ECONOMIC

TABLE 7.—Changes in gross national product in constant (1972) dollars,, 1975-76[Percent change; quarterly changes at seasonally adjusted annual rates]Component1975197611II1976IIIIV iPercent change in 1972 dollars:Total GNP-1.86 29.24.53.93.0Personal consumption expendituresDurable goods..Nondurable goodsServices1.5-.4.92.65.512.34.34.58.823.26.86.24.03.03.84.63.63.21.75.35.42.38.53.9Business fixed investmentResidential investment-13.3-14.73.822.77.822.38.315.19.616.1.837.0Government purchases. _ __Federal purchasesState and local purchases..1.8.42.61.31.01.4-4.9-7.2-3.52.62.52.72.95.71.4.43.5-1,3Addenda:Final salesDomestic final sales-.1-.74.35.03.76.04.24.54.34.54.85.0Change in billions of 1972 dollars:Inventory accumulationNet exports of goods and services-20.56.121.1-6.715.9-6.5.7-.6-.9-.3-5.5-.4i Preliminary.Source: Department of Commerce, Bureau of Economic Analysis.in inventory investment, while the pace of inventory accumulation slowedconsiderably at year-end, pushing GNP growth to its lowest rate of the year.The growth rate of final sales was much steadier, averaging 4% percent duringthe year. Consumption expenditures slowed after a rapid growth in thefirst quarter, but then accelerated at year-end. Consumption at midyear wasrestrained by a slow growth of personal income. The buildup of inventories inthe first quarter led to cautious production and employment policies by business.Wage rates and government transfers also rose less than was expectedand farm income declined. There was unexpected slowness in growth of governmentpurchases early in the year, when public spending in many categorieswas below expectations. Investment, however, was weak in the finalquarter of the year.PERSONAL CONSUMPTIONReal personal consumption expenditures rose 5.5 percent in 1976. Afterincreasing 6.1 percent in the year ending in the first quarter of 1976, realexpenditures grew more slowly during the rest of the year.Real disposable income is the most important determinant of long-run realconsumption. Individuals tend to retain their consumption patterns for sometime after a given change in income. In the short run the effects of incomechanges tend to be divided between savings and the purchases of durableitems. During 1975 and 1976 the rate of growth in real consumption roughlyfollowed the rate of growth in real disposable income (Table 8). After aperiod of relatively fast growth from the first quarter of 1975 through the59