.04441.0099.99071.0002.97801.0175.98631.06331.14051.17131.16931.19901.23441.23251.29521.36591.38961.32591.23061.18421.16681.14601.20851.29021.17751.19401.20161.26171.26081.27031.30391.3251Sweden(krona)4.42945.17015.18625.10514.75714.36194.43874.15314.35804.48024.52074.28934.23105.06606.28397.67188.27088.60327.12736.34696.13706.45595.92316.05215.82587.79565.88545.83025.35236.25817.52997.41308.01518.2185France(franc)4.51565.19995.52885.51005.04444.45354.81074.28774.78254.91614.50914.25674.22515.43976.57947.62048.73568.98006.92576.01225.95956.38025.44675.64685.29355.66695.51375.44164.96285.26715.54635.46355.81805.8368Switzerland(franc)3.21714.31314.31064.11713.81863.16882.98052.58392.50022.40651.79071.66441.67721.96752.03272.10072.35002.45521.79791.49181.46431.63691.39011.43561.40641.47811.45731.47801.30411.38881.50631.46281.47681.4676Germany(mark)2.81323.92513.64653.48303.18862.67152.58682.46142.51852.32362.00971.83431.81752.26322.42812.55392.84552.94202.17051.79811.75701.88081.61661.66101.56181.65451.62041.61461.46431.55091.63491.61981.67761.6851United Kingdom(pound) 12.47242.39012.39592.44422.50342.45252.34032.22171.80481.74491.91842.12242.32462.02431.74801.51591.33681.29741.46771.63981.78131.63821.78411.76741.76631.50161.76921.80701.90301.57811.47691.53311.50371.4914Italy(lira)568.17627.32627.12618.34583.70582.41650.81653.10833.58882.78849.13831.11856.211138.581354.001519.321756.111908.881491.161297.031302.391372.281198.271241.281232.171573.411218.541217.231135.181362.891547.371506.551586.561653.17Japan(yen)261.90358.36358.16347.79303.13271.31291.84296.78296.45268.62210.39219.02226.63220.63249.06237.55237.46238.47168.35144.60128.17138.07145.00134.59126.78111.08128.77130.37124.93123.02120.67110.05105.65108.35Multilateral trade-weighted value ofthe U.S. dollar (March 1973=100)Nominal100.0122.4121.1117.8109.199.1101.498.5105.7103.492.488.187.4103.4116.6125.3138.2143.0112.296.992.798.689.189.886.693.288.288.081.988.593.390.993.794.9Real 2 100.098.999.494.197.693.384.483.284.9100.9111.8117.3128.8132.4103.690.988.294.486.086.583.489.984.884.478.985.490.087.690.291.71 Value is U.S. dollars per pound.2 Adjusted by changes in consumer prices.Source-. Board of Governors of the Federal Reserve System.394

TABLE B —111.— Growth rates in real gross domestic product, 1975-93[Percent change]Area and country 1975-84 1985 1986 1987 1988 1989 1990 1991 1992 1993 *World3.3Industrial countries-2.5United States2.5Canada3.2Japan4.0European Community2.0France2.1Germany 21.8Italy2.5United Kingdom 31.5Developing countries4.5Africa2.3Asia6.3Middle East and Europe3.6Western Hemisphere3.2Countries in transition 43.9Central Europe3.3Former Soviet Union 5 4.13.73.33.24.85.02.51.91.92.63.85.23.77.32.93.52.13.11.73.62.92.93.32.62.92.52.22.94.34.91.97.02.44.03.63.73.63.93.23.14.24.12.92.31.43.14.85.71.38.15.93.22.61.92.84.64.33.95.06.24.24.53.74.15.05.33.99.0.71.14.31.55.33.43.22.52.44.73.54.33.62.92.24.13.65.53.61.62.3.23.02.22.31.2-.24.83.02.55.72.1.43.71.95.74.2.3-3.5-7.1-2.30.6.5-.7-1.74.0.71.71.3-2.24.51.66.12.43.3-12.0-12.6-11.81.72.6.71.31.11.41.9.9-.55.8.47.87.82.5-15.4-9.1-17.82.21.12.72.6-.2-1.0-1.6.01.86.11.68.73.43.4-10.2-1.8-13.71 All figures are forecasts except data for United States.2 Through 1990 for West Germany only.3 Average of expenditure, income, and output estimates of GDP at market prices.4 For most countries included in the group, total output is measured by real net material product (NMP) or by NMP-based estimatesof GDP.5 Data beginning 1990 are weighted averages of separate estimates for the 15 states of the former U.S.S.R.Sources: Department of Commerce (Bureau of Economic Analysis) and International Monetary Fund.395

NATIONAL WEALTHTABLE B-l 12.—National wealth, 1946-92[Billions of dollars]End of yearPrivate net worth 2Tangible wealth 3Totalnetworth lTotalTotal *OwneroccupiedrealestateConsumerdurablesTotal 5Financial wealthCorporateequity 6NoncorporateequityGovernment net financial assetsTotal 7FederalStateandlocal1946194719481949533.7624.1673.9706.8755.5831.6872.9909.6220.1260.7294.7323.5149.6175.5197.1214.753.265.176.386.6535.4570.9578.2586.1102.6100.299.0108.1200.1236.1245.1244.6-221.8-207.5-199.0-202.8-221.6-207.4-198.8-202.4-0.6-.1-.919501951195219531954816.9918.8954.5979.01,076.51,015.41,112.91,167.61,204.51,311.2373.1419.1455.2486.3514.4239.7266.8291.6312.6335.4108.2124.4134.0143.0147.1642.3693.8712.4718.2796.8132.0154.6156.3150.2218.9276.3297.3299.6301.2303.3-198.5-194.1-213.1-225.5-234.7-195.1-189.7-203.2-212.1-217.5-3.9-5.0-10.5-14.0-17.9195519561957195819591,186.21,282.21,302.41,452.61,526.91,421.71,515.01,537.01,702.51,784.0557.9603.2634.3664.1699.1364.8391.9416.3438.8464.4157.3171.9176.2182.0189.0863.8911.8902.71,038.41,084.9268.2288.4254.3358.0385.4312.0327.4337.7351.1354.5-235.5-232.8-234.6-249.9-257.1-215.1-209.4-206.7-216.5-219.4-21.1-24.1-28.7-34.2-38.6196019611962196319641,570.91,727.51,715.01,855.52,010.11,828.91,995.31,990.62,135.82,297.3730.0761.2794.5833.0874.9488.2512.5535.9559.2584.6193.7196.8202.3212.8223.71,098.91,234.11,196.11,302.81,422.4381.5487.8423.0497.3572.2356.4365.0374.1383.6396.1-258.0-267.8-275.6-280.3-287.2-217.0-223.1-227.8-229.9-233.8-41.9-45.7-48.8-51.5-54.5196519661967196819692,182.82,239.02,513.82,847.82,891.42,474.22,537.62,825.23,172.03,216.7919.2991.81,059.41,182.01,282.8609.6651.9688.2768.7826.7236.1258.5283.2314.2343.71,550.01,545.81,765.81,990.01,933.9649.8581.7724.2863.8655.5417.8441.3460.6496.5524.1-291.4-298.6-311.4-324.2-325.3-235.7-239.0-247.0-255.5-249.2-57.0-60.9-66.0-70.5-78.2197019711972197319743,018.43,331.33,762.93,942.44,090.13,364.03,706.94,153.74,333.84,493.61,363.91,478.11,667.71,887.82,146.8867.4945.71,085.51,234.91,395.2372.4393.7424.7470.5544.22,000.12,228.82,486.02,446.02,346.8638.6730.1810.5607.0387.8546.2592.8666.2799.9877.6-345.6-375.6-390.8-391.4-403.5-260.7-282.3-298.9-305.2-316.2-87.3-96.2-95.1-90.6-93.91975..1976..1977..1978..1979..4,636.05,328.15,784.46,615.97,734.55,119.45,871.76,396.67,232.68,365.62,391.12,683.83,088.33,601.34,178.71,572.11,790.42,094.72,478.22,897.2595.7652.8725.5815.2924.42,728.33,187.93,281.33,631.34,186.9515.6721.1620.4631.4764.3958.61,071.41,195.11,398.61,632.0-483.4-543.6-585.2-616.7-631.1-392.9-452.9-507.7-545.3-566.5-99.0-100.8-88.1-83.0-77.31980..1981..1982..1983..1984..8,958.99,531.110,099.510,860.811,421.59,650.610,307.611,021.411,961.812,697.74,703.05,096.55,358.55,672.86,160.03,289.43,572.63,758.43,983.94,349.41,014.31,086.21,133.71,193.81,281.54,947.65,211.15,662.96,289.06,537.71,021.0926.1999.11,158.71,099.81,863.62,016.22,015.12,059.12,026.8-691.7-776.5-921.9-1,101.0-1,276.2-626.7-702.8-848.3-1,041.7-1,223.9-79.2-89.3-90.9-77.8-73.61985..1986..1987..1988..1989..12.474.013,468.614,249.315,146.616,683.513,942.315,158.516,122.717,216.218,955.66,603.27,100.47,656.18,102.88,708.64,650.14,978.25,368.95,619.66,058.51,391.11,527.51,659.51,808.41,929.67,339.18,058.18,466.69,113.410,247.01,453.51,754.81,757.01,900.02,264.92,049.62,107.22,224.62,353.02,508.1-1,468.3-1,689.9-1,873.4-2,069.6-2,272.1-1,429.8-1,663.7-1,845.4-2,037.8-2,212.9-59.3-48.1-51.8-59.1-90.21990..1991..1992..16,425.217,949.818,569.318,933.120,731.821,749.98,738.39,248.39,534.15,979.06,440.76,671.72,047.12,141.92,232.110,194.811,483.512,215.82,190.43,073.43,665.52,440.62,344.62,266.6-2,507.9-2,782.0-3,180.6-2,406.0-2,646.5-2,998.2-136.6-173.2-226.01 Sum of private net worth and government net financial assets.2 Referred to as household net worth in the Balance Sheets.3 Held by households and nonprofit organizations.4 Also includes nonprofit organizations real estate.5 Also includes credit market instruments, life insurance and pension reserves, security credit, and miscellaneous assets, and is net ofliabilities.6 Includes households and nonprofit organizations' direct (or through mutual funds) holdings of corporate equity. Equity held throughpension and life insurance reserves is not included.7 Also includes sponsored credit agencies and the Federal Reserve. Some tangible wealth is included for these agencies.Note.—Data are from Balance Sheets for the U.S. Economy, 1945-92, September 1993, with updates for recent years from Flow of FundsAccounts, Flows and Outstanding, December 1993.Data are measured at market value where available. For example, corporate equity and land are measured at market value, but bondsare measured at par value.Source: Board of Governors of the Federal Reserve System.396

TABLE B-113.—National wealth in 1987 dollars, 1946-92[Billions of 1987 dollars]End of yearPrivate net worth 2Tangible wealth sTotalnetworth 1TotalTotal 4OwneroccupiedrealestateConsumerdurablesTotal 5Financial wealthCorporateequity 6NoncorporateequityGovernment net financial assetsTotal 7FederalStateandlocal1946..1947..1948194919501951195219531954195519561957.1958.1959.1960.19611962.1963.1964.19651966196719681969197019711972197319741975197619771978197919801981198219831984198519861987198819891990199119923,195.83,200.53,336.13,551.83,871.64,313.64,358.44,450.04,805.85,091.05,320.35,294.35,741.55,895.46,018.86,494.46,328.46,747.37,153.47,552.97,463.38.109.08,735.68,429.78,361.28,766.69,430.89,168.48,647.19,108.19,866.910,007.610,518.111,307.711,866.111,637.511,812.312,189.512,307.713,020.913,687.614,011.114,262.315,057.314,196.415,020.815,121.64,524.04,264.64,321.34,570.94,812.35,224.95,331.55,475.05,853.66,101.76,286.36,248.06,729.26,888.07,007.37,501.17,345.47,766.58,175.48,561.28,458.79,113.59,730.19,378.19,318.69,755.010,410.310,078.69,500.210,057.810,873.511,020.111,498.612,230.412,782.312,585.612,890.513,425.113,682.914,553.515,405.015,853.216,211.117,107.916,364.017,348.817,711.61,318.01,336.91,458.91,625.61,768.21,967.62,078.52,210.52,296.42,394.42,502.92,578.52,624.92,699.22,796.92,861.72,931.73,029.13,113.53,180.63,306.03,417.43,625.83,739.93,778.13,889.74,179.74,390.24,538.74,697.64,970.05,343.15,725.46,109.26,229.16,222.86,267.36,366.86,637.96,892.77,215.97,528.17,629.87,859.77,552.57,739.27,763.9895.8900.0975.71,078.91,136.01,252.61,331.51,420.91,497.31,565.71,626.11,692.31,734.41,793.11,870.51,926.71,977.52,033.52,080.42,109.32,173.02,220.02,358.02,410.22,402.82,488.72,720.62,871.92,949.73,088.63,315.63,624.03,939.94,235.74,356.84,362.14,395.84,471.34,686.94,854.05,059.15,279.25,291.55,468.05,167.75,389.75,433.0318.6333.8377.7435.2512.8584.0611.9650,0656.7675.1713.3716.3719.4729.7742.1739.8746.5773.8796.1817.0861.7913.5963.81,002.01,031.61,036.11,064.41,094.21,150.51,170.31,208.91,255.21,296.01,351.51,343.41,326.31,326.01,339.81,380.91,452.11,552.31,631.81,702.81,741.51,769.31,792.41,817.73,206.02,927.72,862.42,945.23,044.13,257.33,253.03,264.53,557.13,707.33,783.43,669.54,104.34,188.84,210.34,639.54,413.74,737.55,061.95,380.65,152.75,696.16,104.35,638.25,540.45,865.36,230.65,688.44,961.55,360.15,903.55,677.05,773.16,121.26,553.16,362.86,623.37,058.47,044.97,660.98,189.18,325.18,581.49,248.28,811.49,609.69,947.7614.4513.8490.1543.2625.6725.8713.7682.7977.21,151.11,196.71,033.71,415.01,488.01,461.71,833.81,560.91,808.42,036.32,248.41,939.02,336.12,649.71,911.11,769.01,921.32,031.31,411.6819.91,013.01,335.41,073.41,003.81,117.41,352.31,130.81,168.51,300.41,185.11,517.21,783.31,727.61,789.12,044.11,893.22,571.92,984.91,198.21,210.81,213.41,229.11,309.51,395.81,368.01,369.11,354.01,339.11,358.51,372.81,387.71,368.71,365.51,372.21,380.41,394.91,409.61,445.71,471.01,485.81,523.01,528.01,513.01,560.01,669.71,860.21,855.41,883.31,984.12,067.62,223.52,386.02,468.32,461.82,356.82,311.02,184.12,139.52,141.52,187.42,215.62,263.62,109.41,962.01,845.8-1,328.1-1,064.1-985.1-1,019.1-940.8-911.3-973.1-1,025.0-1,047.8-1,010.7-966.0-953.7-987.7-992.7-988.5-1,006.8-1,017.0-1,019.3-1,022.1-1,008.3-995.3-1,004.5-994.5-948.4-957.3-988.4-979.4-910.2-853.1-949.7-1,006.7-1,012.5-980.4-922.7-916.2-948.1-1,078.2-1,235.7-1,375.2-1,532.7-1,717.4-1,842.1-1,948.8-2,050.6-2,167.6-2,328.0-2,590.1-1,326.9-1,063.6-984.2-1,017.1-924.6-890.6-927.9-964.1-971.0-923.2-868.9-840.2-855.7847.1-831.4-838.7-840.6-836.0-832.0-815.6-796.7-796.8-783.7-726.5-722.2-742.9-749.1-709.8-668.5-771.9-838.7-878.4-866.9-828.2-830.1-858.1-992.2-1,169.1-1,318.9-1,492.5-1,690.8-1,814.6-1,918.8-1,997.2-2,079.5-2,214.6-2,441.5-3.6-2.6-3.5-4.5-18.5-23.5-47.9-63.6-79.9-90.6-100.0-116.7-135.2-149.0-160.5-171.8-180.1-187.3-194.0-197.2-203.0-212.9-216.3-228.0-241.8-253.2-238.3-210.7-198.5-194.5-186.7-152.4-132.0-113.0-104.9-109.0-106.3-87.3-79.3-61.9-48.9-50.9-55.6-81.4-118.1-144.9-184.01 Sum of private net worth and government net financial assets.2 Referred to as household net worth in the Balance Sheets.3 Held by households and nonprofit organizations.4 Also includes nonprofit organizations real estate.5 Also includes credit market instruments, life insurance and pension reserves, security credit, and miscellaneous assets, and is net ofliabilities.6 Includes households and nonprofit organizations' direct (or through mutual funds) holdings of corporate equity. Equity held throughpension and life insurance reserves is not included.7 Also includes sponsored credit agencies and the Federal Reserve. Some tangible wealth is included for these agencies.Note.—See Note, Table B-112.Deflated by the GDP implicit price deflator. (The deflator was averaged for fourth quarter of year shown and first quarter of followingyear.)Sources: Board of Governors of the Federal Reserve System and Department of Commerce, Bureau of Economic Analysis.397

SUPPLEMENTARY TABLETABLE B-114.—Selected historical series on gross domestic product and related series, 1929-58[Billions of dollars; except as noted]Year1987dollarsGross domestic productImplicitpricedeflator(1987 =100)Percent change frompreceding periodCurrentdollars1987dollarsCurrentdollarsImplicitpricedeflatorPersonalconsumptionexpendituresConstant (1987) dollarsNetexportsGrossprivatedomesticinvestmentGovermentpurchasesDisposablepersonalincomeTotalPercapita(dollars)Savingaspercentofdisposablepersonalincome1Population(thousands)21929103.1821.812.5554.5152.81.9112.6585.84,8073.0121,8781930193119321933193490.475.858.055.665.1748.9691.3599.7587.1632.612.111.09.79.510.3-12.4-16.2-23.5-4.117.1-8.9 -3.2-7.7 -9.1-13.3 -11.8-2.1 -2.17.7 8.4520.0501.0456.6447.4461.1107.267.225.026.641.1-.3-2.3-2.4-3.0-1.0122.0125.5120.5116.1131.4542.2519.7449.8437.0462.04,4024,1863,6003,4773,6522.52.1-3.1-3.9-1.1123,188124,149124,949125,690126,4851935193619371938193972.382.790.884.990.8681.3777.9811.4778.9840.710.610.611.210.910.811.114.49.8-6.57.07.714.24.3-4.07.92.9.05.7-2.7-.9487.6534.4554.6542.2568.765.289.9106.469.993.4-7.2-5.1-1.94.24.6135.7158.6152.2162.5174.0505.2565.9585.5547.6590.33,9674,4154,5404,2134,5052.34.44.0-.32.4127,362128,181128,961129,969131,02819401941194219431944100.0125.0158.5192.4211.0906.01,070.61,284.91,540.51,670.011.011.712.312.512.610.225.026.821.39.77.818.220.019.98.41.96.45.11.6.8595.2629.3628.7647.3671.2121.8149.481.453.559.88.22.8-11.1-28.1-29.0180.7289.1586.0867.7968.0627.2713.9824.7863.8901.84,7475,3526,1156,3176,5163.810.723.124.525.0132,122133,402134,860136,739138,39719451946194719481949213.1211.9234.3260.3259.31,602.61,272.11,252.81,300.01,305.513.316.718.720.019.91.0-.610.611.1-.4-4.0-20.6-1.53.8.45.625.612.07.0-.5714.6779.1793.3813.0831.482.6195.5198.8229.8187.4-23.926.541.916.617.3829.4271.0218.8240.6269.3890.9860.0826.1872.9874.56,3676,0835,7325,9535,86219.28.53.05.83.7139,928141,389144,126146,631149,188195019511952195319541955195619571958287.0331.6349.7370.0370.9404.3426.2448.6454.71,418.51,558.41,624.91,685.51,673.81,768.31,803.61,838.21,829.120.221.321.522.022.222.923.624.424.910.715.55.45.8.29.05.45.21.48.79.94.33.7-.75.62.01.9-.51.55.4.92.3.93.23.13.42.0874.3894.7923.4962.5987.31,047.01,078.71,104.41,122.2256.4255.6231.6240.3234.1284.8282.2266.9245.73.211.12.3-7.1-2.3-5.2-1.21.6-14.9284.5397.0467.6489.8454.7441.7444.0465.3476.0942.5978.21,009.71,053.51,071.51,130.81,185.21,214.61,236.06,2146,3406,4336,6036,5986,8427,0467,0917,0985.97.37.27.06.25.77.17.27.4151,684154,287156,954159,565162,391165,275168,221171,274174,1411 Percents based on data in millions of dollars.2 Population of the United States including Armed Forces overseas; does not include data for Alaska and Hawaii.Source: Department of Commerce, Bureau of Economic Analysis.O398

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