ECONOMIC

there was considerable room for expansion in both these demand componentsonce confidence in a stable recovery began to be established. Accordingly,the main impetus to the expansion in output in late 1975 and early 1976came from a shift in inventory behavior, which turned from significantdecumulation to moderate accumulation. As confidence about the economicoutlook improved, consumer spending began to contribute strength to therecovery. The historically high saving rates of the preceding period of inflationand recession began to decline to more normal levels, especially inthose countries where inflationary tendencies were subsiding, as consumersbegan to feel more secure about their jobs as well as about a restoration ofthe value of their inflation-eroded savings (Table 26). As a consequencepent-up consumer demand, reflecting earlier postponement of both replacementneeds and new purchases of durable goods, was released. And industrialproduction in OECD countries expanded at an annual rate of nearlyTABLE 26.—Personal or household saving rates in selected industrial countries,1965-76[Percent; seasonally adjusted]PeriodUnitedStatesCanadaJapanFranceGermanyUnitedKingdom1965-72 average..19731974 ..19751975: First half.Second half1976:1...II—IIIi Estimate.6.77.87.37.88.17.56.97.16.46.29.39.410.210.99.69.811.619.122 524.323.023.222.923 621.822.213.317.317.417.71 U6.3Note.—For the United States, Canada, and the United Kingdom, the rate is personal saving as percent of personal disposableincome. For other countries, the rate is household saving as percent of disposable income.Sources: Organization for Economic Cooperation and Development (OECD) and national sources.20 percent in the first quarter of the year (Table 27). Most of this increasewas concentrated in the growth of output of industrial materials and consumergoods. Clearly industrial activity could not be sustained at such apace, and growth of output moderated in the second quarter of the year.But as the summer passed and the temporary impetus to activity stemmingfrom the reversal of the inventory cycle and the partial release of pent-upconsumer demand spent itself, the rate of increase of economic activity continuedto be slow, largely because investment demand did not revivesignificantly.13.014.215.215.816.914.814.514.515.0DEMAND AND OUTPUT IN MAJOR INDUSTRIAL COUNTRIESThe continued slow pace of the world recovery after the vigorous upswingearlier in 1976 raised questions about whether or not the recoverymight be faltering, especially in the United States, Germany, and Japan,where considerable progress had been made in reducing inflationary expec-8.811 614.014.014.513.612.913.3