ECONOMIC

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CHAPTER 2. <strong>ECONOMIC</strong> REVIEW OF 1976—ContinuedPageMonetary Policy and Financial Markets 78Growth of the Monetary Aggregates 78Federal Reserve Tolerance Ranges for Monetary Growth 80Interest Rates 81Other Financial Developments 82Employment, Unemployment, and Income Transfer Programs. 84Employment 84Unemployment 85Labor Force Participation 86Income Transfer Programs 87Energy Developments 90Consumption 90Production 91Imports 92Prices 93Agricultural Developments 94Commodity Markets and Food Prices 95Farm Income 96Farm and Food Policy 97CHAPTER 3. THE WORLD ECONOMY IN 1976 100The Demand Situation 101Demand and Output in Major Industrial Countries 102General Demand Trends 109Public Sector DeficitsIllThe External Sector 113Economic Outlook and Government Policies 118Stabilization Policy and Exchange Rate Policy 119Current Account Positions and Financing 124OECD Current Account Positions 124OPEC Surpluses 126Non-Oil LDC's 126Exchange Rate Changes 127International Financial Markets 128Official Financing 130Adequacy of Official Financial Resources 132North-South Economic Relations 133CHAPTER 4. POLICIES TO INCREASE SUPPLY 136Structural and Induced Unemployment 136Frictional and Cyclical Unemployment 137Induced Unemployment and Unemployment Compensation137Structural Unemployment 139Employment Tax Credit 144Summary 14518
CHAPTER 4. POLICIES TO INCREASE SUPPLY—ContinuedPageGovernment Regulation 146Regulated Price Above Market Price ....-* 148Regulated Price Below Market Price 151Regulations That Directly Affect Cost 153Implementing Regulatory Reform 156Summary 157Agricultural Policy 158The Movement to Market-Oriented Farm Programs 158The Threat to Market-Oriented Policies 159The Future of Market-Oriented Policies 160Tax Policies for Capital Formation 162Investment Tax Credit 163Tax Integration 166Policies To Stimulate Saving 168APPENDIXES :A. Report to the President on the Activities of the Council ofEconomic Advisers During 1976 171B. Statistical Tables Relating to Income, Employment, andProduction 181List of Tables and ChartsTables1. The Market Value and the Replacement Cost of Net Assetsof Nonfmancial Corporations, 1960-76 292. Projected Growth Rates of Monetary Aggregates, 1977 343. Calendar of Major Private Nonfarm Collective BargainingActivity, 1977 424. Civilian Unemployment Rates by Age, Sex, and Reason forUnemployment, 1973 495. Civilian Unemployment Rates for Selected Groups, 1956,1965, and 1973 506. Potential and Actual Gross National Product, 1952-76 547. Changes in Gross National Product in Constant (1972) Dollars,1975-76 598. Growth of Real Consumption Expenditures and Real DisposablePersonal Income, 1975-76 609. Changes in Plant and Equipment Expenditures, 1974-76 6110. Changes in Selected Price Measures, 1973-76 6511. Changes in Labor Costs and Productivity in the Private NonfarmBusiness Sector, 1974-76 6612. Changes in Major Collective Bargaining Settlements, 1974-76. . 6713. Output, Profits, Net Interest, and Profit Measures of NonfinancialCorporate Business, 1960-76 6919
Page 1: ECONOMICTRANSMITTEDTO THE CONGRESSJ
Page 5: CONTENTSPageECONOMIC REPORT OF THE
Page 9 and 10: ECONOMIC REPORT OF THE PRESIDENTTo
Page 11 and 12: manent tax rate reductions. My prop
Page 13 and 14: will help shield us from disruption
Page 15 and 16: executive branch must undertake a c
Page 17: lasting implications of the changes
Page 21: THE PRESIDENT:LETTER OF TRANSMITTAL
Page 26 and 27: List of Tables and Charts—Continu
Page 29 and 30: CHAPTER 1Economic Policy and Outloo
Page 31 and 32: GENERAL POLICY PRINCIPLESTo assure
Page 33 and 34: 3. Economic initiatives should be b
Page 35 and 36: TABLE 1.—The market value and the
Page 37 and 38: on investment would increase with i
Page 39 and 40: MONETARY POLICYThe Federal Reserve
Page 41 and 42: like the latter part of 1976. The 4
Page 43 and 44: PRIVATE CONSUMPTIONThe growth of re
Page 45 and 46: NET EXPORTSIn real terms net export
Page 47 and 48: LABOR FORGE AND UNEMPLOYMENTIt is e
Page 49 and 50: led to large first-year catchup inc
Page 51 and 52: Consumer prices of fuels during 197
Page 53 and 54: other workers. Productivity is meas
Page 55 and 56: Since the mid-1950s a dramatic chan
Page 57 and 58: women's labor force participation;
Page 59 and 60: The full-employment benchmark has b
Page 61 and 62: Chart 4Gross National Product, Actu
Page 63 and 64: groups can be a useful supplement t
Page 65 and 66: TABLE 7.—Changes in gross nationa
Page 67 and 68: Relative price movements were appar
Page 69 and 70: August was followed by a 20 percent
Page 71 and 72: main price indexes were significant
Page 73 and 74: A broader measure of labor costs, c
Page 75 and 76:
TABLE 13.—Output, profits, net in
Page 77 and 78:
TABLE 15.—Federal Government rece
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In the unified budget the total sho
Page 81 and 82:
The permanent changes in the Tax Re
Page 83 and 84:
tial output and the full-employment
Page 85 and 86:
For this reason, although the rate
Page 87 and 88:
quarter a year later. The actual gr
Page 89 and 90:
Partly as a result of the desire of
Page 91 and 92:
widespread among demographic groups
Page 93 and 94:
of longer-term trends. Over the pas
Page 95 and 96:
ment and earnings show little cycli
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production or real GNP, and this al
Page 99 and 100:
percent from 1973. The cost of petr
Page 101 and 102:
COMMODITY MARKETS AND FOOD PRICESWo
Page 103 and 104:
TABLE 25.—Real income per farm an
Page 105 and 106:
While circumstances have enabled a
Page 107 and 108:
The policy actions taken in 1975 an
Page 109 and 110:
TABLE 27.—Changes in industrial p
Page 111 and 112:
States some underspending by public
Page 113 and 114:
continued strong domestically gener
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GENERAL DEMAND TRENDSEconomic devel
Page 117 and 118:
PUBLIC SECTOR DEFICITSThe economic
Page 119 and 120:
insurance funds. The requirement th
Page 121 and 122:
TABLE 29.—Export shares in trade
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Chart 7—ContinuedINDEX, 1973=100
Page 125 and 126:
widened and the possibility of borr
Page 127 and 128:
Chart 8—ContinuedInterest Rates i
Page 129 and 130:
Where stabilization policies are pe
Page 131 and 132:
Germany grew more in line with outp
Page 133 and 134:
TABLE 32.—Estimated disposition o
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ates, and tax changes that facilita
Page 137 and 138:
facility is designed to help countr
Page 139 and 140:
is necessary that the strongest eco
Page 141 and 142:
A freezing of relative prices, eith
Page 143 and 144:
implicit and explicit subsidies bui
Page 145 and 146:
qualitative conclusions. For exampl
Page 147 and 148:
For some youths unemployment is inv
Page 149 and 150:
may be as low as 10 percent. Thus t
Page 151 and 152:
large subsidies through the tax cre
Page 153 and 154:
in the transportation and public ut
Page 155 and 156:
trust exemption permits motor carri
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purchase less expensive air travel.
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produced with higher-cost energy so
Page 161 and 162:
of establishing efficient methods o
Page 163 and 164:
in the future. Consequently current
Page 165 and 166:
demand and supply at support prices
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with stringent controls on peanut a
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aspects of the tax system which imp
Page 171 and 172:
TABLE 35—Change in aUer-tax inter
Page 173 and 174:
and raise the return to capital inc
Page 175:
come, social security encourages pe
Page 179:
LETTER OF TRANSMITTALCOUNCIL OF ECO
Page 182 and 183:
RESPONSIBILITIES OF THE COUNCILThe
Page 184 and 185:
the Administration's economic polic
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member of the senior staff, and Rob
Page 189 and 190:
CONTENTSNATIONAL INCOME OR EXPENDIT
Page 191:
PageB-76. Estimated ownership of pu
Page 194 and 195:
TABLE B-2.—Gross national product
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TABLE B-3.—Implicit price deflato
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TABLE B-4.—Implicit price deflato
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TABLE B~6.—Gross national product
Page 202 and 203:
Page 204 and 205:
Page 206 and 207:
TABLE B-ll.—Gross domestic produc
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TABLE B-13.—Personal consumption
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TABLE B-15.—Inventories and final
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TABLE B-17.—Relation of gross nat
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TABLE B-19.—National income by ty
Page 216 and 217:
TABLE B-20.—Sources of personal i
Page 218 and 219:
TABLE B-21.—Disposition of person
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19291933Year orquarter1939...194019
Page 222 and 223:
TABLE B~25.- -Number and money inco
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TABLE B-27.—Noninstitutional popu
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TABLE B-28.—Civilian employment a
Page 228 and 229:
TABLE B-30.— Unemployment by dura
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TABLE B-32.—Wage and salary worke
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TABLE B-33.—Average weekly hours
Page 234 and 235:
TABLE B-35.—Productivity and rela
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PRODUCTION AND BUSINESS ACTIVITYTAB
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TABLE B-39.—Industrial production
Page 240 and 241:
TABLE B-41.—New construction acti
Page 242 and 243:
TABLE B-42.—New housing units sta
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TABLE B-44.—Sales and inventories
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TABLE B-46.'—Manufacturers 1 new
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TABLE B-48.—Consumer price indexe
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TABLE B—50.—Consumer price inde
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TABLE B-52.—Percent changes in co
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19291933193919401941194219431944194
Page 256 and 257:
TABLE B-54.—Wholesale price index
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TABLE B-56.—Percent changes in wh
Page 260 and 261:
TABLE B-58.—Commercial bank loans
Page 262 and 263:
TABLE B-60.—Total funds raised in
Page 264 and 265:
TABLE B-61.—Federal Reserve Bank
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TABLE B-63.—Bond yields and inter
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TABLE B-64,—Instalment credit ext
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TABLE B-66.— Mortgage debt outsta
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GOVERNMENT FINANCETABLE B-68.—Fed
Page 274 and 275:
TABLE B-69.—Federal budget receip
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TABLE B-71.—Receipts and expendit
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TABLE B-73.—Receipts and expendit
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TABLE B-75.—Interest-bearing publ
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TABLE B-77.—Average length and ma
Page 284 and 285:
TABLE B-79.—Corporate profits by
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TABLE B—80.—-Corporate profits
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TABLE B1-81.—Sales, profits, and
Page 290 and 291:
TABLE B-83.—Relation of profits a
Page 292 and 293:
TABLE B-85.—Current assets and li
Page 294 and 295:
TABLE B-87.—Common stock prices a
Page 296 and 297:
192919331939Year orquarter19401941
Page 298 and 299:
TABLE B-91.—Farm population, empl
Page 300 and 301:
TABLI. B-93.—Selected measures of
Page 302 and 303:
INTERNATIONAL STATISTICSTABLE B-95.
Page 304 and 305:
TABLE B-96.—U.S. merchandise expo
Page 306 and 307:
TABLE B-98.—U.S. overseas loans a
Page 308 and 309:
TABLE B-100.—U.S. reserve assets,
Page 310 and 311:
TABLE B-102.—Price changes in int
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ECONOMIC

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