Economic Report of the President

CONTENTSPageECONOMIC REPORT OF THE PRESIDENT 1ANNUAL REPORT OF THE COUNCIL OF ECONOMIC AD-VISERS* 9CHAPTER 1. FROM RECESSION TO RECOVERY AND GROWTH 17CHAPTER 2. THE DUAL PROBLEMS OF STRUCTURAL AND CYCLICALUNEMPLOYMENT 29CHAPTER 3. THE UNITED STATES IN THE WORLD ECONOMY:STRAINS ON THE SYSTEM 51CHAPTER 4. INCREASING CAPITAL FORMATION 77CHAPTER 5. THE BURDEN OF ECONOMIC REGULATION 96CHAPTER 6. REVIEW OF 1982 AND THE ECONOMIC OUTLOOK 124APPENDIX A. REPORT TO THE PRESIDENT ON THE ACTIVITIES OFTHE COUNCIL OF ECONOMIC ADVISERS DURING 1982 147APPENDIX B. STATISTICAL TABLES RELATING TO INCOME, EM-PLOYMENT, AND PRODUCTION , 157*For a detailed table of contents of the Council's Report, see page IS.(Ill)

ECONOMIC REPORTOF THE PRESIDENT

ECONOMIC REPORT OF THE PRESIDENTTo the Congress of the United States:Two years ago, I came to Washington with a deep personal commitmentto change America's economic future. For more than adecade, the economy had suffered from low productivity growth anda rising rate of inflation. Government spending absorbed an increasingshare of national income. A shortsighted view of economic prioritieswas destroying our prospects for long-term prosperity.The economic program that I proposed shortly after I took officeemphasized economic growth and a return to price stability. My taxproposals were designed to encourage private initiative and to stimulatesaving and productive investment. I have supported and encouragedthe Federal Reserve Board in its pursuit of price stabilitythrough sound monetary policy. My Administration has slowed thegrowth of Federal regulation, strengthening the forces of competitionin a number of economic sectors. And I have worked with the Congressto enact legislation that has reversed or limited the growth ofgovernment programs that have become too large or outlasted theirusefulness.Although the full effect of these changes in government policy willtake time to develop, some of the benefits have already become apparent.The rate of consumer price inflation between December 1981and December 1982 was only 3.9 percent, about one-third of the ratein the year before I took office. Interest rates are now lower thanwhen I took office, and have fallen rapidly during the last 6 months.The Administration will propose many additional measures overthe next several years to strengthen economic incentives, reduce burdensomeregulations, increase capital formation, and raise our standardof living. It is easy to lose sight of these long-term goals in ayear, like 1982, when the economy was in an extended recession. Iam deeply troubled by the current level of unemployment in theUnited States and by the suffering and anxiety that it entails for millionsof Americans. The unemployment that many of our citizens areexperiencing is a consequence of the disinflation that must necessarilyfollow the accelerating inflation of the last decade. Allowing theupward trend of inflation to continue would have risked even greaterincreases in unemployment in the future. In spite of the present highunemployment rate and the accompanying hardships, it is essentialthat we maintain the gains against inflation that we have recently

achieved at substantial cost. Continuing success in restraining inflationwill provide a stronger foundation for economic recovery in1983 and beyond.ReducingUnemploymentThe Federal Government can play an important role in reducingunemployment. I believe, however, that the government should focusits attention on those groups that will continue to face high unemploymentrates even after the recovery has begun. By helping themto develop their job-related skills, we will foster productive careers inthe private sector rather than dead-end jobs. This emphasis on trainingand private sector employment is the focus of the Jobs TrainingPartnership Act that I supported and signed into law in 1982. I amproposing additional steps this year to strengthen Federal trainingand retraining programs and to help the structurally unemployedfind lasting jobs.It is understandable that many well-meaning members of the Congresshave responded to the current high unemployment rate by proposingvarious public works and employment programs. However, Iam convinced that such programs would only shift unemploymentfrom one industry to another at the cost of increasing the Federalbudget deficit.Although programs to help the structurally unemployed are important,only a balanced and lasting recovery can achieve a substantialreduction in unemployment. There are now over four million moreunemployed people than there were at the peak of the last businesscycle. Nine million new workers are expected to join the labor forceby 1988. Only a healthy and growing economy can provide the morethan 13 million jobs needed to achieve a progressively lower level ofunemployment over the next 5 years.The Prospects for Economic RecoveryThere are now signs that an economic recovery will begin soon. ByDecember 1982 the index of leading economic indicators had risen in7 of the last 8 months. Housing starts have risen substantially overthe last year, and by December 1982 were 39 percent higher than 12months earlier. Inventory levels have fallen sharply, so that increasedsales should translate quickly into increased production and employment.Both long-term and short-term interest rates have fallen substantially.The Administration's economic forecast predicts that thegross national product will begin to rise in the first quarter of 1983and will then rise more quickly as the year continues. Most privateforecasters also predict a recovery in 1983.

Monetary policy will play a critical role in achieving a sound andsustainable economic recovery. If the monetary aggregates grow tooslowly, the economy will lack the level of financial resources neededfor continued economic growth. But if these aggregates are allowedto expand too rapidly, an increase in inflation and a short-lived recoverywill result. I recognize the difficulties that the Federal Reservehas faced and will continue to face in guiding the growth of themoney supply at a time when major regulatory changes have made itdifficult to rely on old guidelines. I expect that in 1983 the FederalReserve will expand the money supply at a moderate rate consistentwith both a sustained recovery and continued progress against inflation.Investment and Economic GrowthAn economic recovery beginning in 1983 should bring not only areduction in unemployment but also an increase in business investmentover the next several years. A higher level of investment is animportant ingredient in raising productivity and economic growth.The Accelerated Cost Recovery System that I proposed and that theCongress enacted in 1981 was designed to encourage a substantialexpansion of business investment above the relatively low levels ofthe 1970s. Since that time the adverse effects of the recession haveoutweighed the positive effects of the new tax rules. As the economyturns from recession to recovery, however, incentives to invest willbecome more powerful. But business investment may not grow rapidlyunless measures proposed by the Administration to reduce potentiallylarge Federal budget deficits are enacted.Federal borrowing competes with private investment for availablesavings. If the government continues to borrow large amounts to financeits deficit, the real interest rate will remain high and discourageprivate investment. This process of "crowding out" will tend todepress private investment in the years ahead unless the budget deficitis progressively reduced.Fiscal Year 1984 Budget ProposalsIt is important to distinguish the cyclical part of the budget deficitfrom the structural part, which would remain even at the peak of thebusiness cycle. Approximately one-half of the 1983 budget deficit isdue to the depressed state of the economy. With earnings and profitsreduced, tax receipts have significantly decreased, and expenditureshave increased. As the economy recovers, the cyclical part of the deficitwill shrink. But cyclical recovery alone will not bring the deficitdown to an acceptable size.

In the budget I am now submitting to the Congress, I am proposingthe dramatic steps needed to reduce Federal budget deficits infuture years. My budget proposals are designed to reduce the deficitby dealing directly with the rapid growth of the domestic spendingprograms (apart from interest payments) of the Federal Government.In 1970 these programs accounted for 10 percent of the gross nationalproduct and 48 percent of Federal spending. By 1980 theseprograms had grown to 14 percent of gross national product and 63percent of the budget. I remain committed to the idea that we canreduce budget deficits without increasing the burden on the poor,without weakening our national defense, and without destroying economicincentives by counterproductive tax increases.Rapid congressional enactment of the budget would provide clearand credible evidence that the Federal Government intends not toplace heavy burdens on the capital markets in future years. Such reassuranceshould hasten the decline in interest rates, especially longterminterest rates on bonds and residential mortgages, and improveprospects for the recovery of the housing, automobile, and capital investmentsectors of the economy.I recognize the special importance of protecting the social securityand medicare programs for aged retirees and their dependents.These programs now face very serious financial problems. The bipartisanNational Commission on Social Security Reform has recentlyrecommended a series of measures, which I have endorsed, to eliminatethe cumulative deficiency of $150 billion to $200 billion projectedfor the social security system in the years 1983 through 1989. It iscritically important at this time to make changes in the social securityprograms that will protect their solvency and financial viability forthe years to come.The Remaining Burden of Federal Economic RegulationFor many decades, the Federal Government has regulated the priceand entry conditions affecting several sectors of the American economy.Much of this regulation is no longer appropriate to the conditionsof the contemporary economy. Over time, most of this regulation—byrestraining competition and the development of new servicesand technologies—has not served the interests of either consumersor producers. Since deregulation of some markets began severalyears ago, the experience has been almost uniformly encouraging.My Administration has supported these step-by-step efforts to reducethese regulations in markets that would otherwise be competitive.It is now time to consider broad measures to eliminate many ofthese economic regulations especially as they affect the natural gas,transportation, communications, and financial markets.

Interest Rates and the U.S. Trade DeficitThe very high levels of real interest rates over the last several yearsare a principal cause of the sharp rise in the exchange value of thedollar relative to foreign currencies. This rise has reduced the abilityof American exporters to compete in foreign markets and increasedthe competitiveness of imports in the domestic market. Largely as aresult, the U.S. merchandise trade balance showed a substantial deficitin 1982.Our current trade deficit is a reminder of the importance of internationaltrade to the American economy. The export share of U.S.gross national product has more than doubled over the last threedecades. American workers, businesses, and farmers suffer when foreigngovernments prevent American products from entering theirmarkets, thus reducing U.S. export levels. While the United Statesmay be forced to respond to the trade distorting practices of foreigngovernments through the use of strategic measures, such practices donot warrant indiscriminate protectionist actions, such as domesticcontent rules for automobiles sold in the United States. Widespreadprotectionist policies would hurt American consumers by raisingprices of the products they buy, and by removing some of the pressuresfor cost control and quality improvement that result from internationalcompetition. Moreover, protectionism at home could hurtthe workers, farmers, and firms in the United States that producegoods and services for export, since it would almost inevitably leadto increased protectionism by governments abroad. I am committedto a policy of preventing the enactment of protectionist measures inthe United States, and I will continue working to persuade the othernations of the world to eliminate trade distorting practices thatthreaten the viability of the international trading system upon whichworld prosperity depends.Trade in goods and services is only one aspect of our economicrelations with the rest of the world. The international flow of capitalinto the United States and from the United States to other countriesis also of great importance. The United States should play a primaryrole in preserving the vitality of the international capital market.Severe strains on that market developed in 1982 as several nationsfound it difficult to service their overseas debt obligations. In 1982,the Federal Government worked closely with debtor and creditor nationsand the major international lending agencies to prevent a disruptionin the functioning of world capital markets. Now, with the cooperationof a wide variety of creditors, countries with especiallysevere debt-servicing difficulties are establishing economic and financialprograms that will permit them to meet their international obligations.

The Years AheadWe are now at a critical juncture for the American economy. Therecession has led to strong pressures from some members of theCongress and from others to abandon our commitment to a policythat is aimed at long-term economic growth, capital accumulation,and price stability. There are many who urge new governmentspending programs and forcing the Federal Reserve to raise monetarygrowth rates to levels that would rekindle inflation.I am convinced that such policies would prove detrimental to thelong-run interests of the American people. Our economy, despite therecession, is extraordinarily resilient and is now on the road to ahealthy recovery. It is essential in the year ahead that the Administrationand the Congress work together, take a long-term perspective,and pursue economic policies that lead to sustained economic growthand to greater prosperity for all Americans.(j ^ CTVAJULAA^ \ CJL^MJ^K^February 2, 1983

THE ANNUAL REPORTOF THECOUNCIL OF ECONOMIC ADVISERS

LETTER OF TRANSMITTALCOUNCIL OF ECONOMIC ADVISERS,Washington, D.C., January 31, 1983.MR. PRESIDENT:The Council of Economic Advisers herewith submits its 1983Annual Report in accordance with the provisions of the EmploymentAct of 1946 as amended by the Full Employment and BalancedGrowth Act of 1978.Sincerely,N\ CutterMartin FeldsteinCHAIRMANWilliam A. Niskanen11

CONTENTSPageCHAPTER 1. FROM RECESSION TO RECOVERY AND GROWTH 17Legacies of the 1970s . 18Rising Unemployment 18Declining Productivity Growth 18Rising Inflation 19The Recession 20The Decline in Velocity 21The Economic Recovery 23Implementing a Stable Monetary Policy 23The Budget Deficit 26CHAPTER 2. THE DUAL PROBLEMS OF STRUCTURAL AND CYCLICALUNEMPLOYMENT 29The Recent Recession 29The Composition of Cyclical and Structural Unemployment31Demographic Composition 31Reasons for Unemployment 33The Dynamics of Unemployment 35Combating Cyclical Unemployment 37The Limits of Macroeconomic Policy 37Public Works Employment Programs 39Combating Structural Unemployment 41The Problem of Youth Unemployment 42Policies to Reduce Youth Unemployment 44Long-Term Unemployment and Structural Change 45The Effects of Unemployment Compensation 47Conclusions 49CHAPTER 3. THE UNITED STATES IN THE WORLD ECONOMY:STRAINS ON THE SYSTEM 51Long-Run Trends in U.S. Competitiveness: Perceptionsand Realities 52Aggregate Performance of the United States andOther Developed Countries 52The Changing Structure of the U.S. Balance of Payments53The Issue of U.S. Trade with Japan 5613

PageThe Problem of Uncompetitive Sectors 58Challenges to U.S. Trade Policy 60Exchange Rates and the Balance of Payments 61Causes of the Dollar's Strength 61An Undervalued Yen? 65Effects of a Strong Dollar on U.S. Trade 66Responses to the Strong Dollar 67Macroeconomic Problems in Europe 70The International Debt Problem 72Debt-Financed Growth in the 1970s 72Causes of the Liquidity Problem 73Implications of the Debt Problem 74CHAPTER 4. INCREASING CAPITAL FORMATION 77The Historical Record 78An International Perspective 80The Importance of Capital Formation 82Measuring National Saving 85Budget Deficits and Saving 86Tax Rules and Personal Saving 87Financial Regulation and Private Saving 89The Role of International Capital Flows 90The Allocation of Capital 91Tax Policy and Investment 92Conclusions 95CHAPTER 5. THE BURDEN OF ECONOMIC REGULATION 96A Brief History of Economic Regulation 96The Traditional Rationale for Economic Regulation.... 98Problems of Economic Regulation 100Energy Policy 102Steps Toward a Market-Oriented Oil Policy 102Natural Gas Pricing and Allocation 102Emergency Preparedness 106Transportation and Communications 108Effects of Aviation Deregulation 109Effects of Partial Deregulation in Surface Transportation110Further Deregulation of Surface Transportation 112Common Carrier Telecommunications 114Broadcasting 115Deregulation of Financial Markets 115Depository Institutions 116Stock Exchanges 119Opportunities for Further Deregulation in the FinancialIndustry 12114

PageConclusions 122CHAPTER 6. REVIEW OF 1982 AND THE ECONOMIC OUTLOOK 124Overview of 1982 124Major Sectors of Aggregate Demand 126Personal Consumption Expenditures 127Residential Investment 128Business Fixed Investment 129Inventory Investment 130The Farm Economy 130Foreign Trade 132Government Purchases of Goods and Services 132Labor Market Developments 133Wages, Productivity, and Prices.. 134Credit Markets 136Interest Rates 137Monetary Developments 139Prospects for 1983 142Prospects and Policies Beyond 1983 143APPENDIXESA. Report to the President on the Activities of the Councilof Economic Advisers During 1982 147B. Statistical Tables Relating to Income, Employment andProduction 157List of Tables and ChartsTables2-1. Median Family Income by Unemployment and FamilyStatus, 1981 302-2. Educational and Labor Market Activities of Youth Aged16 to 19, by Sex, October 1981 423-1. Structure of the U.S. Balance of Payments, as Percent ofGNP, 1960-80 553-2. Trade Balances by Commodity Group as Percent ofGDP, United States, Japan, and the European EconomicCommunity, 1980 573-3. Trade Balances by Region as Percent of GDP, UnitedStates and Japan, 1980 583-4. U.S. Trade Balances by Sector as Percent of GDP,1972-79 583-5. Real Appreciation of the Dollar Against Major Currenciesto August 1982 663-6. Economic Performance by Major Industrial Countries,1973-82 713-7. Employment and Unemployment in the European EconomicCommunity, 1973-80 7215

List of Tables and Charts—ContinuedTables4-1. Alternative Measures of Capital Formation, 1951-82 794-2. Comparison of Capital Formation in Six OECD Countries,1971-80 814-3. Net Saving as Percent of GNP, 1951-81 854-4. Investment Incentives under Different Tax Laws 936-1. Growth in Major Sectors of Real GNP, 1978-82 1276-2. Real Household Income, Consumption, Saving, andResidential Investment, 1978-82 1286-3. Labor Market Developments, 1978-82 1336-4. Changes in Wages and Compensation, 1978-82 1346-5. Productivity, Costs, and Prices in the Nonfarm BusinessSector, 1978-82 1356-6. Price Changes, 1978-82 1366-7. Funds Raised by the Nonfinancial Sector of the Economy,1978-82 1366-8. Components of Ml and M2, 1978-82 1416-9. Economic Outlook for 1983 1436-10. Projections of Economic Goals, 1983-88 144Charts2-1. Distribution of Unemployment by Age and Sex 322-2. Distribution of Unemployment by Family Status 332-3. Distribution of Unemployment by Race 342-4. Distribution of Unemployment by Reason 352-5. Distribution of Unemployment by Duration 363-1. Structural Changes in the Current Account Balance 553-2. Composition of Trade, 1980 573-3. Real Exchange Rates of Major Currencies Against theDollar 633-4. International Real Short-Term Interest Rate Differentials644-1. Measures of Capital Formation 804-2. International Comparison of Investment and ProductivityGrowth, 1971-80 824-3. Three-Month Treasury Bill Rate and Regulation Q,Maximum Rate on Savings Accounts 906-1. Interest Rates 1256-2. Index of Leading Indicators and Real GNP 1266-3. Debt Burden Ratio 1296-4. Real Inventory/Sales Ratio and Industrial Production 1316-5. Nominal and Real 3-Month Treasury Bill Yield 13816

CHAPTER 1From Recession to Recovery andGrowthTHE MAJOR ECONOMIC ACHIEVEMENT OF 1982 was a dramaticreduction of inflation to its lowest rate in a decade. The 4.6percent increase in the gross national product (GNP) implicit pricedeflator between the fourth quarters of 1981 and 1982 was less thanhalf the 10.2 percent rate of increase between the fourth quarters of1979 and 1980. This decline in inflation has moderated the earlierwidespread fears that inflation would accelerate. While some of thisimprovement in inflation was transitory, reflecting such special factorsas the appreciation of the exchange value of the dollar, the largestshare was almost certainly due to a decline in the underlying rateof inflation. The reduced rate of inflation is a major step toward theAdministration's goals of full employment, healthy economic growth,and price stability.The progress made in reducing inflation, however, was accompaniedby a painful slowdown of the economy. Beginning in July 1981,the Nation suffered the second of two back-to-back recessions thatbrought the unemployment rate to 10.8 percent in December 1982.At that time, approximately 5 million more people were unemployedthan in January 1980, when the first of the two recessions began.The increase in long-term unemployment poses a particularlysevere problem. In January 1980, about 550,000 people had beenunemployed for more than 6 months. In December 1982 there weremore than four times as many. Long-term unemployment is particularlyserious in that it causes substantial financial hardship and is associatedwith a loss of job skills that may reduce future income significantly.Some temporary decline in real economic activity was probably unavoidablein the process of reversing the upward trend of inflation.The United States entered the 1980s with a high rate of inflation andwith widespread public expectations that the rate would remain high,and perhaps increase. As high inflation persisted, it became embeddedin the plans and contracts of firms and workers, and lowering itinvolved a painful process. The decline of real GNP since early 198117

was in large part the price the United States paid for failing to controlinflation in the late 1970s.LEGACIES OF THE 1970sIn the 1960s, many economists believed that the Federal Governmentcould keep unemployment down permanently by accepting ahigher rate of inflation. Steady rises in productivity and living standardswere taken for granted. During the 1970s these views proved tobe incorrect. By the closing years of the 1970s, both the unemploymentrate and the inflation rate were higher than they had been inthe 1960s, and the rate of productivity growth was lower.Why did unemployment, productivity growth, and inflation allworsen in the 1970s? These developments occurred in part becauseof factors outside the government's control, such as changes in thesize and composition of the work force and rising world energyprices. But the economy also suffered from long-standing governmentpolicies that exacerbated inflation and distorted the incentivesto work, save, and invest.RISING UNEMPLOYMENTTotal employment grew rapidly in the 1970s but so did the rate ofunemployment. The civilian labor force participation rate rose from60.4 percent of the population in 1970 to 63.8 percent in 1980. Theunemployment rate averaged 5.4 percent in the first half of the1970s, greater than the 4.8 percent average of the 1960s. The recessionof 1975 took the unemployment rate to a monthly high of 9.0percent. Unemployment then declined to a monthly low of 5.6 percentin 1979, only to begin rising again to a peak of 7.8 percent inJuly 1980.In addition to cyclical fluctuations in the economy, a number ofstructural factors contributed to the rise in the unemployment rateover the decade. These included the changing demographic structureof the labor force, the increased number of workers dislocated bychanges in technology and international competitiveness, and thework registration requirements in a number of government welfareprograms.A more detailed analysis of unemployment and the labor marketconsequences of macroeconomic policy is presented in Chapter 2.DECLINING PRODUCTIVITY GROWTHFrom 1960 to 1970, real output per hour in the private sector roseat an annual rate of 3.0 percent; from 1970 to 1980 it rose at a rateof only 1.4 percent. Labor productivity growth would probably have18

slowed somewhat in the 1970s regardless of the policies adopted.The sharp increases in the price of oil caused by supply disruptionsin 1974 and 1979 reduced productivity growth as firms substitutedcapital and labor for energy. Furthermore, as the post-World War IIbaby-boom generation entered the labor force and the percentage ofworking-age women seeking employment rose, the proportion of lessexperienced workers increased, further depressing productivity.The slowdown in productivity growth was, however, exacerbatedby a decline in rates of capital formation. Net investment in fixedbusiness capital fell from 3.5 percent of GNP in the 1960s to 3.0 percentin the 1970s, and the rate of growth of capital per worker felleven more sharply, from 3.2 percent per year in the 1960s to only1.3 percent in the 1970s. The interaction of the tax system with inflationplayed an important role in reducing the rate of capital formation.Another cause of slow productivity growth was an increase in governmentregulation. In some sectors of the economy, Federal regulationsdirectly reduced labor productivity; in others, they diverted capitalinvestment away from the improvement of productivity into thesatisfaction of regulatory requirements. Some of these regulationsserved useful purposes, but some imposed economic costs that exceededtheir economic benefits.The tax changes proposed by the Administration and enacted bythe Congress in 1981 and 1982 were designed to lead to fastergrowth and higher productivity by stimulating saving, investment,and individual effort. In addition, the Administration's policy of reducinggovernment regulation is intended to enhance the efficiencyof individual markets and thereby increase total production.RISING INFLATIONOf all the economic problems that this Administration inheritedwhen it came to office in 1981, the most urgent was the problem ofrising prices. Double-digit inflation had created serious economic distortions.An equally serious concern was that the trend rate of inflationwas rising over time.From 1960 to 1970, the GNP deflator rose at an average rate of3.0 percent per year. Between 1970 and 1973, the average rate of inflationby this measure was 5.3 percent. Then, aggravated by thesharp jump in world oil prices and other special factors, inflationreached 10.2 percent during 1974, but by 1976 it was down to 4.7percent. In the next 4 years, which included the second oil priceshock in 1979, inflation increased continually until it reached 10.2percent again in 1980.19

Over short periods of time a variety of factors influence the rate ofinflation. One important factor in the 1970s was supply-determinedchanges in commodity prices resulting from fluctuations in harvestsand disruptions in the supply of foreign oil. Another important factorwas the increasing level of expected inflation. Once the expectationof continuing inflation has become firmly entrenched, prices andwages may continue to rise even in the face of declining demand, andthe cost of reducing inflation may increase.These factors, however, only affect the rate of inflation for a limitedtime. The popular axiom that attributes inflation to "too muchmoney chasing too few goods" reflects a basic truth: it is difficult toimagine a sustained inflation that is not supported by excessivemoney growth. Over long periods of time, an additional percentagepoint in the rate of growth of the money stock will tend to producean additional percentage point of growth of nominal GNP, that is,GNP measured at current prices. If the rate of real GNP growth doesnot change, the entire increase in nominal GNP growth will take theform of increased inflation. Although the relations between moneygrowth, nominal GNP growth, and inflation are considerably morevariable over shorter periods than they are in the long run, theimpact of money growth on nominal income and inflation remainspowerful even in the short run.THE RECESSIONThe substantial decline in the rate of growth of the Ml measure ofmoney that occurred between the end of 1980 and the end of 1981was a principal contributor to the decline in nominal income growthin 1982, a decline compounded by a marked change in the velocity ofmoney. Part of the slowdown in nominal GNP growth took the formof lower inflation, and part of it took the form of a decline in realeconomic activity.The adverse short-run effect of a slowdown in nominal GNP onreal economic activity is a basic feature of our economy that reflectsthe stickiness of wages and prices in most markets. If prices andwages were perfectly flexible, reduced nominal GNP growth wouldtranslate immediately and painlessly into reduced inflation. However,not all wages and prices are flexible. When expectations of future inflationare deeply embedded, prices and wages may continue to risefor some time despite excess supplies of goods and labor. A changein inflationary expectations, together with the direct pressures exertedby excess supplies, eventually causes prices and wages to adjust tonew market-clearing levels. But until that occurs a slowdown in nomi-20

nal GNP growth is reflected in a slowing of real growth as well as ina slowing of inflation.The severity of the recession in 1982 reflected a combination ofcircumstances which caused a very sharp decline in nominal GNPgrowth between 1981 and 1982. Between the fourth quarter of 1980and the fourth quarter of 1981, nominal GNP grew at a rate of 9.6percent; in contrast, nominal GNP rose only 3.3 percent last year.About one-third of the 6.3 percentage point drop in nominal GNPgrowth between 1981 and 1982 was reflected in a 1.9 percentagepoint decline in the real GNP growth rate—from an increase of 0.7percent in 1981 to a decline of 1.2 percent in 1982. The reduction ininflation accounted for the remaining two-thirds of the drop in nominalGNP.Although some slowdown in nominal GNP growth and in inflationin 1982 was a predictable effect of tighter monetary policies, the verysharp decline actually experienced did not reflect a decrease in thegrowth of the monetary aggregates. Rather the exceptional severityof the slowdown in nominal GNP growth can be traced to a combinationof factors that led to an unusually sharp decline in the velocityof money, that is, in the ratio of GNP to the money stock.THE DECLINE IN VELOCITYThe 1982 decline in the velocity of money—as measured by the velocityof either the Ml or M2 monetary aggregates—was historicallyatypical. Between 1961 and 1981, Ml velocity rose at an averageannual rate of 3.2 percent, while the velocity of M2 remained essentiallyconstant, rising at an average annual rate of 0.2 percent. Incontrast, in 1982 the velocity of Ml fell 4.9 percent and M2 velocityfell 6.0 percent on a fourth quarter to fourth quarter basis. By eithermeasure, the growth of nominal GNP was well below the rate thatwould have prevailed if the Ml or M2 measures of velocity hadgrown at their average historic rates. These velocity declines were thelargest since 1959, the earliest year for which the Federal Reservehas published data on the monetary aggregates under the definitionscurrently in use.If these velocity shifts had not occurred, the rise in nominal GNPin 1982 would have been between 10 and 12 percent. While it is uncertainhow this hypothetical change would have been distributed betweenreal activity and inflation, it is likely that real GNP would haveincreased enough to have ended the recession sometime before thefinal quarter of 1982.Although the cause of the large velocity shift that occurred in 1982is not fully understood, it is likely that major changes in asset demandsof individuals and businesses played an important role. More21

precisely, an increase in the demand for Ml or M2 at any incomelevel decreases the corresponding velocity of money. Such shifts mayoccur because of regulatory changes that provide new financial opportunities—likethe introduction of nationwide interest-bearing negotiableorder of withdrawal (NOW) accounts—or because ofchanges in asset preferences—like the increased demand for moneymarket mutual funds instead of long-term securities.The uncertain cause of the recent decline in velocity is characteristicof the problems that the Federal Reserve has encountered in applyingthe new monetary control procedures that it adopted in October1979. Changes in banking regulations and the development ofnew financial instruments by the private sector have compelled theFederal Reserve to make frequent revisions to the definitions of themonetary aggregates and reassessments of their economic impacts. In1980 a complete revision of the definitions of the monetary aggregateswas introduced. In the next year, a "shift adjusted" Ml-B wasdefined in an effort to adjust for shifts from savings deposits toNOW accounts. Most recently, in 1982 and early 1983, definitionalchanges in Ml and M2 were required to deal with the advent of thenew money market deposit account—which was added to M2—andthe new super NOW account—which was added to Ml.The Federal Reserve was aware throughout 1981 and 1982 that therelationship between the monetary aggregates and economic activitywas in a state of flux, and that future velocity trends were uncertain.While sustained but unanticipated shifts in velocity growth can beidentified in hindsight, it is nearly impossible to know at the timethey occur whether unusual quarter-to-quarter changes in velocitywill continue or reverse themselves. The presumption, on the basisof past experience, is that most velocity changes are temporary.Thus, increasing the rate of money growth in response to temporarydeclines in velocity runs the risk of providing excessive liquidity andincreasing inflation, while a failure to recognize a continuing shift inliquidity preference or velocity runs the risk of providing inadequateliquidity and reducing real GNP. Given the circumstances of 1982,the somewhat greater growth in the monetary aggregates than initiallyintended by the Federal Reserve appeared to be an appropriateway to balance those risks.ECONOMIC RECOVERYThe Administration believes that the American economy will soonrecover from the recession that began in July 1981. The forecast presentedin Chapter 6 projects that economic recovery will begin in1983, marking the start of a long period of sustained growth with low22

inflation. More specifically, the Administration forecasts that realGNP will rise 3.1 percent from the fourth quarter of 1982 to thefourth quarter of 1983, and that nominal GNP will rise 8.8 percent.Realization of the economic forecast and steady noninflationarygrowth in subsequent years will depend upon the implementation ofappropriate monetary and fiscal policies.IMPLEMENTING A STABLE MONETARY POLICYThe Administration has repeatedly indicated that the fundamentalguiding principle of monetary policy in an inflationary economyshould be a gradual reduction in the rate of growth of the moneystock until the rate is consistent with price stability. This principle isconsistent with the general approach enunciated in recent years bythe independent Federal Reserve.The basic challenge for monetary policy at present is to balancethe principle of stable money growth with the need to take accountof changing asset preferences that may alter the velocity of money.While maintaining the approach of setting specified target ranges formoney growth, the Federal Reserve will also need to use its judgmentto adjust money growth rates and the corresponding targets toreflect lasting changes in asset demands.The extent to which a policy of predetermined money growth ratesis appropriate depends on the stability and predictability of the velocityof money. Strictly speaking, inflexible monetary growth rates areappropriate only if the trend in income velocity is constant or haspurely random disturbances. The advisability of a strict policy ruledepends on the degree of predictability of velocity disturbances. Themore predictable velocity disturbances are, the more they can beoffset by countervailing shifts in the money stock. The less predictablethey are, the more likely it is that any attempt at countervailingshifts in the money stock will add to the overall volatility of nominalGNP.The task of making appropriate adjustments to the monetary targetsis enormously difficult. An excessive increase in the money stockwill cause a period of increased inflation while an insufficient increasein the money stock will not provide adequate liquidity for theneeds of an expanding economy. Eventually such deviations are selfcorrecting,but only after a period of accelerating inflation or weakeconomic performance.One possible way to avoid such periods is to use the obseryed behaviorof nominal GNP to guide a gradual recalibration of the monetarygrowth targets, recognizing that there are uncertain lags betweenmoney stock changes and the resulting changes in nominal GNP.Basing the recalibration of monetary targets on nominal GNP is con-23

sistent with the basic principle of pursuing a stable monetary policy.Indeed, it is the relatively stable long-run relationship between themonetary aggregates and nominal GNP that justifies the Federal Reserve'spolicy of setting targets for the growth of Ml and M2. Thisimplies that caution in revising these targets is appropriate. The principleof targeting money growth rates is not an end in itself but onlya means of achieving control of nominal GNP.Disadvantages of Interest Rate TargetingFrom World War II until the mid-1970s the Federal Reserve, likemost central banks, conducted monetary policy by focusing on interestrates and money market conditions. Over the 1970s, increasingemphasis was given to targeting monetary aggregates. More recently,under new procedures first adopted in October 1979, the FederalReserve has given greater emphasis to keeping the growth of themonetary aggregates within pre-announced target ranges, eventhough it was recognized that this could result in greater variations ininterest rates.Since 1979 both long-term and short-term interest rates haveproven more variable than in the past. Many critics attribute thischange to the increased emphasis on monetary targets and the levelof bank reserves as the operational basis for monetary policy. Althoughsome have argued that the Federal Reserve should dropmonetary targeting in favor of targeting interest rates, the Administrationbelieves strongly that targeting interest rates, either nominalor real, would prove to be a serious error.The nominal rate of interest is a very unreliable indicator of thethrust of monetary policy. The financial variable important to borrowersand lenders is not the nominal interest rate but a real interestrate determined by subtracting the rate of inflation from the nominalinterest rate. Borrowers and lenders take into account the fact thatthe dollars repaid when a loan matures do not have the same purchasingpower as the dollars originally borrowed. When inflation isexpected, lenders insist that the nominal rate of interest include apremium to compensate them for the declining purchasing power ofthe dollar, and borrowers are willing to pay such a premium.Although the real interest rate is more closely linked to borrowingand lending decisions than the nominal interest rate, the real interestrate is also not an appropriate target for monetary policy. There areseveral basic reasons for rejecting the policy of real interest rate targeting.First, real interest rate targeting might well lead to an inflationarymonetary policy. Any given real interest rate is compatible with awide range of inflation rates. For example, a real interest rate of 2percent could occur with a 5 percent nominal rate and a 3 percent24

inflation rate, or with a 12 percent nominal rate and a 10 percent inflationrate. Thus, achieving a real interest rate target would provideno assurance of price stability.Second, the real interest rate that governs economic behavior isthe difference between the nominal interest rate and the expected rateof inflation. Since expectations of inflation are not observable, themonetary authorities cannot as a practical matter measure or targetthe expected real interest rate.A third reason why real interest rate targeting is not feasible is thatthe relevant interest rate is not merely the real rate but the real netof-taxinterest rate. Because net-of-tax rates of interest vary amongindividuals and businesses in different tax positions, there is no wayfor the monetary authorities to determine the relevant average realnet-of-tax interest rate in financial markets. Compounding the problemfurther, different rates of inflation can result in very differentnet-of-tax real interest rates corresponding to the same pretax realinterest rate, even for a particular taxpayer. For example, a taxpayerwith a marginal tax rate of 40 percent earns a real net-of-tax returnof 1 percent if he receives a nominal rate of 10 percent and there is 5percent inflation; that same taxpayer earns a real net-of-tax return of— 2 percent if he receives the same real return of 5 percent but thereis zero inflation. Similarly, the real interest rate and the real net-oftaxinterest rate can easily move in opposite directions when the inflationrate changes.There is a final and even more fundamental reason for rejectingreal interest rate targeting. Even if the expected real interest ratewere measurable, there would remain the virtually impossible task ofdetermining what level of that interest rate is actually compatiblewith noninflationary growth. The problem of identifying the equilibriuminterest rate is made even more difficult by the interaction oftax rules and inflation.Monetary Rules and DiscretionThere is no simple solution to the problem of guiding monetarypolicy in a time of rapid institutional change. Interest rate targeting,as shown above, is not a desirable approach. Instead, the monetaryauthorities should be guided by the principle of keeping moneygrowth within a prespecified target range while adjusting those targetswhen a careful consideration of the evidence indicates that sustainedshifts in asset demands have occurred.The combination of monetary rules and discretion must be appliedwith great care and judgment. The observance of rules must notbecome a doctrinaire attachment to arbitrary standards, and the exerciseof discretion must not degenerate into unprincipled fine tuning.Instead, the monetary rules must be understood as a way of achiev-25

ing an appropriate long-run path for the economy. The exercise ofdiscretion in recalibrating monetary targets must be subject to thediscipline that such revisions are ultimately compatible with the desiredlong-run path of nominal GNP. With rules and discretion balancedin this way, monetary policy can support a sound recovery thatleads to sustained and noninflationary growth.THE BUDGET DEFICITThe Federal budget deficit has become a major problem for theAmerican economy. Without the savings proposed by the Administrationin its budget plan for the years 1984 through 1988, the UnitedStates is forecasted to experience a series of deficits that would consumemore than 6 percent of GNP in each of the next 6 years. Althoughbudget deficits have been a nearly constant feature of our Nation'seconomic life for the past two decades, the prospective budgetdeficits that would result if no legislative actions were taken toreduce them would be far larger than those previously experiencedin the postwar period. The economic effects of such deficits arebeyond our previous experience.The fiscal 1983 deficit is partially a result of the recession. Any recessionreduces tax collections and increases outlays for unemploymentbenefits, retirement benefits, and certain other activities. A reasonableapproximation is that the change in economic output associatedwith a percentage point change in the unemployment rate wouldraise the fiscal 1983 deficit by about $25 billion. The Administrationforecasts that the unemployment rate for fiscal 1983 will average 10.7percent. If the unemployment rate were 6.5 percent instead, thebudget deficit would be about half the $208 billion now forecast forfiscal 1983. The cyclical component represents a similarly large shareof the fiscal 1984 deficit.Economic recovery and growth in the years ahead will reduce thecyclical component of the deficit. The Administration's forecast projectsa decline in the unemployment rate by 4 percentage points betweenfiscal 1983 and fiscal 1988, leaving only a negligible cyclicalcomponent in the fiscal 1988 budget. Unless the Administration'sproposals are enacted, a current services budget deficit of $300 billionis forecasted to materialize.To see the origin of these large deficits, it is useful to compare thecomponents of the 1988 current services budget with the same componentsfor 1970. Between those years, taxes decline very slightly asa percentage of GNP, from 19.9 percent in 1970 to 18.9 percent in1988. The defense share of GNP remains unchanged at 8.1 percentof GNP in both years. By contrast, nondefense activities excluding interestrise from 10.6 percent of GNP in 1970 to 13.6 percent in26

1988, an increase of about one-fourth. In addition, the accumulationof previous deficits raise the net interest component of the budgetdeficit from 1.5 percent of GNP to 3.4 percent of GNP.Deficits and Long-Term GrowthA succession of large budget deficits is likely to reduce substantiallythe rate of capital formation. The government's borrowing to financesuch deficits would compete directly with borrowing by privatebusinesses and households. With a limited amount of savings availablefor borrowing, high budget deficits would cause interest rates torise until private demand for funds was reduced to the amount thatremained after the government's borrowing needs were satisfied.The magnitude of the potential crowding out of private investmentis immense. During the past two decades, the net saving of householdsand businesses totaled only about 7 percent of GNP. Prospectivedeficits of more than 6 percent of GNP would represent virtuallyall of current net saving. Even though existing saving would be augmentedby borrowing from abroad and by some increase in the privatesaving rate, the reduced rate of capital formation would be verysubstantial.A lower rate of capital formation would have adverse consequencesbecause the accumulation of capital is a key determinant of future increasesin productivity and economic growth and therefore of higherreal wages and standards of living. Further reductions in the rate ofcapital formation would be particularly unfortunate because, as Chapter4 discusses in detail, the U.S. rate of capital formation has beenundesirably low for several decades. In the years since 1960, net privateinvestment has averaged only 6 percent of GNP, significantlyless than the rate in most major industrial countries. Moreover, sincehalf of this 6 percent has gone into housing, only about 3 percent ofGNP has been available for productivity-increasing investments inplant and equipment. Deficits of the level implied by the currentservices budget could reduce the rate of net investment in plant andequipment enough to preclude any increase in the amount of capitalper worker. If this occurred, the process of increasing capital intensitywould cease to contribute to rising productivity and real wages.Deficits and the RecoveryThe adverse effects of large budget deficits are not limited to thedistant future. The deficits that would occur without the budget actionsproposed by the Administration could seriously affect thedegree to which various economic sectors share in the benefits of recoveryfrom the current recession. The crowding out of private investmentwhich would accompany large deficits could depress thelevel of output in the construction industries, the steel industry, the27

machinery and equipment industries, and industries that produceother durable goods.In addition, large budget deficits raise the exchange value of thedollar relative to foreign currencies by attracting foreign capital tothe United States. This weakens the competitive position of U.S. exportsin the world economy and hurts those domestic industries thatcompete with imports from abroad. The nature and magnitude ofthis effect are discussed in Chapter 3 of this Report.A "lopsided" recovery in which some sectors remained relativelydepressed might prove more fragile than a recovery which wasbroadly based. An increase in economic activity limited to some sectorsand regions might result in greater upward pressure on pricesand wages at any given level of total output and employment thanwould be the case if there were balanced expansion among industries.In addition, an unbalanced recovery would produce more inflationand less real growth, regardless of the rate of expansion ofnominal GNP.The prospect of large budget deficits in the second half of thisdecade may also have an adverse effect on the prospects for recoveryin 1983. If the financial markets respond to expected future deficitsby keeping real long-term interest rates higher in 1983 than theywould otherwise be, the level of spending in 1983 on interest-sensitivepurchases may remain depressed. Clear evidence of the willingnessof the Administration and the Congress to reduce Federalbudget deficits substantially in the second half of the 1980s can playan important part in ensuring a healthy and balanced economic recoveryin the more immediate future.28

CHAPTER 2The Dual Problems of Structural andCyclical UnemploymentUNEMPLOYMENT IS THE MOST SERIOUS ECONOMICPROBLEM now facing the United States. By December 1982 thenumber of unemployed had risen by more than 4 million since thebeginning of the recession in July 1981. The unemployment rate washigher in December 1982 than at any point since the Depression,with over 12 million persons counted as unemployed. Even after theeconomy recovers from the recent recession, it is likely that the unemploymentrate will reach a plateau between 6 and 7 percent.This chapter analyzes the two major types of unemployment: cyclicaland structural. The high level of cyclical unemployment now prevailingin the United States is a major problem, but it should provetransitory. Only a healthy and sustained recovery from the recent recessioncan effectively diminish cyclical unemployment. Even afterfull recovery, however, a serious structural unemployment problemwill remain unless measures are taken to improve the functioning oflabor markets. Reducing structural unemployment will require attackingthe special problems of young people and the long-term adultunemployed.This chapter begins by describing the dimensions of the cyclicaland structural unemployment problems. It then examines the potentialof public employment programs and macroeconomic policies tolower cyclical unemployment. Finally, policies for reducing structuralunemployment are considered.THE RECENT RECESSIONThe unemployment rate in December 1982 stood at 10.8 percentof the civilian labor force. Since the recent period of economic slack thatbegan in January 1980, the unemployment rate has risen by 4.5 percentagepoints. During the recent recession, which began in July1981, the unemployment rate rose by 3.6 percentage points.Historical experience suggests that the unemployment rate tends toincrease for several months after the level of production bottoms out29

and it is possible that the unemployment rate will reach 11 percent atsome point during 1983.Beyond those officially counted as unemployed, the recent recessionhas prevented many Americans from working as much as theywould like. In December 1982 there were over two million personsinvoluntarily working part time. The Bureau of Labor Statistics alsoreported that there were over 1.8 million discouraged workers in December.These are individuals who have given up looking for workbecause they believe they cannot find jobs.Unemployment is often linked to economic hardship. While manyof the unemployed receive unemployment insurance and live in familiesthat have other members who work, many unemployed individualsand their families suffer economic distress. Table 2-1 presentsinformation on the incomes of families in which the husband, wife, orhead of household experienced unemployment during 1981. (Datafor 1982 are not yet available.) Three types of families are distinguished:(1) families in which both husband and wife worked, (2)families in which only the husband or male head worked, and (3)families in which only the wife or female head worked. For all of thefamily types, unemployment experienced by husband, wife, or headof household significantly lowered median family income. For example,single-earner families in which the husband (or male head) wasnever unemployed had a median income in 1981 of $25,000. In contrast,the median income of similar families in which the male headexperienced 1 to 26 weeks of unemployment was $16,500. Familiesin which the male head was unemployed for more than 26 weeks hada median family income of $10,200.TABLE 2-1.—Median family income by unemployment and family status, 1981 (current dollars)Family statusUnemployment status of husband, wife,or head of householdPersonneverunemployedPersonunemployedless than26 weeksPersonunemployedmore than26 weeksHusband and wife both work$31,600$23,000$17,900Only husband or male head works..25,00016,50010,200Only wife or female head works18,90015,20011,200Source.- Department of Labor, Bureau of Labor Statistics.The financial losses of the unemployed are not the only costs of aprolonged economic decline. Considerable anxiety and emotionaldistress is experienced by those who have lost their jobs or who fearthat they might lose their jobs in an economy with a decliningnumber of employment opportunities. Protracted unemployment is30

frequently associated with poor heafyh, psychological problems, andgradual erosion of job-related skills.THE COMPOSITION OF CYCLICAL AND STRUCTURALUNEMPLOYMENTThe unemployment problem can be divided into two components,cyclical and structural unemployment. The term cyclical unemploymentis used to refer to the unemployment associated with cyclical downturnsin aggregate economic activity. The incremental unemploymentassociated with the recent recession would fall into this category. Theterm structural unemployment is used to refer to the unemployment thatremains even after cyclical recoveries in aggregate economic activity.In large part, structural unemployment is a natural concomitant ofa dynamic economy with constantly changing patterns of demand.Labor markets are in constant flux, with people entering and leavingthe labor force, losing or quitting old jobs, and looking for and acquiringnew jobs. Some amount of structural unemployment is aninevitable aspect of a large modern industrial economy such as ours. Itis important to realize that although expansionary macroeconomicpolicies cannot reduce structural unemployment permanently, certainmicroeconomic policy interventions can affect the ease and speed ofthe process that matches workers with jobs.Some insight into the differences between cyclical and structuralunemployment can be obtained by comparing the characteristics ofthe unemployed in 1982 and in a period of low cyclical unemployment.Since the unemployment rate in 1978 was 6.1 percent, close tomost observers' estimates of full employment, data from that yearwill be used to illustrate the characteristics of structural unemployment.The next two sections examine the composition of the unemployedpopulation in 1978 and 1982 in terms of demographic compositionand reasons for unemployment. A third section analyzes thedynamics of unemployment.DEMOGRAPHIC COMPOSITIONChart 2-1 provides information on the demographic compositionof the unemployed population in 1978 and in 1982. The chart showsthat young people under age 24 account for a substantial fraction ofunemployment both when the economy is weak and when it isstrong. Persons under 24 accounted for 49 percent of total unemploymentduring 1978 and 41 percent of unemployment in 1982.The decline in the share of youth unemployment reflected the largeincrease in unemployment among adult males in cyclically sensitivesectors of the economy, such as manufacturing.31

Chart 2-1Distribution of Unemployment by Age and SexADULT MALES25 AND OVER25.2% ADULT MALES25 AND OVER34.5%ADULT FEMALES,25 AND OVER24.6%1978 1982NOTE.—DATA RELATE TO PERSONS 16 YEARS AND OVER.SOURCE: DEPARTMENT OF LABOR.A pattern that appears in Chart 2-2 is the cyclical sensitivity of unemploymentamong those who provide the primary financial supportfor a family. The share of unemployment among husbands, wives,and family heads in families without a working spouse rose from 20percent in 1978 to 24 percent in 1982. Because unemployment undoubtedlyimposes its greatest hardship when it hits a worker uponwhom others depend for their sole support, this increase is particularlydistressing.A continuing tragedy in both good and bad times is the very highrates of unemployment of blacks and other minorities. This group accountsfor a share of unemployment that is greatly disproportionateto its share of the labor force. While blacks and other minoritiescomprised 13 percent of the labor force in 1982, they comprised approximately23 percent of the unemployed. Chart 2-3, shows that therecent recession raised the unemployment rate of blacks and otherminorities proportionally less than that of the rest of the population.However, black and other minority unemployment rates increasedsharply during the recession and continue to greatly exceed those ofthe entire population. The unemployment rate for black and otherminority adult males was 16.2 percent in 1982, compared to 7.8 percentfor white males. For black and other minority teenagers the unemploymentrate was 43.9 percent, compared to 20.4 percent forwhite teenagers.32

Chart 2-2Distribution of Unemployment by Family StatusHUSBANDS,SPOUSE WORKING7.8%HUSBANDS.SPOUSE WORKING11.5%1978 1982'HUSBANDS AND WIVES WHOSE SPOUSE DOES NOT WORK AND PERSONS WHO MAINTAINFAMILIES.NOTE.^DATA RELATE TO PERSONS 16 YEARS AND OVER.SOURCE: DEPARTMENT OF LABOR.REASONS FOR UNEMPLOYMENTAnalyzing the problem of unemployment requires understandingthe process by which people become unemployed. The unemployedare often described in stereotyped terms as the victims of permanentlayoffs by firms that are either partially or fully shutting down. Evenduring the recent recession, however, this characterization applied toless than half of the unemployed.As part of the monthly Current Population Survey, the unemployedare asked a number of questions designed to elicit the reasonsfor their unemployment. The answers to these questions permit abreakdown of the unemployed into five groups: (1) persons laid offwho can expect to return to the same job; (2) persons who have lostjobs to which they cannot expect to return; (3) persons who havequit their jobs; (4) reentrants who are returning to the labor forceafter a spell of neither working nor looking for work; and (5) newentrants who have never worked at a full-time job before but are nowseeking employment.Chart 2-4 shows that the distribution of the unemployed amongthese categories is very sensitive to cyclical conditions. The share ofpersons who have lost their jobs, either temporarily or permanently,33

Chart 2-3Distribution of Unemployment by Race1978 1982NOTE.—DATA RELATE TO PERSONS 16 YEARS AND OVER.SOURCE: DEPARTMENT OF LABOR.is particularly sensitive, rising from 42 percent in 1978 to 59 percentin 1982. Over this period the number of job losers on temporarylayoff tripled and the number of permanent job losers more thandoubled. The decline in alternative employment opportunities resultedin a decline in the share of unemployment traceable to workersleaving their jobs voluntarily during the recession—from 14 percentin 1978 to 8 percent in 1982. Finally, because the number of laborforce entrants and reentrants is relatively constant, their share intotal unemployment declined somewhat during the recession.The data on reasons for unemployment indicate a major differencebetween cyclical and structural unemployment. Almost 90 percent ofthe increase in unemployment during cyclical downturns involves increasesin job losses and layoffs, as firms respond to declines indemand for their products. On the other hand, almost 60 percent ofstructural unemployment is comprised of voluntary job leavers, laborforce entrants, and reentrants. The remainder are job losers. As describedbelow, the very different causes of cyclical and structural unemploymentsuggest that different policy responses are appropriate.34

Chart 2-4Distribution of Unemployment By Reason1978 1982NOTE.—DATA RELATE TO PERSONS 16 YEARS AND OVER.SOURCE: DEPARTMENT OF LABOR.THE DYNAMICS OF UNEMPLOYMENTAn essential feature of the unemployment problem is its dynamiccharacter. The appropriate design of policies to reduce unemploymentdepends on whether most of the unemployed are out of workfor a long time and must wait for an economic upturn to find jobs orwhether they are a group whose membership changes rapidly, evenduring recessions.The principal source of information on the duration of unemploymentis the monthly Current Population Survey, which asks personswho report themselves as unemployed to report how long they havebeen unemployed. Chart 2-5 presents information on the duration ofunemployment in 1978 and 1982. The clearest difference betweencyclical and structural unemployment emerges in the incidence oflong-term unemployment. In 1982 the number of unemployed individualswho reported that they had been out of work for 6 or moremonths was almost three times the corresponding number in 1978,when the economy was operating without significant cyclical unemployment.While the incidence of long-term unemployment increases sharplyduring recessions, it is important to recognize that many of the un-35

Chart 2-5Distribution of Unemployment by Duration1978 1982NOTE.—DATA RELATE TO PERSONS 16 YEARS AND OVER.SOURCE: DEPARTMENT OF LABOR.employed find jobs or withdraw from the labor force relatively quickly.Of all the persons who became unemployed in September 1982,over 45 percent were no longer unemployed by October, and over65 percent were no longer unemployed by November. However, evidenceon the duration of unemployment is not purely indicative ofthe ease or difficulty with which persons find jobs since almost halfthe unemployed leave the labor force without finding jobs.While most persons who become unemployed look for work onlybriefly, this group does not comprise a large part of the unemploymentproblem. It is long-term unemployment that is of special concern.A recent study found that in 1978, more than 40 percent oftotal unemployment was due to the 15 percent of the unemployedpopulation who were out of work a total of 6 months or longerduring the year. This concentration of long-term unemploymentamong a relatively small group of the unemployed is particularly pronouncedduring cyclical downturns. Data on this subject are not yetavailable for 1982. During 1975, however, when the unemploymentrate was 8.5 percent, an estimated 52 percent of unemployment wasdue to the 22 percent of the unemployed population who were out ofwork more than 6 months.36

These findings suggest several conclusions. First, even during recessions,most persons who become unemployed either find jobs orleave the labor force relatively quickly. Second, the unemploymentproblem is most serious for those who are unemployed for prolongedstretches. Third, the incidence of long-term unemployment isvery sensitive to cyclical conditions, which suggests that it will diminishas the economy recovers. Even after a recovery is well underway,however, a sizable fraction of total unemployment will involve protractedjoblessness. The needs of the long-term unemployed deservespecial recognition in the designing of policies to attack structuralunemployment.COMBATING CYCLICAL UNEMPLOYMENTHigh rates of cyclical unemployment, which the American economyis now experiencing, are largely a consequence of fluctuations in aggregatedemand caused by macroeconomic policies and shocks to theeconomy. As described in Chapter 1, the historical experience of theUnited States and other countries suggests that disinflation is generallyassociated with lost output and increased unemployment. Duringperiods of disinflation and recession, the measures available toreduce the pain of the transition from accelerating inflation to pricestability are limited. Greater fiscal or monetary stimulus might increaseemployment, but only at the risk of igniting inflation. Chapter1 describes the principles that the Administration feels govern soundmacroeconomic policies.THE LIMITS OF MACROECONOMIC POLICYThe only way to reduce current high levels of cyclical unemploymentis for the United States to achieve a sound recovery from therecent recession. Avoiding future recurrences of high cyclical unemploymentrequires avoiding an expansion so rapid as to lead to rapidlyincreasing inflation. Historical experience suggests that the changein the rate of inflation depends both on the rate at which economicactivity is expanding and on the level of economic slack. If the slackin the economy declines too rapidly, or capacity utilization is held attoo high a level, inflation will tend to increase. The lower limit onunemployment below which inflation will tend to increase is referredto as the inflation threshold unemployment rate.While it is not easy to pinpoint the inflation threshold unemploymentrate precisely, it probably lies between 6 and 7 percent. Econometricstudies of historical data suggest that when unemployment isclose to 6 percent, the rate of inflation tends to accelerate. For example,during 1978 when the unemployment rate was 6.1 percent, infla-37

tion as measured by percentage changes in the gross national product(GNP) deflator rose to 7.4 percent from 5.8 percent in 1977. Aneven larger increase occurred in 1979 when the unemployment rateaveraged 5.8 percent.The Effect of Demographic FactorsThere are a number of reasons to believe that the inflation thresholdunemployment rate increased during the 1960s and 1970s. Manyeconomists believe that demographic factors may have contributed tothe increase. Persons with little labor market experience tend to havehigh rates of unemployment as they move from job to job in aneffort to obtain a desirable career position. In the last 15 years, thechildren of the baby boom have reached maturity thus raising substantiallythe share of inexperienced workers in the labor force. Inaddition, women with little recent labor market experience have enteredthe labor force at an unprecedented rate during the last 15years. It has been estimated that if the labor force had the same demographiccomposition today as it had in 1958, the unemploymentrate would have been about three-quarters of a percentage pointlower in 1982. The share of young people in the labor force will declinesharply over the next decade due to a dramatic reduction in thebirth rate throughout the late 1960s and the 1970s. This providesgrounds for cautious optimism that the inflation threshold unemploymentrate will decline.Social Insurance ProgramsOther factors which have increased the inflation threshold unemploymentrate in recent years are less likely to be reversed in thenext decade. These include the effects of social programs. While providingimportant financial support to their recipients, these programsalso have both behavioral and reporting effects on the measured unemploymentrate.Behavioral effects of social insurance programs such as unemploymentinsurance include the encouragement of firms to lay off workersand the inducement of persons to prolong their spells of unemployment.These effects are discussed in more detail below. Reportingeffects occur when programs induce persons to change reportingof their labor force status, without changing their behavior. For example,some experts believe that the Federal Supplemental Benefitsprogram instituted during the 1975 recession caused persons whootherwise would have withdrawn from the labor force to report thatthey were unemployed because of job search requirements. There issome evidence to suggest that the work registration requirements inthe food stamp and AFDC programs have had a similar effect.38

Wage RigidityA number of studies show that wages and prices are much morerigid now than prior to World War II, and that rigidity has increasedwithin the post-War period. Increased wage rigidity is likely to raisethe economy's inflation threshold level of unemployment, since lessflexible wages increase the inevitable unemployment associated withthe sectoral shocks which buffet the economy.The reasons for this change are not well understood. A side effectof the provision of a "safety net" program is that employees maybecome more resistant to wage reductions, leading to increases inwage and price rigidity. To the extent that the two-earner family is aform of private "safety net" against the financial losses of unemployment,the recent growth in the number of two-earner families mayalso have contributed to increasing wage rigidity in the United Statesover time.Increasing Structural ChangeA final factor that may have contributed to a rising inflation thresholdunemployment rate is the increasing rapidity of structural changein the economy. This acceleration, which is in part caused by theeconomy's increasing sensitivity to events in the world economy, isevidenced by increasing dispersion across industries and localities inrates of unemployment. Because transfers of human and physical resourcesare costly and take time, increased unemployment is a concomitantof structural change.While the separate impacts of these factors—changing demographiccomposition, larger social insurance programs, increased wage rigidity,and increased structural change—are difficult to quantify, it isreasonable to conclude that together they may have significantly increasedthe inflation threshold unemployment rate. Expansionary macroeconomicpolicies are unlikely to reverse the effects of thesechanges.PUBLIC WORKS EMPLOYMENT PROGRAMSDirect provision of public works jobs by the government is a politicallypopular response to cyclical unemployment during recessions.Available evidence suggests, however, that public works programsadopted in past recessions proved counterproductive, and that the inherentcapability of public works programs to combat cyclical unemploymentis limited.The Timing of Public Works ExpendituresPublic employment programs that produce useful goods or servicesgenerally take time to plan and implement. Therefore, such programsoften have their greatest effects on public employment long39

after an economic recovery has begun. For this reason, public employmentprograms have sometimes exacerbated rather than mitigatedcyclical fluctuations in aggregate demand. A study of the AcceleratedPublic Works program enacted in September 1962 by the Congressto combat the high unemployment rate of the early 1960sfound that the number of jobs created by the program peaked inJune 1964, 37 months after the bottom of the recession. More recentexperience also confirms that lags in implementation are long. Arecent study by the Office of Management and Budget found that 90percent of the outlays for local public works projects designed tostimulate recovery from the 1974-75 recession occurred more than2J6 years after the trough of the recession. The lags in implementingpublic works programs result in their having destabilizing effects,since a large share of the resulting spending occurs during periods ofeconomic expansion.The Effect of Federal Funding of Public Works on State ExpendituresEven when spending for these programs begins immediately afterthey are enacted, many public works projects do not yield a net increasein employment. Because of the long planning and implementationlags, most of the projects available for immediate funding arethose that were planned before the recession began. Thus, Federalexpenditures on these projects often substitute for outlays that wouldhave taken place anyway.A major effect of Federal public works expenditures may be toalter the timing of public works projects. The expectation of newpublic works programs may induce State and local governments todelay making outlays during the early stages of economic downturnsin the hope that they will receive Federal funds for projects they have"on the shelf/' The importance of this possibility is suggested by experienceswith the Local Public Works Capital Development and InvestmentAct of 1976 and the Public Works Employment Act of1977, programs intended to spur recovery from the 1975 recession.Three characteristics of these programs may have created incentivesfor local governments to delay their own discretionary spending untilthey could see whether the Federal Government would pay theirentire bill: (1) projects were financed fully by the Federal Government;(2) grants were limited to quick-starting projects; and (3) therewas considerable uncertainty and lengthy delays in the process ofawarding money to State and local governments. One study foundthat State and local public works expenditures fell substantially inmid-1976 and decreased further between 1976 and 1977. It suggestedthat this may have occurred because States and local governmentsdelayed projects in anticipation of funds becoming available underthe 1976 and 1977 public works programs. The study also suggested40

that these measures may have caused the postponement of as muchas $22 billion in total government spending.Crowding Out of Private Sector EmploymentAnother reason for discounting the efficacy of public works measuresis their adverse side effects on private employment. If publicworks outlays are financed by additional taxes, the income andspending of consumers are reduced, decreasing the number of jobsin the private economy. Alternatively, insofar as public works outlaysare financed by borrowing from the public, interest rates are raised,crowding out some forms of private spending and reducing privateemployment. The higher interest rates resulting from increased Federalborrowing also discourage capital investments that help createfuture employment.Benefits to WorkersAn additional reason to discount the efficacy of accelerated publicworks projects is their limited value to participants. Most jobs incountercyclical public works projects are of extremely short durationand are unlikely to provide participants with lasting job skills. Underthe Public Works Impact Program, initiated in fiscal year 1972, theaverage duration of employment amounted to only 4.1 weeks. Almost60 percent of all employees worked 2 weeks or less. Data for thelocal public works programs initiated in 1976 and 1977 and describedabove, indicate that the average job lasted only 3.5 weeks.Although public works programs are motivated by a desire to providejobs for the unemployed, very few jobs are actually filled by unemployedworkers. Under the Public Works Impact Program, only 27percent of all jobs were filled by the previously unemployed. Underthe more recent public works programs of 1976 and 1977, it hasbeen estimated that only 12 percent of all jobs were filled by previouslyunemployed workers.COMBATING STRUCTURAL UNEMPLOYMENTThe preceding analysis suggests that it would be imprudent to usemacroeconomic policies to reduce the unemployment rate below itsinflation threshold level of 6 to 7 percent. Such an effort would increaseinflation, and ultimately prove counterproductive as increasedinflation was followed by recession. This does not mean that unemploymentrates in the 6 to 7 percent range are either inevitable ordesirable. The inflation threshold level of unemployment can be reducedby policies that consider the special problems of two groups ofworkers: (1) young people, and (2) adults experiencing long-term unemployment.It can also be reduced by reforms of the unemployment41

insurance system, which, while providing valuable insurance, may increasethe incidence of unemployment.THE PROBLEM OF YOUTH UNEMPLOYMENTAt times of low cyclical unemployment, about half the unemployedare young people between the ages of 16 and 24. Close to one-fourthof all the unemployed are teenagers aged 16 to 19. While unemploymentclearly imposes hardships on youths, it has very different economicimpacts than it does for adults. Many unemployed youths arein school and looking for part-time work. Most of this group, andmany other young people who have left school, are not economicallyindependent, but rather live at home and rely on their parents forfinancial support. Many other young people experience only brief periodsof unemployment as they move from one job to the next.Table 2-2 provides information on the labor market activities ofyoung men and women aged 16 to 19 in October 1981, when theteenage unemployment rate was 24.1 percent. Data for 1982 are notyet available. As the table reveals, only 5 percent of all teenagerswere out of school and measured as unemployed (because they werelooking for work). A striking feature of the youth labor market is thelarge fraction of young people who are out of school but are neitherworking nor looking for work. Over 30 percent of female and 14 percentof male out-of-school teenagers were not in the labor force. Thefactors underlying this labor force withdrawal by young people arenot well understood. In some cases, young people may withdrawfrom the labor force because they are discouraged about their prospectsfor finding suitable employment. In other cases, labor forcewithdrawal may reflect a desire for leisure.The observations about the dynamic character of unemploymentmade elsewhere in this chapter are especially true of young people.TABLE 2-2.—Educational and labor market activities of youth aged 16 to 19, by sex, October 1981ItemNumber(thousands)Percent ofsubgroupMalesPercent ofpopulationNumber(thousands)Percent ofsubgroupFemalesPercent ofpopulationTotal population8,036100.08,059100.0Enrolled in school..,5,683100.070.75,526100.068.6EmployedUnemployedNot in labor forceUnemployment rate (percent)..Not enrolled in schoolEmployedUnemployedNot in labor forceUnemployment rate (percent)..2,0244243,23517.32,3531,58543433421.535.67.556.9100.067.418.414.225.25.340.329.319.75.44.21,8294293,26819.02,5331,34041777623.733.17.859.1100.052.916.530.622.75.340.631.416.65.29.6Source: Department of Labor, Bureau of Labor Statistics.42

Most young people find jobs or leave the labor force fairly quickly. Itwas recently estimated that of those male teenagers who become unemployedin a given month only 42 percent remain unemployed inthe next month.Youth unemployment is nevertheless a critical economic problem.A large part of the youth unemployment problem is traceable to thesmall group of teenagers who experience extensive unemployment.More than 52 percent of all unemployment experienced by teenagemales aged 16 to 19 in 1981 was due to the 4.4 percent of the maleteenage population of this group who were out of work for morethan 6 months during that year.Evidence also suggests that certain teenagers who suffer extensiveunemployment earn lower wages later in life. The direction of causationis very difficult to establish since persons with low skills maysimply fare poorly both early and late in life. However, the best evidenceavailable suggests that poor labor market experiences early inlife cause reduced wages during adulthood. This suggests the importanceof developing policies to improve employment opportunitiesfor the long-term unemployed and to reduce job turnover.Training, Unemployment, and the Minimum WageA major problem in the youth labor market is the dearth of*'career-oriented" employment opportunities. While people who participatein post-secondary schooling are generally subsidized by thepublic sector, public support of equivalent magnitude has not beenavailable for the post-high school training of youth who choose toenter the labor force after high school.Employers may find it very difficult to offer such training becauseof the constraints imposed by minimum wage legislation. These lawsdiscourage employers from hiring unskilled workers at very lowwages and compensating them further by providing training. Thismay help explain very high job turnover among youths as they moverapidly in and out of "dead-end" jobs. Another consequence of minimumwage laws is that they prevent some young people from acquiringthe training that would permit them to find steady, well-payingemployment as adults. Statistical studies provide evidence that minimumwages significantly depress the accumulation of valuable skillsand .resulting growth in earnings among youths who are paid theminimum wage. There is also evidence that the negative effects ofthe minimum wage on employment and training are concentrated43

disproportionately among youths with the fewest labor market skills.Thus, although the stated purpose of the minimum wage is to reducepoverty, experience suggests that it may actually decrease the lifetimeearnings of some of the poor and thereby increase income inequality.POLICIES TO REDUCE YOUTH UNEMPLOYMENTAlmost all observers agree that mitigating the problems of instabilityand high unemployment in the youth labor market requires increasingthe availability of career-oriented employment and training.This can be accomplished through public support of training, minimumwage reforms, and employment tax credits.The Job Training Partnership ActThe Job Training Partnership Act (JTPA) of 1982 represents amajor Federal initiative to reduce structural unemployment amongyouth and adults. The JTPA departs from previous Federal employmenttraining programs by establishing a formal partnership betweenprivate industry, the public sector, and vocational training institutionsfor the purposes of planning, designing, and providing federally financedtraining. Federal resources are targeted to individuals identifiedas most in need: economically disadvantaged youth, low-skilledand chronically unemployed adults, and skilled workers who have lostjobs in declining industries and regions. The problems faced by thelatter group are discussed more fully later in this chapter.The JTPA is intended to fill an important niche in the national employmentand training system by serving individuals who are unableto make use of job training provided by more traditional institutions:high schools, vocational-technical schools, community colleges, universities,and employers. Federally funded training programs such asJTPA provide a second chance to youth and adults experiencingtrouble in the labor market. The JTPA is administered at the Stateand local level. This allows training programs to be tailored to theparticular needs of workers and employers in local labor markets.Minimum Wage ReformsThe Administration will propose a summertime differential minimumwage for young people under the age of 22. Between May 1and September 30 of each year the minimum wage for this groupwould be reduced to $2.50 from $3.35. This measure would encouragefirms to hire young people, just out of school, and give them theexperience needed to compete effectively in the labor market. It willalso encourage employers to provide youth who remain in schoolwith valuable work experience during the summer months.The Targeted Jobs Tax CreditAn alternative policy avenue for encouraging employment andtraining of young people is to provide tax credits or wage subsidies44

to employers who hire youths. Tax credits are currently provided tofirms that employ economically disadvantaged youths, aged 18 to 24,under the Targeted Jobs Tax Credit program. The credits are alsotargeted to welfare recipients, and economically disadvantaged Vietnamveterans, cooperative education students, handicapped persons,and ex-convicts.The tax credit lasts for up to 2 full years. In the first year it isequal to 50 percent of an individual's earnings, up to a maximumcredit of $3,000. In the second year it is equal to 25 percent of earnings,up to a maximum credit of $1,500. Participation in the programhas been limited since its inception in 1979. This is an apparent consequenceof administrative problems encountered by the agencies responsiblefor determining program eligibility (especially the Job Service),reluctance on the part of eligible recipients to use the tax creditas a self-marketing tool, and employers' reluctance to let governmentprograms influence hiring decisions.Recent legislation added a second component to the tax credit programby providing a tax credit for summer employment targeted ateconomically disadvantaged youths aged 16 and 17. The tax creditfor this group is quite large, equaling 85 percent of wages, up to atotal summer income of $3,000. The summer Targeted Jobs TaxCredit program, in effect, allows employers to hire eligible youths,who are paid the minimum wage for a net cost to the firms of 50cents an hour. The program will be in place for the first time duringthe summer of 1983.A virtue of measures which subsidize employment and on-the-jobtraining for youth is that they counteract the large bias toward formalschooling over on-the-job training inherent in current policies. Inpart because of large public subsidies to higher education during thelast two decades, the percentage of young people, aged 18 to 24, enrolledin higher education rose very sharply from 26 percent in 1963to 41 percent in 1975. This shift toward increased formal schoolingwas accompanied by a decline in the relative wages of college graduatesand high school graduates. The ratio of the average annual incomesof college graduates to that of high school graduates, aged 25and over, fell from 1.53 in 1968 to 1.38 in 1978.LONG-TERM UNEMPLOYMENT AND STRUCTURAL CHANGEAn especially visible and serious component of the unemploymentproblem is composed of adults suffering protracted unemployment.At present, most long-term unemployment is a consequence of therecession and the resulting reduction in the demand for labor. But asdiscussed earlier in the chapter, long-term unemployment will remaina significant problem even after the economy recovers.45

Structural Change and Economic AdjustmentA large part of long-term unemployment among adults can betraced to structural changes in the economy. An increasingly importantsource of structural change is the growing interdependence ofthe U.S. economy with that of the rest of the world. The share ofexport and import-competing industries in GNP has increased overthe last several decades, and many industries have consequently feltthe cold winds of economic change. By December 1982 the unemploymentrate had reached 23.2 percent in the motor vehicle industryand 29.2 percent in the primary metals industry. Other industries, includingmining, construction, and lumber, have also contracted rapidly,leaving behind a significant number of long-term unemployed.These figures reflect both changes resulting from foreign competitionand the sharp declines in the demand for manufactured goodscaused by the recent recession. The gradual decline of the dollar inforeign exchange markets to historically prevailing levels, a drop inreal interest rates, and general economic recovery would contributeto easing the problems of troubled industries, as explained in Chapter3. However, most observers believe that foreign competition willpresent persistent problems in some domestic industries even in thelong run.In a number of these industries, significant adjustments will needto take place. If foreign firms can continue to produce goods at lowercosts than U.S. firms, either domestic production will contract, forcingworkers to leave the affected industries, or workers will have toaccept constant or even declining real wages. The former option isparticularly painful in industries like automobiles and steel, whereworkers have become accustomed to high standards of living. Becausewages in these industries are substantially greater than wagesin other manufacturing industries, workers find it difficult to locatesuitable alternative jobs.Programs which inhibit the transition of workers from declining industriesto growing industries would raise the level of structural unemploymentin the economy. Included in this group are programswhich would provide financial assistance to industries without providingincentives for employee relocation or wage and price flexibility.In a dynamic economy subject to the pressures of domestic and foreigncompetition, our economic health depends critically on the abilityof workers and firms to respond quickly to changing economicconditions.Policies to Alleviate Long-term UnemploymentThe centerpiece of Federal policy to alleviate long-term unemploymentis Title III of the new Job Training Partnership Act discussedearlier in the chapter. Title III established State-administered programsof employment and training assistance for dislocated workers,46

defined broadly to include individuals who have become unemployedas a result of plant closures, laid-off workers who are unlikely toreturn to their previous industry or occupation, and individuals experiencinglong-term unemployment in occupations with limited employmentopportunities. Matching grants are provided to States onthe basis of their unemployment conditions. Title III authorizesStates to establish a wide variety of employment and training activities,including job search assistance, job training, relocation assistance,and employment counseling. Individuals receiving Title III assistancemay also receive unemployment compensation, if they areeligible.The Administration in its 1984 budget has introduced two new approachesto the problem of reducing long-term unemployment. First,it has proposed that Federal unemployment laws be amended topermit States to use a portion of the unemployment insurance taxesthey collect to support retraining and job search assistance for theirunemployed workers. Second, the Administration has proposed thatthe Federal Supplemental Compensation program be replaced whenit expires with a new temporary program that provides incentives forwork as well as compensation for long-term unemployment. As an alternativeto added weeks of unemployment compensation, this programwould give recipients the option of receiving assistance in securingwork through a system of tax credits to employers. This willgive employers a significant incentive to hire the long-term unemployed.THE EFFECTS OF UNEMPLOYMENT COMPENSATIONFor more than 40 years, unemployment compensation has givenvaluable support to millions of unemployed workers and has providedan important source of security to millions more who are employed.Along with these beneficial consequences, however, the presentstructure of the unemployment insurance system has altered theincentives faced by employers in hiring and firing decisions and theincentives of unemployed workers to accept new employment opportunities.As a result, unemployment compensation seems to have increasedthe incidence and duration of unemployment.The current system of unemployment compensation produces twodistinct but related adverse incentive effects. First, for those who areunemployed it reduces the cost of unemployment, providing an incentivefor longer durations of unemployment. Second, currentmethods of financing unemployment insurance increase the incidenceof unemployment by increasing the size of seasonal and cyclical flucuationsin unemployment and by making temporary jobs morecommon.47

Incentives to Prolong UnemploymentPayments to the unemployed clearly raise the level of householdexpenditures that can be maintained when one or more family membersare not working. Such payments reduce the economic pressureto find work immediately, encouraging a longer period of job searchduring which the unemployed worker hopes to find a more attractivejob than might otherwise be found. For some workers unemploymentinsurance replaces more than 70 percent of after-tax wages duringperiods of unemployment. Economic research indicates that there isa positive relationship between duration of job search and the levelof unemployment benefits.Workers who take longer to find jobs because of unemploymentcompensation are in no sense "loafing" or "cheating." An unemployedperson who does not expect to be recalled by his previousemployer can expect, on average, to find a better job the longer andmore carefully he looks. Unemployment insurance, by reducing thecost of additional weeks without work, encourages unemployed workersto continue searching for better employment opportunities.Incentives for More Unstable EmploymentA second avenue through which the unemployment insurancesystem, as currently financed, tends to increase the economy's rate ofstructural unemployment is by increasing seasonal and cyclical fluctuationsin the demand for labor and the relative number of shortlived,casual jobs.The effect of unemployment compensation is to offset the marketforces that would otherwise decrease, at least somewhat, the amountof unstable employment in the economy. Insofar as unemploymentcompensation provides a subsidy to unstable employment practices,it reduces the wage differential required to attract workers to seasonal,cyclical, and temporary jobs. And because employers pay a relativelysmall premium for unstable employment practices under currentmethods of financing unemployment insurance, they have littleincentive to reduce this instability.The current subsidy to unstable employment patterns would be reducedif unemployment insurance were financed through a morecompletely experience-rated employer tax that more accurately reflectedthe expected level of unemployment benefits to a firm's laidoffworkers in the future. The theory of experience rating is clear: ifan employer pays the full cost of the unemployment benefits that hisformer employees receive, he will not have an incentive to make excessiveuse of unstable employment practices. Recent statistical researchdemonstrates that there is, in fact, a strong positive relation-48

ship between incomplete experience rating and employment instability.Most States use experience rating to some extent, in that some employerscontribute to the State unemployment compensation fundpartially on the basis of the unemployment experience of their ownemployees. The degree of experience rating is highly imperfect,however, for two reasons.First, a significant share of benefits paid are not directly charged tofirms, but rather, are spread across all the firms in a State. These includebenefits paid to job leavers, benefits to employees of firms nolonger doing business in a State, and allowances for dependents. Extendedbenefits, which are available in high unemployment States toworkers who have exhausted their regular unemployment insurance,are also not directly charged to employers.Second, employer contributions are limited by minimum and maximumtax rates. Firms stuck at the maximum or minimum tax rateswill find that their tax rates do not change even if the unemploymentexperience of their workers is altered. As a consequence they face reducedeconomic incentives to smooth employment fluctuations.One measure of the extent of experience rating is the proportionof benefits received that are not effectively charged to theformer employer. A value of 100 percent represents perfect experiencerating. A recent study of nine States over the period 1971-1978found that on average, less than 60 percent of total benefits were experiencerated, by this definition. The degee of experience rating fellto 47.5 percent during the 1975 recession and reached a high of 62.6percent in 1978, a year with relatively low unemployment.The problem of imperfect experience rating has been partially remediedby a provision of the Tax Equity and Fiscal ResponsibilityAct of 1982 which raised the federally proscribed lower bound onState maximum unemployment insurance tax rates from 2.7 percentto 5.4 percent of employers' taxable payroll. Because of this change,fewer firms are likely to face the maximum tax rate.CONCLUSIONSThe dual problems of cyclical and structural unemployment areboth extremely serious. Increased unemployment during cyclicaldownturns, and the high levels of unemployment that prevail evenafter the economy recovers, impose large costs on the unemployedand the economy as a whole. Fortunately, both can be ameliorated byprudent public policy. Sound macroeconomic policies will avoid recurrencesof the rising inflation of the 1970s and subsequent in-49

creases in cyclical unemployment. Policies directed at young peopleand the long-term unemployed, and reform of the unemployment insurancesystem, can significantly reduce the level of structural unemployment.50

CHAPTER 3The United States in the WorldEconomy: Strains on the SystemDURING THE 1970s the world's market economies became moreintegrated with each other than ever before. Exports and imports asa share of gross national product (GNP) reached record levels formost industrial countries, while international lending and direct foreigninvestment grew even faster than world trade. This closer linkageof economies was mutually beneficial. It allowed producers ineach country to take greater advantage of their country's special resourcesand knowledge, and to take advantage of economies of scale.At the same time, it allowed each country to consume a wider varietyof products, at lower costs, than it could produce itself.Underlying the growth in world trade and investment was a progressivereduction of barriers to trade. The postwar period wasmarked by a series of agreements to liberalize trade: both multilateral,like the Kennedy Round, and bilateral, like the Canada-U.S. autopact.In spite of its huge benefits, however, this liberalized tradingsystem is now in serious danger. Within the United States, demandsfor protection against imports and for export subsidies have grownas a combination of structural changes, sectoral problems, and shortrunmacroeconomic developments has led to a perception that weare becoming uncompetitive in world markets. In Europe, a growingstructural unemployment problem, aggravated by the recession, hasincreased protectionist pressures. In the developing countries a financialcrisis threatens the integration of capital markets and is pushingmany countries back toward the exchange controls and import restrictionsthey had begun to dismantle.These problems must not be allowed to disrupt world trade. If thesystem comes apart—if the world's nations allow themselves to becaught up in a spiral of retaliatory trade restrictions—a long timemay pass before the pieces are put back together.This chapter reviews the strains on the international economicsystem and the policies by which the United States is attempting toovercome them. It is divided into four sections. The first section discusseslong-term changes in U.S. competitiveness. The correction of51

widespread misconceptions about the competitive position of theUnited States is essential if we are to get through the difficult periodahead without making major policy mistakes. The second section ofthe chapter is devoted to financial developments and their effects ontrade, especially the appreciation of the dollar and its likely effects onthe U.S. trade balance. Two final sections examine macroeconomicand financial problems in Europe and the developing countries.LONG-RUN TRENDS IN U.S. COMPETITIVENESS:PERCEPTIONS AND REALITIESConcern over the international competitiveness of the UnitedStates is as high as it has ever been. It is argued with increasing frequencythat U.S. business has steadily lost ground in the internationalmarketplace. This alleged poor performance is often attributedboth to failures of management in the United States and to the supportgiven to foreign businesses by their home governments. Feedingthe perception of declining competitiveness is the persistent U.S.deficit in merchandise trade, especially the imbalance in trade withJapan.Changes in U.S. trade performance must, however, be put into thecontext of changes in the U.S. role in the world economy. This widerapproach reveals that much of the concern about long-run competitivenessis based on misperceptions. Although the recent appreciationof the dollar has created a temporary loss of competitiveness,the United States has not experienced a persistent loss of ability tosell its products on international markets; in fact, in the 1970s theUnited States held its own in terms of output, exports, and employment.Changes in the relationship of the United States to the worldeconomy, however, have made the United States look less competitiveby some traditional measures.AGGREGATE PERFORMANCE OF THE UNITED STATES AND OTHERDEVELOPED COUNTRIESDiscussion of U.S. competitiveness often gives the misleading impressionthat the United States has consistently performed poorly relativeto other industrial countries. The U.S. share of world trade andworld GNP did in fact decline throughout the 1950s and 1960s, reflectingthe recovery of the rest of the world from World War II, togetherwith the narrowing of the huge and unsustainable U.S. technologicallead. In the 1970s, however, this long decline leveled off.• From 1973 to 1980, real gross domestic product (GDP) in theUnited States grew at an annual rate of 2.3 percent, compared52

with 2.6 percent in the other Organization for Economic Cooperationand Development (OECD) countries.• From 1973 to 1980 the U.S. share of OECD exports remainednearly constant, declining from 17.6 to 17.2 percent.• Over the same period, employment in the United States grew at2.1 percent a year, compared with only 0.5 percent in the rest ofthe OECD countries.The United States, in part as a side effect of its relatively rapidgrowth in employment, did do poorly by comparison in one respect,productivity growth. Output per worker grew at only 0.2 percent inthe United States, compared with 2.2 percent a year in the rest of theOECD countries. Productivity is, of course, crucial to living standards;ultimately, the level of consumption per capita depends on thelevel of output per worker. But there is no necessary relation betweenproductivity and competition in international markets. Slowgrowth in productivity only hampers a country's international competitivenessif it is not offset by correspondingly slow growth in realwages. If U.S. workers, for example, were to receive real wage increasesequal to those granted in other countries while their productivityfailed to increase at a comparable rate, U.S. industry would finditself increasingly uncompetitive. The fact is, however, that this didnot occur, as the comparative experience of the United States andthe European Economic Community illustrates. From 1973 to 1980output per manufacturing worker in the European Economic Communityrose at an annual rate of 2.7 percent, but real compensationrose at an annual rate of 4.1 percent. By contrast, output per workerin the United States rose 1.1 percent annually, while real compensationrose only 1.8 percent annually. In fact, until the recent rise inthe dollar's exchange rate, it was workers in the European EconomicCommunity, rather than those in the United States, who were probablypricing themselves out of the world market in spite of their relativelygood productivity performance.The overall performance of the United States, then, does not suggesta long-term problem of competitiveness. The shift from persistenttrade surplus to persistent deficit which occurred over the lastdecade is, however, often misinterpreted as a sign of an inability tocompete. In fact, changes in the structure of the U.S. balance of paymentsare more the result of changes in the U.S. saving and investmentposition than of slow productivity growth.THE CHANGING STRUCTURE OF THE U.S. BALANCE OF PAYMENTSIn the 1950s and early 1960s the United States normally had atrade surplus and invested heavily in other countries. In the yearsafter 1973, however, the United States normally had a trade deficit,53

and annual investment by foreigners in the United States began toapproach annual U.S. investment abroad. The shift in the U.S. tradebalance was closely connected with the shift in investment flows.Taken as a whole, U.S. international transactions always balance.Any force tending to increase or decrease the balance in one categoryof transactions sets in motion a process leading to exactly offsettingchanges in balances in other categories. For example, an increasein foreign demand for U.S. exports tends directly to improvethe trade balance, but this improvement leads to a rise in the dollar'sexchange rate against foreign currencies. The exchange-rate appreciationin turn leads to increases in imports, a worsened balance onservices, and so on. Similarly, an increased desire by foreign residentsto invest in the United States is reflected in an increase in thecapital account but leads to an appreciation of the dollar and an offsettingdecline in other parts of the balance of payments.The shift in the U.S. trade balance from persistent surplus topersistent deficit was largely an offset to changes in the U.S. capitalaccount. In the 1950s and the first half of the 1960s, rates of returnon capital were lower and wage rates were higher in the UnitedStates than in other industrial countries. Since the United States sufferedno war damage, its capital stock was intact, and the diffusion ofU.S. technology abroad created a demand for new capital investmentin the recipient countries. The result was that returns to investmentwere higher abroad than in the United States, and the United Stateswas a heavy net foreign investor. The counterpart to this foreign investmentwas a persistent surplus on current transactions, includingmerchandise trade.By the 1970s the other industrial countries had narrowed or eliminatedthese differences in capital and labor costs. The result was thatthe demand for new capital abroad was no longer a great deal largerthan it was in the United States. At the same time, the supply of savingsin the United States was restricted by a low national saving rate(the lowest among the major industrial countries). Thus the UnitedStates ceased to be a major net exporter of capital, and the currentaccount of the balance of payments moved from surplus to roughbalance. Meanwhile, the U.S. balance on items other than merchandisetrade improved: the deficit in military transactions fell, the surplusin services rose, and, in particular, the accumulation of past foreigninvestments began to yield increasing income. This meant that abalanced current account was associated with a deficit in merchandisetrade.Table 3-1 and Chart 3-1 show how the structure of the U.S. currentaccount has changed, measuring its components as percentagesofGNP.54

TABLE 3-1 .—Structure ofthe U.S. balance of payments, as percent of GNP, 1960-80Type of balancePercent of GNP1960-661974-80Change,percentagepointsMerchandise trade0.86-0.80-1.66Investment income.741.06.32Military transactions.41-.03.38Travel and services.04.12.16Remittances-.44-.30.15Current account.70.06-.64Source: Department of Commerce, Bureau of Economic Analysis.Chart 3-1Structural Changes in the Current Account BalancePERCENT OF GROSS NATIONAL PRODUCT1.51.0INVESTMENTINCOME.5-.5-1.0-1.51962 1964 1966 1968 1970 1972 1974 1976 1978 1980 1982NOTE.—DATA ARE 16-QUARTER WEIGHTED CENTERED MOVING AVERAGES.SOURCE: DEPARTMENT OF COMMERCE.55

THE ISSUE OF U.S. TRADE WITH JAPANThe perception of diminished U.S. competitiveness stems not onlyfrom the U.S. trade deficit but from an impression that U.S. tradeperformance compares poorly with that of other countries, especiallythat of Japan. Japan runs a huge surplus in its manufactures trade,while the United States runs only a small one, and Japan also has alarge surplus in its bilateral trade with the United States. These factsare often attributed to Japanese trade restrictions. Japan does maintainrestrictions which seriously hurt U.S. businesses. Trade restrictions,however, do not in the long run improve the Japanese tradebalance; as discussed more fully below, they lead to offsetting increasesin other imports or declines in exports. The main explanationof Japan's surplus in manufactures trade and in trade with the UnitedStates is that Japan, with few natural resources, incurs huge deficitsin its trade in primary products, especially oil, and with primary producers,especially the Organization of Petroleum Exporting Countries(OPEC). The surpluses in the rest of Japan's trade offset these deficits.Table 3-2 and Chart 3-2 show the differences in the structure ofthe Japanese, European, and U.S. trade accounts. They show clearlyhow the huge Japanese surplus in manufactures offsets large deficitsin primary products.Corresponding to the Japanese sectoral deficit in primary products,especially oil, is a regional deficit with OPEC. Japan makes up for itsdeficit with OPEC by running surpluses in its trade with other regions.The extent of this regional imbalance—and its contrast withthe U.S. position—is shown in Table 3-3. The point here is similarto that already made with respect to the overall U.S. trade balance:looking at Japanese-U.S. trade in isolation is misleading. The Japanesesurplus in trade with the United States is largely a response tothe rise of OPEC.Although Japanese trade policy does not play a central role incausing the bilateral trade imbalance with the United States, Japaneseimport restrictions remain a major source of friction. Japan maintainsa variety of nontariff barriers against imports. These include importquotas for a number of agricultural products and "red tape" barriersagainst manufactured goods, such as stringent inspection requirementsapplied against imported goods but not against Japanese products.These trade restrictions probably do not lead to a larger overallJapanese trade surplus. If they were removed, the yen would depreciateand increased Japanese imports in the currently protected sectorswould be offset by reduced deficits or increased surpluses elsewhere.Japanese trade restrictions do, however, distort the composition ofU.S. trade with Japan, imposing serious costs on some U.S. produc-56

TABLE 3-2.—Trade balances by commodity group as percent of GDP, United States, Japan, and theEuropean Economic Community, 1980[Percent of GDP]Commodity groupUnitedStatesJapanEuropeanEconomicCommunityTotal..-1.45-0.99-2.23Primary products-1.93-10.11-5.41Food, beverages, and tobacco.40-1.26-.41Crude materials excluding petroleum...54-2.15-1.23Mineral fuels-2.87-6.71-3.77Manufactures.489.123.18Machinery and transport equipment....-.423.09.88Other manufactured goods.906.022.30Source: Organization for Economic Cooperation and Development.Chart 3-2Composition of Trade, 1980PERCENT OF GROSS DOMESTIC PRODUCT10| | TOTALPRIMARYGOODSMANUFACTURESi—IHV.'.•'•'v> . ".:-5-10UNITED STATES EUROPEAN JAPANECONOMIC COMMUNITYSOURCE: ORGANIZATION FOR ECONOMIC COOPERATION AND DEVELOPMENT.57

ers. As the fastest growing and second largest market economy,Japan has a responsibility to help sustain the open trading system. Amajor trade liberalization by Japan would do much to relieve the politicalstrains on that system, while the failure of Japan to make morethan token concessions would intensify them.TABLE 3-3.—Trade balances by region as percent of GDP, United States and Japan, 1980[Percent of GDP]Industrial countriesOil-exporting countries..Non-oil developing countries..,Source: International Monetary Fund.UnitedStates0.23= 1.45.52Japan1.92-3.201.46THE PROBLEM OF UNCOMPETITIVE SECTORSAnalysis of the overall U.S. trade deficit and the bilateral deficitwith Japan suggests that worries about U.S. competitiveness arebased in part on a misunderstanding of the situation. There is noquestion, however, that increased foreign competition has forcedsome sectors of the U.S. economy to contract.This is partly a consequence of the fact that trade has becomemore important to the U.S. economy. Specialization by nations is thereason for international trade. If the United States is to expand itstrade, the U.S. economy must become more specialized. This meansthat some sectors will grow and others will shrink. During the 1970sthe United States developed increasing surpluses in areas in which italready enjoyed a comparative advantage and developed increasingdeficits in sectors in which it was at a disadvantage. Some illustrativenumbers are given in Table 3-4.TABLE 3-4.—U.S. trade balances by sector as percent of GDP, 1972-79[Percent of GDP]Item 1972 1979U.S. comparative advantage:Research-intensive manufactures.,Resource-intensive products, other than fuels..Invisibles (services and investment income)....U.S. comparative disadvantage:Nonresearch-intensive manufactures..Fuels0.93.06.40-1.27-.271.63.671.44-1.44=2.41Sources: International Monetary Fund, National Science Board, and Organization for Economic Cooperation and Development.Specialization of this kind is desirable both for the United Statesand for its trading partners. Specialization and trade raise the efficiencyof the world economy as a whole by allowing each country to58

concentrate on doing what it does relatively well, and by allowing increasedeconomies of scale. But greater specialization can leave thoseinvolved in the contracting sectors worse off, at least temporarily. Attemptsto prevent adjustment through trade barriers or subsidies,however, impose severe costs on unprotected sectors.Some sectoral reallocation of resources, then, is a normal consequenceof the increasing U.S. integration into the world economy.This is not the whole story, however. Some sectors of the U.S. economyare confronted by a problem that is not simply the result ofmarket forces. Broadly speaking, these sectors fall into two groups.In one group are sectors where firms or their workers, accustomed tohaving substantial market power, now find that they have pricedthemselves out of the world market. In the other group are sectorswhich are hurt by foreign protectionism or export subsidies.Market Power and CompetitivenessThe "problem" of diminished market power in some sectors actuallyderives from a desirable aspect of trade: the fact that trade increasescompetition. One of the major benefits of an increasinglyopen U.S. economy is that it reduces the problems of monopoly andmarket power, thus increasing efficiency and helping consumers. Butthe transition to more competitive markets can prove painful. Whenan industry accustomed to having domestic market power encountersinternational competition, it must accept a reduction in the premiumin prices and wages it previously commanded over other sectors ofthe economy. Both firms and workers may be reluctant to accept thisimplication of increased competition, and idle capacity and unemploymentmay result. Prices and wages in some U.S. heavy industriesare probably too high to be sustainable in an integrated world economy.Policies of Foreign GovernmentsA different problem is posed when foreign governments engage inprotective or export promotion measures that harm U.S. producers.U.S. trade negotiators have emphasized four particular areas of concern:1. Agriculture: Japan and the European Economic Community havehigh protective barriers against U.S. agricultural products. Further,the European Economic Community now engages in massive subsidizedexport of agricultural products to dispose of the surpluses createdby its price-support program. These measures depress worldprices of agricultural products, imposing substantial costs on U.S.producers in a sector where the United States holds a clear comparativeadvantage.59

2. High technology: In recent years, many countries have come toview the high-technology industries as vehicles for economic growthand have sought to promote them through a complex mix of policies—outrightsubsidies, export credit subsidies, research subsidies,preferential procurement by State-owned enterprises, and so on. TheUnited States holds a comparative advantage in high-technologyproducts, and the U.S. export market share has remained roughlyconstant since 1973. Nevertheless, there is concern that in some specificareas, especially aircraft, foreign subsidies are threatening theposition of U.S. producers.3. Services: The United States has developed an increasingly strongnet export position in services. Services, however, have never beenrecognized as being under the rules of the international tradingsystem, and trade in services is limited by a maze of foreign governmentregulations.4. Investment: Many countries impose "investment performance requirements'*on foreign investors in exchange for the right to investor to receive investment incentives. Many of those performance requirementsare trade-related, requiring foreign companies to exportmore, reach a specified level of local content, or reduce imports.CHALLENGES TO U.S. TRADE POLICYThe next few years are critical for the international trading system.Accumulating structural problems have combined with short-run macroeconomicstresses to produce a resurgence of protectionist pressures.The Administration's aim, nonetheless, is to preserve andextend the benefits of freer trade. To do this will require resistingprotectionist pressures at home while continuing to urge foreign governmentsto eliminate their more objectionable trade-distorting policies.Responding to Foreign ActionsThe practices of foreign governments pose extremely difficultissues for U.S. trade policy. The United States customarily seeks toinduce other nations to move in the direction of freer trade. The dilemmais how to do this without imposing costs on ourselves thatexceed the benefits from changes in other countries* policies.Trade-distorting measures, whether they take the form of protectionagainst imports or the promotion of exports, hurt the countrywhich adopts them as well as other countries, even when they are aresponse to foreign trade-distorting practices. If foreign governmentslimit imports from the United States and we respond in kind, the initialresults will be further reductions in economic efficiency at homeand higher domestic prices. If foreign governments subsidize exports,depressing world prices for U.S. products, a countersubsidy by60

the United States will depress prices still further. The belief that departuresfrom free trade are automatically called for if other countriesdo not play by the rules is a fallacy.Intervention in international trade by the U.S. Government, eventhough costly to the U.S. economy in the short run, may, however,be justified if it serves the strategic purpose of increasing the cost ofinterventionist policies by foreign governments. Thus, there is a potentialrole for carefully targeted measures, explicitly temporary,aimed at convincing other countries to reduce their trade distortions.There are obvious risks in such a course of action. Instead of inducingother countries to move toward freer trade, U.S. pressuremight set off a cycle of retaliation which would leave everyone worseoff. There are also domestic political risks. Trade measures intendedto be temporary may end up permanent and institutionalized. Theneed to balance the strategic objective of reducing foreign trade barriersagainst the harm which might be caused by U.S. retaliatorymeasures explains the U.S policy of negotiating for freer trade whileholding open the possibility of more direct action as a last resort.Responding to Problem IndustriesThe problems of industries which have recently lost their traditionalmarket power also pose a serious policy dilemma. There is strongpressure to give these industries at least temporary relief from imports,in the hope that lower wage and price increases and improvedproductivity will eventually make them competitive again. On theother hand, protection reduces the incentives for both firms andworkers to make these changes. Furthermore, protectionist measures,however temporary they are supposed to be, tend to become permanent.The limitation of protection for these problem industries is acentral goal of U.S. economic policy.EXCHANGE RATES AND THE BALANCE OF PAYMENTSDuring 1982 the dollar rose against other major currencies to itshighest level since the beginning of floating exchange rates in 1973.The strength of the dollar provided some benefits to the U.S. economyby reducing import prices and thus accelerating progress againstinflation. On the other hand, the strong dollar caused severe problemsby decreasing the cost competitiveness of exported U.S. goods.CAUSES OF THE DOLLAR'S STRENGTHExchange-rate movements are not well understood. Econometricmodels of exchange-rate determination proposed in the past decadehave not shown any consistent ability to track past exchange-ratemovements, let alone predict future changes. Nevertheless, careful61

analysis can narrow the range of plausible explanations of the dollar'srise.The recent appreciation of the dollar, unlike many earlier exchange-ratemovements, did not simply reflect contemporaneouschanges in relative price levels. The well-known theory of purchasingpower parity suggests that the rate of change in the exchange rateshould equal the difference between the foreign and domestic inflationrates. Over the very long run, or in situations of very large differencesin inflation rates, the purchasing power parity theory hasproved to be a useful guide. But the theory has little or no power toexplain the recent rise of the dollar. Price increases over the past 2years in Germany and Japan, for instance, were lower than in theUnited States. Yet the dollar appreciated dramatically during thatperiod against both the mark and the yen. Stated differently, the riseof the dollar was not simply a nominal but also a real appreciation, asillustrated in Chart 3-3.Large exchange-rate movements may also occur because of shiftsin world demand for a country's exports or changes in a country'sdemand for imports. An example of such an event was Great Britain'sdiscovery of oil in the North Sea, which has played at least somerole in the high level of Great Britain's real exchange rate relative toother European currencies.No comparable event accounts for the appreciation of the dollar,although U.S. oil imports have declined sharply. The rise of thedollar was not initially accompanied by a deterioration of the tradebalance, a fact which might seem to suggest that there was an increasein demand for U.S. goods. The initial lack of deterioration,however, stemmed from lags in the effect of the exchange rate on thetrade balance rather than from a shift in either export or importdemand, and the U.S. trade deficit grew rapidly in the second half of1982.What the rise of the dollar seems clearly to reflect is a rise not inthe demand for U.S. goods, but in the demand for U.S. assets. Thereasons for the increased attractiveness of investment in the UnitedStates are somewhat controversial, but the effects are not. In order tobuy U.S. assets, foreigners must first acquire dollars. The increaseddemand for dollars drives up the exchange rate.One important factor in the increased demand for U.S. assets wasthat real interest rates in the United States were high relative to realinterest rates elsewhere. Real interest rates are not directly measurable,since they equal the nominal rate minus expected inflation. Butsome rough measure is attainable by computing the nominal rateminus actual inflation. Chart 3-4 shows the differential in real interestrates, computed in this way between the United States and other62

Chart 3-3Real Exchange Rates Of Major CurrenciesAgainst The Dollar1973-80=10013012011010090807060%\-—--\1 ir•/"7/tI I I 11* **- *\1 1 1 iJV,1v \ YEN\ \l\MARK\ \ ,*• *1 1 1 1 1 1 1 1S \ \FRANC\\...A *i • . 1 . . • i i i i1980 1981 1982—7/^ ^/.**• /-*-i i i iNOTE.—CONSUMER PRICES USED AS DEFLATOR.SOURCE: INTERNATIONAL MONETARY FUND.industrial countries. The chart suggests that the real interest rate inthe United States was substantially higher than foreign rates in recentyears.But events in the fall of 1982 cast some doubt on whether real interestrates alone can explain the dollar's strength. As U.S. shortterminterest rates fell sharply, the differential between short-term interestrates in the United States and other countries was greatly reduced.Yet the dollar continued to rise. The explanation for this maylie in the difference between short- and long-term rates. Most exchange-ratemodels suggest that long-term real rates, and not shorttermones, are what affect the real exchange rate. A notable featureof the U.S. financial scene in the fall of 1982 was that long-term rates63

Chart 3-4International Real Short-Term Interest RateDifferentialsPERCENTAGE POINTS64 -2 -1975 1976 1977 1978 1979 1980 1981 1982NOTE.—DATA ARE U.S. RATE MINUS AVERAGE OF RATES FOR MAJOR INDUSTRIAL COUNTRIESWEIGHTED BY GNP, ADJUSTED FOR DIFFERENCES IN CONSUMER PRICE INFLATION.SOURCE: INTERNATIONAL MONETARY FUND.did not fall nearly as much as short-term rates. At the same time,long-run inflation expectations may have declined, so that it is unclearhow much long-term real interest rates actually fell.Many observers believe that other factors besides real interest rateshelp explain the dollar's strength. In particular, the unsettled state ofthe world economy—particularly the problems in Europe and LatinAmerica described later in this chapter—may have created a desireon the part of investors for a safe haven for their funds. The UnitedStates, according to this argument, is still regarded as the most politicallyand economically stable of the market economies and hasbecome a financial refuge in troubled times. While the importance ofthis factor is hard to assess, the worldwide search for financialsecurity may partially explain this country's rising capital account surplusand its growing current account deficit.64

AN UNDERVALUED YEN?The explanations of the strong dollar discussed so far leave out aview which has received considerable attention—that the strength ofthe dollar reflects deliberate undervaluation of their currencies byour competitors, especially Japan. This view is important enough inits implications for U.S. international economic policy to deserve separatetreatment.Arguments that the yen is undervalued are of two types, which arebasically independent of one another. One argument is that the Japanesegovernment has persistently kept the yen undervalued. Theother is that the Japanese have only recently engineered a decline inthe yen to gain competitive advantage. Neither of these views appearscorrect in light of the actual behavior of Japan's balance of paymentsand exchange rate.If the first allegation—that the yen has been persistently undervalued—wascorrect, Japan would run persistent current account surplusesin excess of what seems justified. We would also expect Japanto have experienced exceptionally rapid growth in its foreign exchangereserves. Neither of these was the case:• From the beginning of floating exchange rates in 1973 through1981, Japan had an average surplus in its current account of only0.15 percent of GNP. This was not much more than the U.S.figure for the same period (0.11 percent), considerably less thanthat of Germany (0.47 percent), and much less than the U.S. surplusof the early 1960s (0.70 percent).• From the beginning of floating exchange rates in 1973 to thethird quarter of 1982, Japan's reserves minus gold grew at anannual rate of 4.8 percent, far less than the 9.7 percent rate ofreserve growth for all non-OPEC countries.These facts contradict the view that the yen was persistently undervalued.There remains the possibility that the yen's weakness duringmuch of 1982 was excessive in some sense. A natural question iswhether, after adjustment for purchasing power parity, the yen fellmore against the dollar than other currencies. The answer to thisquestion depends on the base period used for comparison. For mostbase periods, however, the real depreciation of the yen against thedollar appears smaller than that of the French franc and the Germanmark. Table 3-5 shows an illustrative set of numbers. As the tableshows, only for a few base periods does the yen appear more "undervalued"than the other two currencies.The actual behavior of the Japanese balance of payments and exchangerate thus do not support the view that there is any special undervaluationof the yen—that is, they suggest that exchange-rate65

TABLE S-5.—Real appreciation of the dollar against major currencies to August 1982[Percent change from base year to August 1982']Base yearFrench francGerman markJapanese yen19711972 . ...-1.011.8-2.19.5=-25.3= 13.11973197427 921.431.431.02.06.41975197639 529.633.728.87.310.91977197829.443.035.950.124.32 53.11979198050 851.653.844.236.825.9198121.111.3a 22.91 Percent change in the price of the dollar In each currency, adjusted for differences in consumer price inflation.'Indicates a base year relative to which the August 1982 exchange rate of the yen looks lower than that of the othercurrencies.Source: Board of Governors of the Federal Reserve System.movements over the last several years stemmed from a strong dollarrather than a weak yen. An examination of Japanese policy by theU.S. Treasury supports this conclusion. This study found that Japanhas attempted to isolate its domestic capital market from world capitalmarkets, but that this has tended to limit capital outflow ratherthan inflow, supporting rather than weakening the yen. Japanese capitalcontrols have been relaxed in recent years, a move which theUnited States supports even though the result will be a weaker yenand an increase in Japan's current account surplus. In the 1980s,Japan may well become more of a capital exporter than it was in the1970s, and thus have larger current account surpluses. These surpluses,if they materialize, will result from Japan's high domesticsaving rate, which gives Japan a natural role as an exporter of capitalto the rest of the world.To show that there is no special yen issue is not to deny that asubstantial deterioration has occurred in the relative cost position ofU.S. firms. This deterioration was actually larger relative to otherindustrial countries, but since Japan is the United States' most importantcompetitor, the depreciation of the yen worries U.S. firms more.There is no special yen issue, but the strong dollar does pose genuineproblems.EFFECTS OF A STRONG DOLLAR ON U.S. TRADEThe rise of the dollar was associated with a large rise in the productioncosts of U.S. firms relative to those of foreign competitors.To take one measure, unit labor costs in U.S. manufacturing rose 32percent relative to those of a weighted average of other industrialcountries from their low point in the third quarter of 1980 to thesecond quarter of 1982. This rise in relative costs has at least tempo-66

arily reduced the international competitiveness of U.S. industry dramatically.Other U.S. exporting and import-competing sectors, especiallyagriculture, have also been squeezed.Despite this deterioration in competitive position, it was only in thethird quarter of 1982 that the U.S. trade deficit began to show a significantincrease. This delay was in line with previous experience ofthe effect of exchange rates on trade. The full effect of changes inexchange rates on the volume of exports and imports is felt onlyafter some time has passed, because some trade takes place undercontracts signed in advance and because customers do not alwayschange suppliers immediately when relative prices change. The shorttermeffect of a rise in the dollar is to reduce import prices, whichactually tends to improve the trade balance. Although the negative effectseventually dominate, some econometric estimates suggest thatthe full negative effect is not felt for more than 2 years.As the effects of the strong dollar are increasingly reflected in U.S.trade, the trade deficit will widen. Economic developments elsewherein the world will also contribute to a widening trade deficit. The recessionin other industrial countries will depress the demand for U.S.exports, and financial constraints in developing countries will leadthem to import less. Both developments will have negative consequencesfor U.S. exports. Record trade and current account deficitsin 1983 will almost surely result.Whether the trade and current account deficits persist will largelydepend on U.S. macroeconomic policies, particularly on the fiscalside. If large budget deficits are allowed to continue to depress theU.S. national saving rate, real interest rates may rise again, sustainingor even increasing the high real exchange rate of the dollar. In thiscase the trade deficit could remain high for several years.A large and sustained trade deficit would result in an economic recoverywhich would be "lopsided" in the sense that exporting andimport-competing sectors would not share in the gains. Should thisoccur, government, business, and labor officials must bear in mindthat even though protectionist foreign trade practices distort thecomposition of world trade and reduce economic efficiency both inthe United States and abroad, large trade deficits are not the resultof unfair foreign competition. Large projected U.S. trade deficits area result of macroeconomic forces, particularly large budget deficits.The main sources of the U.S. trade deficit are to be found not inParis or in Tokyo, but in Washington.RESPONSES TO THE STRONG DOLLARThe temporary adverse effects of a strong dollar create pressure todo something for the exporting and import-competing sectors. Three67

kinds of policies might be used: microeconomic intervention in theform of protection or export subsidies, direct intervention in the foreignexchange market, and changes in monetary and fiscal policy.Protection and Export PromotionThe negative effect of the strong dollar on the competitiveness ofmany U.S. firms has fueled pressures for an interventionist tradepolicy. These pressures must be resisted. Protecting import-competingindustries or subsidizing exports is not just a harmful long-runpolicy. With a floating exchange rate, such policies would fail to improvethe trade balance or create employment even in the short run.The exchange rate always moves to clear the market. An increasein exports or a reduction in imports would lead to an increaseddemand for or reduced supply of dollars on the world market, raisingthe exchange rate. This would lead to a further loss of competitivenessin the sectors not protected or promoted. An export subsidy foragricultural products would worsen the situation of the auto industry,an import quota on steel would hurt the competitiveness of the aircraftindustry, and so on. Although these indirect effects may seem ofdoubtful importance in the real world, they are not. That governmentscannot simultaneously protect everyone is a basic principle ofinternational trade.Instead of creating additional employment and output, the distortionof trade through protectionist policies or export promotionwould probably reduce them. Market-distorting policies reduce theefficiency of the economy. Thus, a turn to protectionism could createa "supply-side" shock that might have the same kind of stagflationaryeffects as an oil price increase. The effects would prove still worse if,as is likely, U.S. actions were to provoke foreign retaliation.Although protectionism and export subsidies provide no answer tothe problems caused by a strong dollar, the pressure to use them isincreasing. Many of the exporting sectors, which make up the traditionalconstituency for freer trade, appear to have become convincedby the strength of the dollar and the resulting loss of U.S. competitivenessthat a more interventionist policy is needed.Exchange-Market InterventionSince March 1981 the United States has abstained as much as possiblefrom direct intervention in the foreign exchange market. Thisunwillingness to intervene is based on doubts about whether exchange-marketintervention is effective or desirable. As long as theFederal Reserve continues to pursue a policy of targeting monetaryaggregates, any U.S. intervention on the foreign exchange marketmust be sterilized—that is, offset by other transactions on domestic fi-68

nancial markets. These transactions are likely to wipe out most of theeffect of the initial exchange-market intervention.The process of sterilization is straightforward. If the U.S. Governmentattempted to drive up the price of foreign exchange andweaken the dollar by buying foreign securities, the Federal Reservewould issue dollars to pay for the foreign assets. In order to preventthese dollars from increasing the U.S. money stock, however, theFederal Reserve would then have to withdraw an equal number ofdollars from the market by selling Treasury bills. The only net resultwould be that the world's supply of dollar-denominated assets wouldincrease, while its supply of assets denominated in other currencieswould fall.The increase in the level of dollar-denominated assets would probablyhave little effect on the exchange rate because of the sheer sizeof world financial markets. The world market in dollar-denominatedsecurities includes not only the dollar assets actually owned abroad—foreign deposits in U.S. banks, foreign holdings of Treasury bills,Eurodollar deposits, and the like—but also all those dollar assetswhich are potentially tradeable. Thus, the total pool of internationallymobile dollar assets is probably in the trillions of dollars. Thismakes it questionable whether even very large interventions in theexchange market can have much effect on the exchange rate.Macroeconomic PoliciesAlthough the government cannot significantly affect exchange ratesthrough direct intervention, monetary and fiscal policies do indirectlyaffect the exchange rate. A feasible strategy for bringing the dollardown would involve looser monetary policies and tighter fiscal policies.Both of these changes would tend to lower real interest rates (atleast in the short run), making capital movement into the UnitedStates less attractive and thus driving down the value of the dollar.Despite its unfortunate effects on the U.S. balance of trade, however,monetary restraint is the prime weapon in the fight against inflation.Disinflation, as we have learned, unfortunately involves substantialcosts. Under fixed exchange rates the heaviest costs of monetarycontraction and disinflation fell on the interest-sensitive sectors ofthe economy, such as construction and consumer durables. Withfloating exchange rates, however, much of the burden also falls onexporting and import-competing sectors, which are injured by therise in the value of the dollar.A tighter fiscal policy would also lower real interest rates and leadto a lower dollar. Under fixed exchange rates, budget deficits crowdedout domestic investment. With a floating exchange rate theycrowd out exporting and import-competing products as well. A re-69

duction in deficits would lead—with some lag—to an improvement inthe trade balance as well as higher investment.The strength of the dollar has put considerable strain on the resolveof the United States to remain committed to free trade. Thisstrain is not unique to the international sector. The recession andhigh interest rates have also put a strain on the resolve to let othertypes of markets, from housing to labor markets, operate freely. Ifthere is special reason for concern about the international side, it isbecause of the danger that mistakes in U.S. policy could set off aspiral of retaliation among all the major trading nations.The competitiveness of U.S. business as a whole—as opposed tothat of particular sectors—and the balance of payments are macroeconomicphenomena. Microeconomic interventions cannot curemacroeconomic problems; they can only make one sector better offby hurting other sectors even more. The most effective strategy theUnited States can pursue for its exporting and import-competing sectorsis to get its overall economic house in order—above all, bybringing budget deficits and real interest rates under control.MACROECONOMIC PROBLEMS IN EUROPEMore than 90 percent of the output of the industrial countries, andmore than 70 percent of the output of the world's market economies,is produced by the United States, Japan, and the European EconomicCommunity. Table 3-6 shows some comparative figures for thethree. The most striking feature of the table is the favorable performanceof Japan by all measures. The United States and the EuropeanEconomic Community look rather similar in their less favorable performances.They experienced nearly the same growth rates before1979, have suffered nearly equal decelerations of growth since then,and had roughly the same unemployment rate in 1981. The U.S. inflationrate was lower than that in Europe, but the United States alsoshowed lower productivity growth.Behind the similarity of U.S. and European experience, however,lies a major difference. The U.S. economy, whatever its other difficulties,has provided employment opportunities for a rapidly growinglabor force. The current high unemployment rate is a cyclical problem,not the result of a persistent failure of employment to expand.In Europe, by contrast, employment was virtually stationary over thelast decade, and unemployment has risen in every year since 1973.This is a worrisome aspect of the European situation.For a given rate of unemployment, the strains on society are probablygreater if employment is stagnant than if it is growing. Growingemployment means that more new jobs are always opening up, offer-70

TABLE 3-6.—Economic performance by major industrial countries, 1973-82[Percent]ItemedesFour largeEuropeancountries'JapanGrowth rate in:Real gross domestic product (GDP), 1973-80..2.32.23.7Real GOP per employed person, 1973-80.22.23.0Real GDP, 1980:l-1981:IV-.2.12.3Level:Consumer price inflation, year ending 1982:11..6.810.22.4Unemployment rate, 19817.67.42.3'France, Germany, Italy, and United Kingdom.Sources: International Monetary Fund and Organization for Economic Cooperation and Development.ing job losers a chance for reemployment and new entrants to thelabor market a chance to get their first job. If employment is stationary,workers who have lost their jobs may stay unemployed for a longtime, and young people may never find jobs. The results of near-zeroemployment growth are painfully visible in Europe, where long-termunemployment (more than 6 months) is several times higher than inthe United States, and where the share of youth unemployment inthe total pool of unemployed has risen steadily since 1973.How did the problem arise? The causes of structural unemploymentare always controversial, but a key element in the Europeanemployment problem was probably rapid increases in real labor costsin the first half of the 1970s in the face of declining productivitygrowth and rising oil prices. These increases in labor costs—whichstemmed at least in part from increases in social insurance payments—squeezedprofitability. Firms closed their marginal plants andinvested in increasingly capital-intensive techniques, which helped tosustain the rate of productivity growth but also led to employmentstagnation.The unemployment problem in Europe is not caused solely by excessivelabor costs. The periods of rapid increase in European unemployment,in 1973-76 and since 1979, came during business cyclecontractions (Table 3-7). The most recent rise in unemployment isprobably mostly due to restrictive monetary and fiscal policies adoptedby the European countries following the oil price shock of 1979.These policies were adopted out of concern that the rise in importprices resulting from that shock—and, later, the further rise inimport prices resulting from the appreciation of the dollar—wouldlead to an uncontrollable inflationary spiral. Thus, recent developmentsin the European economy are to some extent similar in characterto those in the United States, which have also resulted largely71

from disinflationary policies. The European situation is more serious,however, because the current recession comes on top of a steadilygrowing structural unemployment problem.TABLE 3-7.—Employment and unemployment in the European Economic Community, 1973-80[Percent]YearIncrease inemploymentUnemploymentrate19731974197519761977197819791980Source: Organization for Economic Cooperation and Development.1.1 .1-1.1-.1.4.6.8.22.83.0424.9525.35.35.7The United States has a major stake in the success of the Europeancountries in dealing with their macroeconomic problems. The stake isnot simply due to the fact that the major European countries are alsoallies of the United States, nor is it simply due to the fact that roughlyone-quarter of U.S. exports go to Western Europe. More than this,Europe is a key part of the world economy, with an aggregate GNPas large as that of the United States itself. If European countriesremain mired in economic stagnation and turn toward increased protectionismas a consequence, little chance will remain of saving theopen trading system.THE INTERNATIONAL DEBT PROBLEMDifferent problems from those facing the United States and Europeafflict the economies of the developing nations. The problems ofthese economies have accumulated over the last several years and areproducts of both domestic policy mistakes and external developments,such as oil price increases, the recession in industrial countries,and high real interest rates. In the summer and fall of 1982 theproblems came to a head in the form of a sharp reduction in internationallending to the developing countries.DEBT-FINANCED GROWTH IN THE 1970sUntil recently, the growth of such middle income developing countriesas Brazil, South Korea, and Taiwan was widely viewed as one ofthe great success stories of the 1970s. Particularly notable was theirsuccess in expanding exports of manufactured goods. While thegrowth of these exports did give rise to some adjustment problems inindustrial countries, the successes of some middle income countries72

were undoubtedly a highly favorable development for the UnitedStates. Such success provided a dramatic demonstration to othercountries of the potential of market-oriented economic policies.An important aspect of growth in the developing world, however,was heavy borrowing from foreign sources. There is nothing inherentlywrong in external borrowing to finance growth. Some of thedeveloped countries, including the United States, relied heavily onforeign capital during earlier periods of industrialization. But somedeveloping nations borrowed too much, investing in projects ofdoubtful productivity. When overly optimistic expectations aboutexport earnings and interest rates turned out to have been wrong,these countries found themselves in serious financial difficulty.From 1973 to 1981 the medium- and long-term external debt ofnon-oil developing countries rose at an annual rate of more than 20percent. Lenders might have viewed this rate of increase as morealarming than they did, were it not for several factors which appearedto indicate that the eventual repayment of the debt would not imposea severe burden on borrowing countries. These factors included:• A rapid growth in the ability of these countries to service their debt Exportsof the non-oil developing countries grew at an annual rateof 18 percent.• Very low real interest rates. From 1973 to 1979 Eurodollar rates inLondon, which set the basis for most international lending, averaged8.5 percent, while U.S. wholesale prices rose at an annualrate of 9.8 percent. Even allowing for the fact that third-worldborrowers paid small spreads over the Euromarket rate, the realinterest rates they paid were still negative.• Special factors which appeared to ensure rising export earnings in thefuture. The most important of these was oil reserves, which wereessentially treated as an asset against which countries couldsafely borrow.CAUSES OF THE LIQUIDITY PROBLEMExcessive borrowing by some developing countries made an eventualfinancial problem inevitable. The proximate factor whichbrought the era of debt-financed growth to a halt was, however, asharp deterioration in the world economy. The rise in oil prices in1979 was a blow to many debtor countries, and further strains resultedfrom disinflation in the United States and other industrial countries.The factors which led to a loss of lender confidence in the developingcountries included:• The effects of the world recession on export demand. The rapid exportgrowth of the 1970s came to an abrupt end in the early 1980s.Exports of the non-oil developing countries actually fell by 7.573

percent from the first half of 1981 to the first half of 1982. Exportersof primary products were hit particularly hard: real commodityprices fell by 25 percent from the fourth quarter of 1980to the second quarter of 1982.• High real interest rates. In 1981 and the first half of 1982, Euromarketinterest rates averaged 16 percent, while wholesale pricesin the United States rose at an annual rate of only 4.5 percent.• The appreciation of the dollar. Since most international debt is denominatedin dollars, while commodity prices tend to follow aweighted average of industrial country currencies, the effect ofthe rise in the value of the dollar was a sudden increase in thesize of developing country debt relative to prospective exportearnings.The result of these developments was that banks, which had beenwilling to lend large amounts to developing countries throughout the1970s, lost confidence that the loans would be promptly repaid. Thedebtor countries were highly vulnerable to such a loss of confidence.Much of their debt was of short maturity, so that a large fraction oftheir debt required refinancing each year. Argentina, Brazil, andMexico, for example, must make annual payments of principal andinterest which exceed their total exports of goods and services.During the 1970s these large financing needs did not pose a problem,since countries were able to roll over their debt as it came due.In the summer and fall of 1982, however, banks became reluctant tomake new loans and roll over old ones, first to Mexico and then toother countries. The result was a quick exhaustion of the foreign exchangereserves of the major debtors.IMPLICATIONS OF THE DEBT PROBLEMThe debt situation of the developing countries poses two problemsfor the world economy. Although quite unlikely, failure to resolve thedebt situation in an orderly way could lead to major financial marketdisruptions. More likely—indeed, it has already happened to a considerableextent—is a situation of forced austerity in debtor countries,with adverse effects on world trade and output.Risks to Financial MarketsThe threat of a financial disruption arises from the possibility thatdebtor countries will be unable to live within their new financial constraints.The unwillingness of banks to lend as much as in the recentpast means that debtor countries will need to cut their imports orexpand their exports. In the case of the most heavily indebted countries,this will almost certainly mean achieving substantial trade surplusesin spite of depressed demand for their exports. The concern74

of lenders that some debtors will not be able to achieve the requiredadjustment is precisely what makes them reluctant to lend.Fortunately, a serious financial disruption is unlikely. The debtorcountries and the banks which are their major creditors share astrong interest in an orderly resolution of the debt problem. For thedebtor countries, maintaining good financial standing is essential ifthey are to maintain access both to world capital markets and to theirexport markets. At the same time, banks realize that demanding toorapid a repayment from debtor countries could prove counterproductive,and they are probably willing to provide enough financing sothat debtor countries can more easily handle the financial squeeze. Althoughbanks find themselves in somewhat of a "prisoner's dilemma"situation, in which no one bank will want to lend if it believes thatthe loans will only go to repay other banks, this problem should notprove insoluble. The banking community should be able to work withthe International Monetary Fund (IMF) in negotiating agreementswhich balance an adequate degree of new lending to the debtorcountries with realistic economic adjustment plans. To aid in thisprocess, the Administration and representatives of other industrialnations recently agreed in principle to an enlargement of the IMF'sresources.Perhaps the most important safeguard against a financial crisis isthe ability of the governments and central banks of the majorindustrial countries to provide a safety net for the international financialsystem. Central banks act as lenders of last resort for commercialbanks, providing effective protection against banking panics. At thesame time, industrial country governments have demonstrated theirwillingness to help provide temporary financing for developing countriesin order to bridge the interval until agreements can be reachedwith the IMF. (The IMF recently concluded agreements with Mexico,Argentina, and Brazil.)Effects on World TradeAlthough a serious disruption of the international financial systemis unlikely, for all of the reasons cited, serious problems still exist.Even under optimistic assumptions, those developing countries withhigh ratios of debt to exports will be forced to improve their tradebalances substantially in order to pay the interest on their debt.Much of this trade balance improvement will probably come throughreductions in imports, involving painful reductions in output and realwages in the debtor countries. This will also depress demand for theproducts of industrial countries—particularly the United States,which has especially close trading relations with some of the majorLatin American debtors. The debt problem of the developing countriesmay worsen the U.S. trade balance by $10 to $20 billion and75

educe U.S. GNP by one-half percentage point or more from thelevel it would otherwise reach.The Outlook for Debtor NationsThe problems of the developing countries are not insoluble. Ifgrowth in the world economy resumes and real interest rates fall tohistorical levels, the debt burden of even the most heavily indebtedcountries will become much more manageable. Mexico and Brazil,among the most heavily indebted countries, both have debts wellbelow half their GNPs. At a historically typical real interest rate of 2percent, the real burden of debt service would fall to less than 1 percentof GNP—a fully manageable level in a growing economy.The key to recovery from the debt problem, however, lies in increasedexports from the debtor countries. Import restrictions by thedeveloping countries can only accomplish so much in improving theirtrade balances. Imports have already fallen considerably in high debtcountries in the last year, leaving limited room for further cuts. Asgrowth resumes among the debtor countries, they will tend to importmore, and will need to export more to pay for the imports. They willnot be able to do this if the industrial countries, including the UnitedStates, institute new protectionist measures. Yet as developing countriesattempt to increase their exports, strong political pressures willdevelop in the industrial countries to stop them. Leaders in theindustrial countries must realize that shutting out imports from thedeveloping world will not only incur the usual costs of protection—higher prices to consumers and jobs lost in unprotected sectors—butalso will threaten the basic stability of the world financial system.76

CHAPTER 4Increasing Capital FormationATTAINING AN ADEQUATE RATE OF CAPITAL FORMATIONin the United States is a crucial challenge for economic policy duringthe 1980s. Devoting a larger share of national output to investmentwould help restore rapid productivity growth and rising living standards.During the past two decades, fiscal, monetary, and regulatorypolicies contributed to the low rate of net investment in plant andequipment; the share of gross national product (GNP) devoted tocapital formation was below the levels achieved by most other industrializednations.The Administration and the Congress have instituted a set of taxand regulatory policies designed to increase the share of output devotedto capital formation. The noninflationary monetary policies followedby the Federal Reserve, with the Administration's support,should also contribute in the long run to increased capital formationand improved efficiency in the allocation of the capital stock. Thischapter examines the linkages between economic policy and capitalformation, and discusses the rationale for the Administration's initiativesin this area.Many forms of investment contribute to productivity growth. Researchand development expenditures provide the basis for the technologicalchange that is a wellspring of productivity growth. Anothermajor source of productivity growth is investment in education andtraining that promotes the accumulation of valuable human capital.Public sector infrastructure investments may also have an importantrole to play. This chapter, however, focuses on nonresidential plantand equipment investment. Past public policies probably discriminatedmost heavily against this form of investment. Plant and equipmentinvestment is also more amenable to quantitative analysis than otherforms of capital investment because of the difficulties involved inmeasuring intangible capital.By late 1982, investment and capacity utilization rates in theUnited States had fallen to very low levels. Even after the recoveryfrom the recession begins, capacity utilization will increase onlygradually, and it will take time for new policies to increase the shareof national output devoted to saving and investment. Hence, levels of77

investment may prove disappointing over the next several years despitethe beneficial long-run impact of policies recently put in place.This should not cause us to lose sight of the importance of soundlong-run policy and the need to increase net capital formation in theyears and decades ahead.THE HISTORICAL RECORDAlthough gross private domestic investment, which includes residentialand inventory investment, accounted for 16.1 percent of GNPbetween 1971 and 1980, gross investment in structures and equipmentaveraged only 10.8 percent of GNP during this period. Of thisgross structure and equipment investment, more than two-thirds wasdevoted to replacing depreciated capital, leaving only 3.0 percent ofGNP for new structures and equipment.It is useful to place the patterns of investment in the United Statesduring the last decade in historical and geographic perspective. Table4-1 displays the behavior of alternative measures of capital accumulation.The data show that the rate of net nonresidential fixed investmentas a fraction of GNP declined by 27.5 percent between the late1960s and the late 1970s. The share of output devoted to net nonresidentialfixed investment in the late 1970s was slightly lower thanthe average rate during the entire 1950-80 period.Some analysts, examining only the data on gross investment, haveconcluded that investment performance was satisfactory during the1970s. This procedure ignores the fact that depreciation as a share ofGNP was greater during this period than in the 1960s because of ageneral shift in net investment from long-lived assets, such as structures,toward assets with shorter lives, and because of a higher ratioof capital to GNP. The appropriate focus in examining data on investmentis the total stock of capital. Therefore, net investment,which measures the change in the total capital stock, is the most appropriateindicator of the adequacy of capital formation.An alternative way to evaluate changes in the level of capital formationis to examine trends in the capital-labor ratio. Measures ofcapital per hour and capital per worker, displayed in Table 4-1 andChart 4-1, both show a large decline in the growth rate of the capitalstock relative to the growth in the supply of labor. Capital per hourincreased at only a 0.9 percent annual rate between 1976 and 1980,compared to a 3.5 percent rate during the 1951-75 interval. Althoughthis dramatic decline was in part due to the low rate of netinvestment during the late 1970s, it was primarily a consequence ofthe rapid growth of the labor force. To maintain the pre-1975growth in the capital-labor ratio, a sharp increase in the post-197578

ate of net investment was required, instead of the decline which actuallyoccurred.TABLE 4-1.—Alternative measures of capital formation, 1951-82[Percent]PeriodNet private domesticinvestment as percent ofGNPTotalinvestmentNonresidentialfixedinvestmentGrowth rate of net capitalstock 'Per worker 2 Per hour 21951-557.21956-606.11961-65....6.71966-70....7.11971-756.41976-806.01951-806.61981..4.81982 3 2.13.13.54.12.44.92.6.93.04.5(*)'Real net private nonresidential fixed capital stock at year-end.2 All persons in private business sector. Year-end obtained by averaging fourth quarter value with value for first quarter ofsubsequent year.3 Preliminary.'Not available.Sources: Department of Commerce (Bureau of Economic Analysis), Department of Labor (Bureau of Labor Statistics), andCouncil of Economic Advisers.Properly measured, the decline in the growth rate of the capitalstock is understated by the net investment figures in Table 4-1. Theenergy price shocks of 1973 and 1979 hastened the obsolescence of avariety of past investments, which implies that actual depreciationwas greater than the official statistics suggest. One estimate placedthe premature obsolescence of capital during the late 1970s at anaverage of 0.5 percent of GNP per year. Other studies have obtainedmuch larger estimates using data on the market valuation of capital.In addition, it is important to recall that much of the investment ofthe 1970s took place in the energy-producing sector. The share ofGNP devoted to net fixed nonresidential investment outside theenergy sector averaged only 1.8 percent between 1975 and 1980.Unfortunately, the combined effects of the recent economic recessionand large Federal budget deficits will hold down the rate of capitalformation, as currently forecasted, over the next several years.Between 1981 and 1985, net investment in plant and equipment mayprove disappointing even by the standard of the late 1970s. The capital-laborratio will grow only slowly and may even decline. While thelow forecasted rate of net investment over the next several years isdue primarily to cyclical conditions, it does not negate the importanceof developing permanent policies to encourage capital formation.In light of the depth of the recent recession, it is reasonable toexpect that investment performance probably would have proven79

Chart 4-1Measures of Capital FormationPERCENTINVESTMENT AS ,' *•PERCENT OF GNP 1 ' *I I I I I I I I I I I I1950 1955 1960 1965 1970 1975 19801 NET PRIVATE NONRESIDENTIAL FIXED INVESTMENT AS PERCENT OF GNP; FIVE-YEARCENTERED MOVING AVERAGES.2 PERCENT CHANGE IN REAL NET PRIVATE NONRESIDENTIAL FIXED CAPITAL STOCK PERWORKER IN THE BUSINESS SECTOR; FIVE-YEAR CENTERED MOVING AVERAGES.SOURCES: DEPARTMENT OF COMMERCE, DEPARTMENT OF LABOR, AND COUNCIL OF ECONOMICADVISERS.worse if the Congress and the Administration had not enacted taxmeasures to spur capital formation. These laws, and the proposals incorporatedin the President's fiscal 1984 budget, are designed toraise the share of net investment to a high level by historical standardsin the late 1980s or before.AN INTERNATIONAL PERSPECTIVETable 4-2 shows that the United States falls behind other majorindustrial nations in several key measures of net capital formation.The share of U.S. gross domestic product (GDP) devoted to net fixedinvestment during the last decade was only 34 percent of the compa-80

able share in Japan and 56 percent of the comparable share in WestGermany. No other major industrial nation devotes as small a fractionof total output to new investment as does the United States.TABLE 4-2.—Comparison of capital formation in six OECD countries, 1971-80[Percent]CountryGrossinvestmentInvestment as percent of GDPGross fixedinvestmentNet fixedinvestmentGrowth rateof outputper hour inmanufacturingFrance24.222.912.24.8Germany23.722.811.84.9Italy22.420.110.74.9Japan34.032.919.57.4United Kingdom..19.218.78.12.9United States19.118.46.62.5Source: Organization for Economic Cooperation and Development.It is instructive to compare the growth rates of productivity fordifferent countries with their shares of output devoted to new investment.Although productivity growth and investment rates are simultaneouslydetermined by a multitude of factors, it is striking that astrong positive relationship emerges. As shown in Chart 4-2, Japanhas both the highest investment share and the highest growth rate ofproductivity, while the United States has the worst investment performanceand the lowest growth rate of productivity.While the reasons for these large international differences in ratesof capital formation are not precisely understood, some evidencesuggests that the roots may lie in different public policies. AfterWorld War II, rebuilding of the capital stock was a primary goal ofeconomic policy in continental Europe and Japan. Governments inthose countries encouraged saving and investment and disregardedthe early Keynesian fear that oversaving could reduce aggregatedemand and depress real economic activity.In contrast, officials in the United States feared a postwar relapseinto depression and avoided policies which would encourage saving.For example, some economists advocated sustained budget deficits asa means of absorbing excess private savings.It is now clear—on the basis of four decades of economic experiencesince the end of the Great Depression—that fears of secularstagnation caused by a high and rising saving rate are unwarranted.The much greater risk is that productivity growth in the UnitedStates will continue to stagnate at low levels, and that Americanworkers will have to accept a lower growth rate in their standard of81

Chart 4-2PERCENT OF GDPInternational Comparisonof Investment and Productivity Growth,1971-80GROWTH RATE20NET FIXED INVESTMENTAS PERCENT OF GDP(LEFT SCALE)GROWTH RATE OFMANUFACTURINGOUTPUT PER HOUR(RIGHT SCALE)1510•••:••:-:UNITEDSTATESUNITEDKINGDOMITALY GERMANY FRANCEJAPANSOURCE: ORGANIZATION FOR ECONOMIC COOPERATION AND DEVELOPMENT.living than their foreign counterparts. Otherwise, American goodscould cease to be competitive on world markets.THE IMPORTANCE OF CAPITAL FORMATIONThe case for increasing the rate of capital formation ultimatelyrests on three justifications. First, increased capital formation can reversepart of the productivity slowdown that the United States hassuffered during the last decade. Second, government policies havediscriminated in favor of consumption and against saving and investment.Third, as a result of tax policies, the pretax return to capitalinvestment exceeds the after-tax return that any individuals are ableto capture privately, leading to an inappropriately low level of capitalformation.82

During the 1970s, productivity growth in the United States deceleratedrapidly. Between 1948 and 1967 the growth rate of productivity(as measured by output per hour in the private business economy)was 3.1 percent, compared to 2.3 percent between 1967 and 1973and only 0.8 percent between 1973 and 198 LThe consequences of reduced productivity growth for our standardof living over the long run are greater than those of any other currenteconomic problem. In 1981 the American economy producedapproximately $12,780 worth of output per capita. Had productivitygrowth continued at the 1948-67 rate during the 14 years subsequentto 1967, output per capita would have reached $16,128 in1981, 26 percent higher than the actual value. As a standard of comparison,the recent recession reduced per capita output by only 4percent between the third quarter of 1981 and the fourth quarter of1982, less than one-fifth the reduction attributable to the productivityshortfall. As time passes, the consequences of reduced productivitygrowth are compounded. Increasing the productivity growth rate by2 percentage points annually would more than double our materialstandard of living by 2020, compared to the level it would reach otherwise.The productivity slowdown is not reliably attributable to any singlecause or combination of causes. Various analysts have suggested thathigher energy prices, regulatory changes, reduced research and developmentspending, reduced opportunities for technical innovation,the changing composition of the labor force, and changing worker attitudes,as well as reduced capital formation, are responsible for theproductivity slowdown. An accurate accounting of the sources of theslowdown is probably impossible in light of the multitude of competingexplanations and the statistical difficulties associated with distinguishingbetween their relative effects precisely.Many of the possible causes of the productivity slowdown are probablynot reversible through public policy. There is relatively little theFederal Government could have done to offset the negative effect ofsharp increases in oil prices or, for that matter, to influence changingcultural attitudes toward work. Changing the rate of capital formation,however, is a principal way in which Federal economic policycan affect productivity growth.Increasing the rate of capital formation will raise productivitygrowth in several ways. More rapid capital formation results, on average,in workers having more equipment at their disposal. In addition,increases in investment reduce the average age of the capital stock,permitting physical assets to embody more recent technological innovations.Technological development and the level of capital formationare intertwined, because the development of more efficient and83

sophisticated capital goods occurs when the demand for new capitalgoods increases.The legacy of past policies, which have artificially depressed savingand investment, provides a second reason for increasing the rate ofcapital formation. As described below, this discrimination againstcapital formation has taken many forms, including tax policy, monetarypolicy and recurring Federal budget deficits. Although thereexist instances of market failure, a market economy can generally beexpected to allocate resources in an efficient way. When public policiessystematically discriminate against one type of spending, however,there is a strong presumption that too little of it will take place.A related and final justification for increased capital formationcomes from a comparison of the total pretax return to investmentwith the return received by private investors. Estimates suggest thatthe total pretax return to investment in corporate capital, as measuredby its pretax marginal product, is about 11 percent. This meansthat $1.00 invested today yields society $1.11 next year, or alternativelya permanent yield of 11 cents. While the total pretax returnfluctuates from year to year with cyclical conditions, studies havetended to find that it has stayed within the range of 8 to 15 percentthroughout the postwar period.In contrast, private investors have earned much smaller rates ofreturn over the last several decades, with many investors earningnegative real after-tax returns over much of that period. Even leavingaside the effects of personal taxes, the real return on short-term debtinstruments averaged less than 1 percent during the 1950-81 interval.While equity investments have yielded a higher average return,they carry with them a large amount of risk. The average real returnon common stock before personal taxes was 6 percent over the1950-81 period, but investors lost money in real terms in 12 of thoseyears and over periods as long as 17 years.This large spread between the total and private returns to investmentis a consequence of the tax system, which extracts a portion ofthe total return to investment before it reaches private investors.Capital market returns are reduced because the corporate income taxreduces the return that corporations can pay out to investors. As aconsequence of this tax-induced divergence between the private andtotal return to investment, too little investment takes place. This suggeststhe desirability of measures both to reduce tax distortions andto increase incentives to save and invest.84

MEASURING NATIONAL SAVINGDomestic saving is an important determinant of a nation's level ofinvestment. Economic output is either invested in capital assets,which help produce future output, or consumed privately or publicly.Only by forgoing consumption does it become possible for a nationto invest in a sustained way. While funds from abroad are available tofinance some investment, experience suggests that most matureeconomies have financed investment through domestic saving. Increasingthe rate of capital formation in the United States without increasingobligations to foreigners therefore probably requires increasednational saving.Table 4-3 provides information on net national saving as reportedin the national income and product accounts. On average, from 1951to 1981, the United States saved 6.7 percent of total output beyondthat necessary to replace depreciated capital. Private saving, comprisingpersonal saving and corporate retained earnings, totaled 7.3 percentof GNP. Federal Government dissaving through budget deficitsaveraged 0.9 percent of GNP, while the sum of State and local governmentsurpluses averaged 0.3 percent of GNP.TABLE 4-3.—Net saving as percent of GNP, 1951-81[Percent]Not adjusted for inflationAdjusted for inflation 3PeriodTotalFederalState andlocalPrivate >FederalState andlocalPrivate1951-551956-606.76,9-0.3.0-0.1-.27.27.10.91.1-0.1-.15.95.91961-651966-707.47.5-.4.6.0.17.88.0.2.6.2.47.06.51971-751976-806.45.8-1.8-1.9.61.27.66.5-.31.11.65.64.419815.0-2.01.15,9.01.53.61951-816.7-.9.37.3.4.65.8'Private saving less capital consumption allowances with capital consumption adjustment.2 Adjusted by GNP implicit price deflator.Sources: Department of Commerce (Bureau of Economic Analysis), Board of Governors of the Federal Reserve System, and Councilof Economic Advisers.While the total saving rate can be measured unambiguously, thereare serious conceptual problems in measuring its various componentsduring an inflationary period. Inflation erodes the real value of thenational debt. Interest rates incorporate inflation premiums andthese premiums compensate lenders for the fact that they are repaidin cheaper dollars. Thus, they do not really represent income to borrowersor costs to lenders. This principle is recognized by the FinancialAccounting Standards Board and is often applied in the privatesector. Table 4-3 therefore also presents a breakdown between pri-85

vate, Federal, and State and local government saving that is adjustedfor the effects of inflation.BUDGET DEFICITS AND SAVINGUnacceptably large Federal budget deficits are likely in the nextseveral years unless legislative changes are made. These deficitscould significantly reduce investment during the economic recovery.Increased public consumption with no reduction in private consumptionleaves fewer resources available for investment. When the FederalGovernment must compete with private borrowers for savings, realinterest rates are bid up, discouraging investment.Federal dissaving would not represent a serious problem if it automaticallycalled forth more private saving. While increased deficits donot induce an equal increase in private saving, they also do notcrowd out investment expenditure dollar for dollar. Increases in thereal rate of return caused by Federal deficits raise the yield savers receiveand may call forth some additional private saving. Higher realinterest rates also discourage spending on consumer durables, housing,and construction by State and local governments. Finally, bycontributing to increases in real interest rates, budget deficits encouragecapital inflows from abroad. These factors imply that deficitsdo not completely crowd out private investment; rather, a reasonableestimate is that funds available for private investment are reduced byperhaps one-half to three-fourths of the budget deficit.The possibility that Federal budget deficits crowd out private investmenttakes on greater importance in light of the large deficitsthat will occur over the next 5 years unless actions are taken. Thefiscal 1982 budget deficit of $110.7 billion absorbed 3.65 percent ofGNP. Projections now suggest the 1983 deficit will equal $207.7 billionor 6.5 percent of GNP. Unless significant actions are taken, deficitsof this magnitude or larger may continue even as the economyrecovers from the recent recession. If such deficits materialize, theconsequences for capital formation could prove very serious unless adramatic increase in private saving also takes place. A budget deficitof 5 percent of GNP would likely reduce net investment by anamount equal to about one-half its historical level, relative to a balancedbudget. With large deficits, significant improvements in laborproductivity and the quality and quantity of housing would be lesslikely in the years ahead.86

TAX RULES AND PERSONAL SAVINGMany economists believe that tax rules in the United States encourageconsumer borrowing and discourage private saving. Duringthe 1970s the combination of tax rules and inflation produced a dramaticdecline in the private return to saving and a large reduction inthe cost of borrowing.During the 1960s, nominal interest rates on 3-month Treasury billsaveraged 4.0 percent, and the consumer price inflation rate averaged2.3 percent. On a pretax basis, this left savers with an average realreturn of 1.7 percent. For a saver in the 30 percent marginal taxbracket, the real after-tax return was only 0.5 percent.The return to saving fell significantly below this level during the1970s. While the average inflation rate rose to 7.1 percent, the averageinterest rate increased to only 6.3 percent. This caused a declinein the real interest rate measured on a pretax basis and a larger declinein the average after-tax rate (for a person in the 30 percentbracket) from 0.5 percent to —2.7 percent.The return to saving has fallen because of corporate taxes as wellas individual taxes. Corporate income taxes decrease the returns corporationscan afford to pay to the holders of their securities. As describedbelow, these tax burdens also increased substantially duringthe 1970s, In addition, corporate taxes reduce the amount of fundsthat corporations can retain for reinvestment.At the same time that tax rules have reduced the return on savings,they have encouraged dissaving through borrowing. Because consumerinterest payments are tax deductible, taxpayers who itemize theirdeductions are encouraged to use credit to finance their purchases ofconsumer durables and other goods. As inflation increased duringthe 1970s, the real after-tax cost of borrowing declined and eventuallybecame negative. Indeed, in the first quarter of 1980 the real aftertaxcost of borrowing for a taxpayer in the 30 percent bracket was—1.2 percent. The encouragement of borrowing to finance purchasesof durable goods probably reduced the aggregate saving rate substantiallyduring the 1970s.The tax reforms supported by the President in 1981and enactedby the Congress were designed to increase saving. Reductions inmarginal tax rates raise the after-tax return to saving and the aftertaxcost of borrowing. The Economic Recovery Tax Act of 1981 willreduce the marginal tax rate facing a median income family in 1984from 28 percent, which would have occurred under pre-1981 law, to22 percent. The act immediately reduced the marginal tax rate onhigh income taxpayers, who account for a large fraction of personalsaving, from 70 to 50 percent.87

The Economic Recovery Tax Act of 1981 also contained severalother provisions directed specifically at encouraging private saving.The Individual Retirement Account (IRA) provisions in the tax codewere extended to cover the entire working population. Working individualsare now permitted to make a yearly tax deductible contributionof $2,000 to finance consumption during retirement. Taxes areonly paid when the funds plus accumulated interest are withdrawnfrom the IRA. Private estimates suggest a substantial response to thislegislation, with about $10 billion placed in IRAs during 1982. A crucialissue in evaluating the efficiency of IRAs is their effectiveness inraising saving incentives on the margin. Some critics have arguedthat IRAs do not provide an incremental incentive for saving becausecontributors can simply transfer funds from other sources without increasingtotal savings. While this occurs to some extent, it is certainlynot universal and will decrease in the future as contributors exhausttheir funds available from other sources. The fragmentary evidenceavailable from private sources suggests that more than half of all IRAcontributors contribute less than the maximum amount allowable, indicatingthat they do face increased saving incentives on the margin.The 1981 tax legislation also provided for an interest exclusionstarting in 1985, allowing individuals to exclude 15 percent of theirnet interest income up to a limit of $3,000. This will also raise thereturn to savings and spur capital formation. Extending the exclusionto dividends as well as interest payments would reduce the tax biasfavoring debt over equity as a source of corporate finance.The 1981 tax act also raised the return to saving by reducing thetop marginal rate on capital gains from 28 percent to 20 percent.This reform partially compensates for the serious distorting effect ofinflation on the measurement of capital gains. Because of inflation,an owner of an asset that experiences no real appreciation will neverthelessbecome liable, at the time of sale, for taxes on the nominalappreciation of the asset. Complete elimination of this distortionwould require indexation for inflation in the measurement of capitalgains.In recent years support has grown among economists and othertax experts for moving the tax system toward taxation of consumptionand away from taxation of income. This change might entail expandingthe existing exclusions of interest and dividend income andthose mechanisms, such as IRAs, which permit tax-deferred accumulationof savings. It might also involve limiting the deduction of interestexpenses for consumer borrowing. Movement toward taxationof consumption is supported by some advocates on the grounds thattaxing individuals on what they take from the economy is "more fair"than taxing what they contribute to the economy. A tax system based88

on consumption taxation might also prove easier to administer thanthe current system because it would eliminate many of the problemsinvolved in measuring certain types of capital income.FINANCIAL REGULATION AND PRIVATE SAVINGAn additional set of public policies that has probably discouragedprivate saving over the last several decades is the regulation of financialinstitutions. As Chart 4-3 shows, small savers holding savings accountssubject to Regulation Q,have received below market rates ofinterest, and holders of checking accounts have received even lowerrates of interest. These low returns are largely consequences of regulationslimiting the interest rates financial institutions may pay oncustomer deposits. As late as 1980, the spread between Treasury billrates and the yield on savings deposits subject to Regulation Q wasas great as 8 percent.The adverse effects of financial regulations on personal savinghave probably lessened considerably in recent years, due to both privateand public actions. In the private sector, the development andexplosive growth of money market funds has made it possible formost high and middle income savers to receive market rates of interest.Legislation adopted in 1982 with Administration support has allowedcommercial banks and thrift institutions to offer financial instrumentswith competitive interest rates to a wide range of depositors.The Administration has strongly supported removal of the manyunnecessary regulations that have impeded competition in the financialservices industry. As discussed in more detail in Chapter 5, theDepository Institutions Deregulation and Monetary Control Act of1980 and the Depository Institutions Act of 1982 have played importantroles in beginning this process of deregulation. Banks and thriftinstitutions can now offer insured accounts that are competitive withmoney market funds in terms of both the interest rates they pay andthe services they provide, thereby increasing incentives for saving.A related development has occurred in the Federal Government'spolicies regarding U.S. Savings Bonds. Savings bonds have historicallypaid low rates of return. In 1980, 10-year Treasury bonds paid11.5 percent, while Series EE Savings Bonds paid an annual yield ofonly 7 percent from issue to maturity 11 years later. Because of legislationrecently proposed by the President and passed by the Congress,the return on savings bonds is now based on market rates. BetweenNovember 1, 1982, and April 30, 1983, for example, U.S. SavingsBonds will earn 11.09 percent if they are held at least 5 years.Apart from making saving more attractive to savings bond purchas-89

Chart 4-3Three-Month Treasury Bill Rate andRegulation Q Maximum Rate on Savings AccountsPERCENT PER YEAR16141210MAXIMUM RATE ONSAVINGS ACCOUNTS\1950 1955 1960 1965 19701975 1980SOURCE: BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM.ers> the new rates on Series EE bonds are desirable on equitygrounds because small savers can now obtain yields close to those receivedby their higher income counterparts.THE ROLE OF INTERNATIONAL CAPITAL FLOWSIt is likely that budget deficits, tax policies, and ceilings on bankinterest rates have contributed to the lower net saving rates whichthe United States has experienced in recent years. In theory, however,this low level of saving need not have strictly limited the level offunds available for investment. Funds from abroad can also financeinvestment in the United States. The link between domestic investmentand domestic saving is not absolute.90

Nevertheless, a number of economic studies cast doubt on theproposition that the United States could offset low domestic savingrates through sustained borrowing from abroad. These studies havefound a consistently high correlation between rates of domestic investmentand domestic saving in the major industrialized countries.While the reasons for these results are not well understood, they mayreflect the high information costs and serious monitoring difficultiesassociated with holding foreign investments. Whatever the exactreason for the historically high correlation between domestic savingand investment, it suggests that increasing the rate of investment inthe United States significantly will probably require policy measureswhich increase domestic saving.Insofar as savings from abroad are available for investment in theUnited States, it is not clear that they provide a desirable substitutefor domestic saving. Throughout most of the postwar period, theUnited States was a net exporter of capital. However, the UnitedStates has recently experienced a large surplus in its capital accountand incurred a large offsetting deficit in its current account. This hasentailed large merchandise trade deficits, with deleterious impacts onU.S. export industries and those domestic industries which competewith imports.THE ALLOCATION OF CAPITALWith only a relatively small fraction of GNP available to finance investment,and with large budget deficits looming over the next fewyears, the allocation of capital in the United States among alternativeuses takes on added importance. In addition to holding down therate of national saving, previous fiscal and monetary policies havetended to alter the allocation of capital investment, favoring housing,consumer durables, and State and local construction at the expenseof business investment. Inflation, caused by overly expansionarymonetary policies, and taxes interact to affect the incentives ondifferent kinds of investments. While a sound economic recovery willboost saving sufficiently to provide for increases in all forms of investment,eliminating tax-induced distortions in the allocation of capitalwould also aid in regaining a rapidly rising standard of living.It is useful to examine how the tax structure has very different effectson alternative forms of investment. The income from investmentsby corporations is taxed at both the individual and the corporatelevel. Corporate profits are taxed as they are earned. Whenthese profits are received by shareholders in the form of either dividendsor capital gains, they are taxed again. By contrast, the implicitreturns from most other forms of investment remain untaxed. The91

services to investors in owner-occupied housing and consumer durablesare largely untaxed.The bias in our tax system against corporate capital investment wasexacerbated during the 1970s by the effects of inflation. Corporationsare permitted to take depreciation allowances based on historicrather than replacement costs for tax purposes. Thus, as the rate ofinflation increases, the real value of depreciation allowances decreases,and the tax burden as a share of real profits rises. Anothersource of inflation-induced corporate tax increases is that inflationcauses "phantom" gains in the value of inventories, raising taxes forfirms using the first-in, first-out method of inventory valuation. Onestudy estimated that the tax law's use of historic costs rather than replacementcosts for depreciation purposes raised corporate tax paymentsby $19.1 billion in 1977, and raised tax burdens for corporationsusing first-in, first-out inventory accounting by $7.0 billion. Althoughthese tax increases were partially offset because corporationsdeduct nominal rather than real interest payments in calculating theirtaxable income, the gains at the corporate level from the deductibilityof nominal interest are offset to some extent by losses from taxationof the inflation component of interest rates at the individual level.The effects of the interaction of taxes and inflation reached dramaticproportions during the 1970s. Increased taxation led to largemarket revaluations of corporate and noncorporate capital assets.The "q ratio," which measures the market value of capital in thenonfinancial corporate sector relative to its reproduction cost, fellfrom 1.09 in 1970 to .67 in 1980. The price of single-family nonfarmdwellings relative to the price of consumption goods rose by 29 percentduring the same period. During the last 2 years of falling inflation,however, the q ratio rose to about .80 in the fourth quarter of1982, and the relative price of single-family nonfarm dwellings fell by5.3 percent.The supply of different types of capital goods ultimately dependson their relative prices. The observation that reductions in inflationare associated with changes in the relative prices of different capitalgoods suggests that the reductions in inflation are likely to cause areallocation of capital toward plant and equipment investment andaway from investments in consumer durables and housing. Theseshifts simply reflect the reduced magnitude of the biases caused byour current tax system in periods of inflation.TAX POLICY AND INVESTMENTIn 1981 the Congress instituted the accelerated cost recoverysystem as part of the Economic Recovery Tax Act. This tax legisla-92

tion permitted businesses to depreciate most purchases of equipmentaccording to an accelerated 5-year schedule. It also permitted businessesto depreciate structures over 15 years using a 175 percent decliningbalance schedule. The Economic Recovery Tax Act preservedthe investment tax credit on equipment and called for further accelerationsin depreciation schedules in 1985 and 1986.The 1982 Tax Equity and Fiscal Responsibility Act altered the provisionsof the Economic Recovery Tax Act by instituting a half-basisadjustment for investment tax credits in calculating depreciation andby eliminating the. planned further accelerations in depreciationschedules. Table 4-4 shows the present value of the depreciation deductionsand investment tax credits received by a corporation underthe old accelerated depreciation system, Economic Recovery Tax Act(ERTA) rules and Tax Equity and Fiscal Responsibility Act (TEFRA)rules. The present value is calculated for a variety of hypotheticalcombinations of discount and inflation rates.TABLE 4-4.—Investment incentives 1 under different tax laws[5-year property]Real interest rateTax law4Inflation rate (percent)68101 percentPre-ERTA 2ERTATEFRA.495.516.495.473.500.480.454.486.466.436.472.4544 percentPre-ERTA 2 .ERTATEFRA.462.492.472.444.478.459.427.465.446.412.452.4357 percent.....Pre-ERTA 2 .ERTATEFRA.435.471.452.419.458.440.404.446.428.390.434.41810 percentPre-ERTA 2ERTATEFRA.412.452.435.397.440.423,384,429.412.372.418.402'Present value of depreciation deductions and investment tax credits per dollar of Investment.2 Assumes depreciation over 9.5 years using double-declining balance switching to sum of years digits.Source: Council of Economic Advisers.Three qualitative conclusions emerge from these calculations. First,current tax laws provide significantly more stimulus to most categoriesof investment than did the pre-1981 law. Second, the reductionin inflation that has occurred during the past 2 years has also increasedsubstantially the value of the depreciation allowances. Third,even with a relatively short 5-year cost recovery period, the value ofthe investment incentives remains quite sensitive to the anticipatedrate of inflation.In considering the economic effects of tax policies on investment,it is crucial to distinguish between measures which apply only to newinvestment, such as accelerated depreciation and the investment taxcredit, and measures which reduce the tax burden on all kinds of93

capital income, such as corporate rate reductions. These two types ofinvestment incentives produce very different economic effects. Measureswhich apply only to new investments affect only marginal investmentdecisions; no tax benefit is conferred on the owners of existingcapital. Therefore, in the short term more investment is stimulatedper dollar of immediate revenue loss than would prove the case if thetax benefit were conferred on all capital. The tax legislation enactedin 1981 relied on tax incentives for new investments.Incentives for new investment are viewed by some observers asbenefiting primarily large wealthholders, but the reality may bedifferent. Since measures like the accelerated cost recovery systemreduce the effective cost of purchasing new capital goods, they arelikely to reduce the value of the old capital goods with which theycompete. For example, a subsidy for the purchase of new cars willreduce the value of used cars. Likewise, reduced taxation of new investmentmay temporarily reduce the level of stock market prices,which in part reflects the market's valuation of existing capital. Thus,investment incentives like those recently enacted, while raising therate of return on new investments, may actually hurt holders of existingwealth. Workers should benefit as greater capital accumulationraises their productivity and wages. The effect on the distribution ofincome is ambiguous* and might even prove progressive.Beginning with the enactment of the accelerated depreciation provisionsin 1954, policy has tended to rely on investment incentivesthat stimulate new investment and do not benefit existing investments.This continued reliance on measures that benefit new capitalat the expense of existing capital carries a subtle but real risk. As investorscome to anticipate this pattern of public policy, they may takeinto account expected future changes in tax laws as they make investmentdecisions. This might have an unintended effect. Investors whoexpect capital losses are less likely to invest. Stated differently, if theeffective purchase price of new capital goods is expected to declinebecause of tax reforms, there will be a tendency to defer investments.This suggests that in designing future reforms it may be desirable toconsider reducing taxes on existing as well as new capital.While current tax law provides significantly more stimulus to investmentthan did earlier law, there is room for further reform. Thevalue of depreciation allowances is still dependent on the rate of inflation,increasing the uncertainty of investment decisions. The accelerationof depreciation allowances has substantially reduced theburden of the corporate income tax, but investment in plant andequipment is still discouraged by taxes on dividends and capitalgains.94

A final problem under current tax law is the treatment of corporatelosses. Because of low profits due to cyclical conditions, or large depreciationwrite-offs, many corporations do not have taxable incomein some years, reducing the efficacy of investment incentives duringthose periods.CONCLUSIONSThe tax programs put in place in the last 2 years should play animportant role in increasing capital formation in the United States.Yet, much more can be done to ensure a rapidly growing standard ofliving in coming years. It is crucial that we take action to reduce largeFederal deficits and to further stimulate private saving and investment.In considering the issue of capital formation, policymakers shouldtake a long view. The reasons for increasing capital formation primarilyinvolve long-run growth rather than current economic conditions.We should not allow the poor performance of investmentduring a period of recession and high deficits to blind us to the importanceof policies that can help us achieve sustained and rapid economicgrowth in the years to come.95

CHAPTER 5The Burden of Economic RegulationFOR MANY DECADES, the Federal Government has regulated theprices and the conditions for entry in certain sectors of the U.S.economy. This type of regulation, often called "economic regulation,*'was broadly applied to the transportation, communications,and financial sectors of the economy. Whatever historical purposeswere served by economic regulation, there is an increasing consensusthat much of this Federal regulation no longer serves the interests ofthe contemporary economy. Indeed, over the last several years a substantialpart of this economic regulation has been relaxed or eliminated.A second form of regulation, "social regulation," is addressed tosituations where unregulated activity may pose significant threats topublic health, safety, or the environment. Although there is an increasingconsensus that economic regulation should be substantiallyreduced, no such consensus exists concerning social regulation. Also,unlike economic regulation, the magnitude of social regulation hasgrown rapidly since the mid-1960s with the passage of extensive environmentaland safety legislation.Economic regulation has diminished in recent years due to a varietyof deregulation measures. Substantial evidence is now availableconcerning the performance of industries that have experienced fullor partial deregulation. This chapter summarizes the history of Federaleconomic regulation, its rationale, its impacts, and the effects ofrecent laws designed to ease economic regulation. The chapter alsoidentifies some opportunities for further deregulation. Special attentionis given to the economic regulation of energy, transportation,communications, and financial markets.A BRIEF HISTORY OF ECONOMIC REGULATIONThe first broad body of Federal economic regulation was establishedin 1887, when the Congress created the Interstate CommerceCommission (ICC) to resolve the increasing controversies betweenthe railroads and shippers. Most of the regulation of other sectors,except for energy, was established by the end of the 1930s and re-96

fleeted efforts to deal with problems similar to those that led to thecreation of the ICC. The agencies created in the 1930s tended to operatein much the same way as the ICC, and the outcome was muchthe same.Economic regulation often evolved from a dispute among several groups. Forexample, the Federal Communications Commission (FCC) was createdto resolve disputes among users of the broadcast spectrum. TheCivil Aeronautics Board (CAB) was created to resolve a disputeamong several Federal agencies concerning the administration of airmailcontracts.Congress delegated direct resolution of these disputes to an independent agencywith very general authority. The typical "public convenience and necessity"standard cited in the enabling legislation provides no direct guidanceabout how the regulatory agencies should resolve disputes. Theindependent commissions are essentially quasi-judicial institutionsthat have developed their own bodies of administrative law.The initial regulations of the independent agencies often served the interests ofthe regulated industry. For example, some scholars contend that theICC, by initially reinforcing the railroad cartels, caused higher averageprices and reduced the variance of prices. For a long time, boththe CAB and the FCC restricted entry to the number of firms operatingat the time these commissions were created.The initial regulation led to more regulation that served to protect the interestsof the initially regulated firms. For example, ICC regulation was extendedto trucks, buses, freight-forwarders, and barges, thus restrainingthe developing competition to the railroads. FCC regulation wasextended to cable television, protecting broadcasters using the frequencyspectrum.Over the long run, many economic regulations have not served the interests ofeither producers or consumers. The development of excess capacity, relativelyhigh wages, restraints on technological improvements and operatingpractices, and competition outside the regulated environmentled to the lower-than-average rates of return in many of the regulatedindustries. Consumers have often been adversely affected byhigher prices and restrictions on service.One other pattern of economic regulation was introduced in the1930s. A belief that the depression was caused by excessive competitionprovided a rationale for many laws and regulations that directlyrestricted entry, output, and competition. The broadest such law, theNational Industrial Recovery Act, was declared unconstitutional;other similar legislation, such as the Agricultural Adjustment Act of1938, is still in force. One might argue that the several regulatorycommissions and laws approved in the 1930s achieved their intended97

effect of raising prices. A later generation questioned whether thiseffect was desirable.THE TRADITIONAL RATIONALE FOR ECONOMIC REGULATIONThe two traditional justifications for economic regulation havebeen to preserve the potential economic efficiencies associated withnatural monopoly in some industries and to eliminate the inefficienciesthought to be associated with excessive competition in others.Natural MonopolyA natural monopoly exists when the entire relevant demand for agood or service can be satisfied at the least total cost by a single firm.At the local level it is probably wasteful to have duplicate distributionsystems to provide telephone, electric, gas, and water services.Among industries regulated at the Federal level, major gas pipelinesand high-voltage electric lines are often considered natural monopolies.Long-distance telephone transmission may also be a natural monopolyin areas of low density. Railroads are a potential natural monopolyonly for that declining share of rail traffic for which the shipperdoes not have an effective choice of carrier or mode of transport.Such industries present a dilemma. Competition may result in unnecessarilyhigh production costs through duplication of facilities, butan unregulated monopoly may not act in the public interest. Withoutregulation, a monopoly would probably set prices too high and producetoo little, with consumers willing to pay more for additionaloutput than the cost of supplying that output. A typical solution tothis dilemma is maximum price regulation. The primary objective ofprice regulation is to set the monopoly's price as close as possible toincremental cost while still assuring the monopoly a market rate ofreturn on its investment.The growth of demand or the introduction of substitutes for aproduct can often transform a natural monopoly into what—in theabsence of regulation—could become an effectively competitive industry.Oil pipelines, for example, are often assumed to be naturalmonopolies. However, these pipelines now face competition fromother pipelines and other modes of transportation. Regrettably, priceregulation often continues long after it is efficient, restricting theemergence of a competitive market. The history of the railroads providesa compelling illustration. In many parts of the country rail lineswere few and far between in the 19th century. But as the market fortransportation services grew, and as technology developed, automobiles,buses, and airplanes provided increasing competition forpassenger traffic, and trucks, barges, and pipelines provided increasingcompetition for freight. The natural monopoly justification for98

egulation was probably not applicable in most rail markets by themiddle of the 20th century.Even in markets where elements of natural monopoly still exist,government intervention will not necessarily produce a more efficientuse of resources. Increasingly, analysts are coming to recognize that,just as there are market imperfections, there are also government imperfectionsthat must be considered in making public policy choices.The relevant tradeoffs are not between imperfect markets and flawlessgovernment regulation, but rather between markets with imperfectionsand regulation which is imprecise and sometimes counterproductive.Excessive CompetitionThe second traditional justification for economic regulation is thatunfettered markets result in excessive competition. This justification wasused for regulating railroads in the late 19th century and other industriesin the 1930s. A common element in early discussions of excessivecompetition was that without regulation, unrestrained rivalryamong firms would result in losses for some or all of them and thatadequate production of an otherwise viable product would prove unsustainable.This argument, which was often rather vague, failed tonote that business losses are not a sufficient basis for government intervention.Losses and business failures are a normal part of the operationof competitive markets; they act to eliminate inefficient firmsand to shift production to meet changes in consumer demands.While the concept of excessive competition was not generally welldefined, it has now come to refer to at least four possible sources ofmarket imperfection: natural monopoly, cyclical demand with imperfectcapital markets, predatory pricing, and suboptimal product quality.As explained earlier, where natural monopoly conditions exist,competition among several firms can lead to higher costs because ofwasteful duplication.A second interpretation of excessive competition is based on theargument that certain industries, particularly those with cyclicaldemand and heavy fixed investment, are prone to excessive pricefluctuations. According to this argument, firms are forced to closedown during recessions and then unnecessarily incur large start-upcosts during recovery because of alleged imperfections in capitalmarkets. These wasteful shutdown and start-up costs are avoidable, itis argued, if government regulation sets minimum prices or allowsfirms to do so.A third definition of excessive competition focuses on the conceptof predatory pricing. Unregulated competition in some markets is allegedto result in monopolization by a firm that engages in predatory99

pricing—setting prices below cost in order to drive out competitors.To succeed, a predator must outlast its rivals and barriers must existto prevent the entry of new competitors once the predator raisesprices. Regulation to prevent firms from charging excessively lowprices is intended to prevent such predatory practices and hence thehigher monopolistic prices that would prevail once the predator haseliminated its competitors. No consensus exists among economiststhat such predatory tactics are effective. Indeed, many economists believethat apparently "predatory" behavior, if ever successful, is amanifestation of cost advantages or an enhanced ability to bear risk.A fourth interpretation concerns the alleged tendency of certaincompetitive markets to produce goods or services of inadequate quality,safety, or reliability if consumers are imperfectly informed aboutthose characteristics. For example, it has been argued that undercompetitive pressure banks might choose excessively risky investmentsin order to offer their customers high rates of interest on deposits.Similarly, some have claimed that airlines may skimp on safetyin a highly competitive market. Even if such claims were true, it doesnot follow that restricting competition will necessarily improve qualityor safety. Moreover, there are more direct ways of addressingthese potential market defects, such as Federal Aviation Administrationairplane safety inspections and Federal Deposit Insurance Corporationguarantees.PROBLEMS OF ECONOMIC REGULATIONMost economists agree that the regulation of price and entry inmarkets that would otherwise be competitive is inefficient. Regulationof transportation, for example, has generally resulted in higherprices, higher production costs, and slower technological growth.Regulation of oil and gas prices has occasionally kept prices too low,causing shortages and inefficient choices among competing fuels.Deregulation usually leads to a reduction in cost to the marginaluser, whether the discarded regulations established maximum orminimum prices. A price kept below the market price by regulationhas the effect of creating a system of nonprice rationing in which excludedconsumers are forced to pay higher prices for substitutes. Theelimination of maximum price ceilings may lead to higher averageprices but lower prices to the marginal consumer. Exceptions to thisconclusion are where natural monopoly conditions exist or whereregulations lead to some cross-subsidy among consumers.In some cases, price regulation leads to an excessively high level ofsome service characteristic, because firms are prevented from competingon price. Because of price regulation of airlines by the Civil100

Aeronautics Board, for example, the airlines competed primarilythrough frequency of flights, which led to low load factors and considerableexcess capacity.Direct economic inefficiencies are not the only costs of rate andentry regulation in inherently competitive industries. Some additionalresources are used to lobby politicians and regulators for favorableregulatory actions. The greater the benefits to groups created by regulation,the more such groups have an incentive to spend to blockderegulation. The magnitude of the benefits defended are often substantial.Trucking firms have sold operating rights, initially grantedthem by the ICC, for over $20 million, and the broadcast rights ofindividual television stations have sold for substantially more.The argument that full deregulation is the appropriate policy forindustries with competitive market structures applies strictly only inthe long run. To minimize the risk of adverse short-run consequencesfrom deregulation, most deregulatory initiatives have calledfor either partial deregulation or a gradual transition to full deregulation.The Civil Aeronautics Board was not immediately abolished bythe Congress, and it retained some temporary domestic authoritythrough 1982. The Staggers Rail Act provided railroads with greaterprice flexibility but did not provide for eventual elimination of allprice and entry controls. The Natural Gas Policy Act provides foronly partial deregulation of natural gas prices.It is not clear how much information about the long-run benefitsof deregulation can be obtained by observing the process of gradualor partial deregulation. For example, minimum price regulation maycause excess capacity in an industry. When deregulation occurs, somefirms in the industry may go bankrupt. This may lead some to considerderegulation a failure and to propose re-regulation. Once theexcess capacity is eliminated, however, the industry may operateprofitably without any regulation.Economists can offer one important piece of advice on partial deregulation:relaxing price restrictions without also relaxing entry restrictionsmay cause problems, such as developed in the air freightmarket. Eliminating minimum price constraints while barring entrymay result in predation. Eliminating maxium price restrictions withoutallowing free entry may result in monopoly pricing.Competitive economic forces, while powerful, are not the onlymeans available to consumers of products from deregulated industriesto defend themselves. Antitrust policies may also be used toprotect consumers against the abuses regulation is sometimesclaimed to prevent. The antitrust laws prohibit anticompetitive behavior.Since regulated industries have often enjoyed broad exemptionsfrom the antitrust laws, a review of the antitrust policies per-101

taining to these industries should accompany the deregulation process.At the same time, however, it is important to avoid misusing theantitrust laws to maintain inappropriate types of regulation.ENERGY POLICYThe pricing and allocation of energy resources was a frequentfocus of public policies over the last decade. Many of these policiesreduced the long-run supply of these important resources. In the lastfew years, several measures have been taken to remove the inefficienciesand uncertainty caused by these policies.STEPS TOWARD A MARKET-ORIENTED OIL POLICYIn January 1981, President Reagan ended the petroleum price andallocation controls that were previously scheduled to expire in September1981. Oil prices were first directly controlled as part of thegeneral system of wage and price guidelines imposed in 1971. Thedata on subsequent production, drilling, consumption, imports, andthe energy/gross national product (GNP) ratio suggest that oil pricederegulation has had many beneficial effects.Despite the disincentives provided by the "windfall profits"(excise) tax on crude oil, the data suggest that decontrol has reversedthe steady decline in production (exclusive of Alaska) observedduring the period of price controls. As of October 1982, there wereseven consecutive monthly production increases over year-earlierlevels, a series of increases not observed in the United States for 10years. Reported oil well completions in 1982 were 49 percent higherthan in 1980, despite the recent decline in real oil prices.Since full decontrol, U.S. consumption has decreased by almost 11percent. While part of this decline is due to the recession, a majorcause is the continuing adjustment to the price increases of the1970s. Since decontrol, the energy/GNP ratio has declined by over 5percent and imports (net of additions to the Strategic Petroleum Reserve)have declined by about 34 percent. The elimination of the regulatoryframework for petroleum prices removed the artificial incentivesto import crude oil and residual fuel oil. The weakening of oilprices has contributed to a stronger dollar and, thus, to lower priceson all imported products.NATURAL GAS PRICING AND ALLOCATIONFollowing the 1954 Supreme Court decision in Phillips Petroleum Co.v. Wisconsin, the wellhead prices of natural gas sold in interstate commercewere regulated by the Federal Power Commission (FPC). Sinceintrastate gas prices were not subject to regulation, a two-market102

system resulted. Price controls, when effective, led to shortages inthe interstate market both because the interstate pipelines could notcompete effectively against intrastate pipelines for gas supplies, andbecause artificially low prices encouraged consumers to demandmore natural gas than they would have otherwise.Rising oil prices in the 1970s triggered occasional gas shortages ininterstate markets. Industrial use of gas was curtailed during periodsof shortages, and many potential users of gas, both at the industrialand residential level, were proscribed from using gas. The abnormallycold winter of 1977 produced a severe interstate gas shortage, resultingin numerous factory shutdowns, thousands of layoffs, andother serious problems. It was evident by the mid-1970s that the existingsystem of wellhead price controls produced serious inefficienciescausing the underproduction of gas for the interstate market andthe misallocation of gas between the interstate and intrastate marketsand among different users within the interstate markets.The Natural Gas Policy Act of 1978The natural gas regulatory environment was changed substantiallyby passage of the Natural Gas Policy Act (NGPA) in 1978. This actwas intended to encourage production by deregulating the prices ofnewly discovered gas while restraining the growth of average gasprices through permanent controls on the price of older gas. TheFederal Energy Regulatory Commission replaced the Federal PowerCommission, and price controls were extended to gas sold in intrastatemarkets. Over twenty regulated categories of gas were created,each with its own initial ceiling price and rules for price escalationover time.The NGPA provides for the phased deregulation of the wellheadprice of most gas discovered after 1977, which should account for 40to 60 percent of all gas in January 1985, while a smaller volume ofgas is scheduled for deregulation in July 1987. A small amount ofhigh-cost new gas was deregulated under the NGPA in 1979. Mostgas to be deregulated in 1985 or 1987 is fixed until those dates at aprice, in inflation-adjusted dollars, leading to the oil equivalent pricelevel existing in 1978. The NGPA also includes "incremental pricing"provisions intended to allocate high-priced gas to industrial users,thus preserving lower prices for other users. Along with the NGPA,the Congress passed the Powerplant and Industrial Fuel Use Act; thislaw authorizes nonprice rationing of gas to counter the problems inherentin continued price controls.As with many efforts to regulate prices, the NGPA has created numerousproblems. Instead of producing the lowest cost gas suppliesfirst and moving successively to higher cost sources, producers areinduced by the different price categories to produce high-cost gas103

first in many cases, and generally to shift production efforts awayfrom cost-minimizing alternatives. The initial boom in the productionof deep gas illustrated this effect.Further problems arise from the control of the prices of new gasuntil those prices are decontrolled in 1985 and 1987. Since oil priceshave risen substantially since 1978, partial decontrol will generate acontinued increase in delivered gas prices in 1985 as consumers bidup gas prices to levels equivalent with those of close substitutes suchas oil. Although real gas prices have risen and real oil prices havefallen in the last year, average real domestic wellhead prices of gaswill rise by about 28 percent between 1983 and 1985 if there is nochange in the NGPA according to a preliminary Department ofEnergy estimate.The price of decontrolled gas is averaged with the price of controlledgas in determining the price to gas users and the demand forgas is affected by prices for fuel substitutes. This is reflected in preliminaryDepartment of Energy estimates which indicate that theaverage 1985 prices of gas under the NGPA are not likely to differgreatly from those that would evolve under full decontrol. Under thepartial decontrol authorized by NGPA, the prices of decontrolled gasare bid up somewhat above the levels that would be observed in afully decontrolled market. Indeed, even now decontrolled deep gas isbeing sold at the wellhead for over $7.00 per million cubic feet. Thepreliminary Department of Energy estimates suggest that the average1985 price under full decontrol will be $3.78 per million cubic feet(both in 1982 dollars).The higher prices to be paid for decontrolled gas in 1985 andthereafter suggest that the average gas consumer will not benefitfrom the remaining controls, and that the primary beneficiaries willbe the producers of decontrolled gas. Under the NGPA, however,different groups of consumers will fare differently. Pipelines withaccess to substantial quantities of price-controlled gas will be able tobid deregulated gas away from other pipelines. This is because thehigher prices on decontrolled gas can be averaged with the lowerprices paid for gas still subject to controls.This means, for some period, that consumers in different regionsmay face different average prices, and that some gas will be reallocatedartifically because of differential access to controlled gas. In particular,the intrastate pipelines will have relatively little access to controlledgas, and so some amount of gas will shift out of the intrastatemarket into the interstate market. Interstate pipelines also will vary intheir ability to bid for decontrolled gas, depending on their access tocontrolled gas and the actions of local regulatory authorities. In summary,in addition to the waste in gas production caused by the104

NGPA, both controlled and decontrolled gas will be allocated inefficientlyamong pipelines. The preliminary Department of Energy estimateof the present value of the efficiency gain that would accrue tothe economy from full gas decontrol in 1983, relative to the partialderegulation authorized by the NGPA, is about $4.2 billion (in 1982dollars).The prospect of a price increase in 1985 may provide an impetustoward extension of the NGPA price controls beyond 1985. Such anextension would sustain the inefficiencies experienced as a result ofthe NGPA. The preliminary Department of Energy estimate of thepresent value of the efficiency gain of full decontrol in 1983, relativeto extension to 1995 of price controls now imposed by the NGPA, isabout $27 billion (in 1982 dollars). Because gas production would bereduced by extension of controls, oil consumption would probablyincrease. The preliminary Department of Energy estimate is that extensionof gas price controls would increase oil import levels byabout 288,000 barrels per day between 1983 and 1995.Reported gas well completions in 1982 increased 21 percent over1980, while under full decontrol, reported oil well completions increasedby 49 percent in the same period. Total proved gas reserves(excluding Prudhoe Bay) declined over one-third during the 1970s.The extension of controls thus would have very serious implicationsfor future domestic gas reserves.Recent Natural Gas Price DevelopmentsNatural gas prices have risen sharply in recent months because gascontrolled at relatively low prices is gradually becoming a smallercomponent of total production and because some contracts fixingvery low prices have expired. Moreover, the NGPA allows price increasesfor some gas beyond a simple inflation adjustment. While itappears that gas prices in some regions have reached short-termmarket clearing levels, that is not true for other regions. On average,gas prices are still apparently below market clearing levels—hence,the expected price increase in 1985 under the path outlined by theNGPA.Some observers have noted that pipelines are buying expensive gaswhile gas subject to lower price ceilings remains unsold. They haveconcluded from this that gas markets are "irrational," and that fullprice decontrol would not work effectively. This analysis is questionable.Under "take-or-pay" contracts, pipelines agree to pay for agiven volume of gas whether or not they resell ("take") it. Sinceprice controls have prevented pipelines from competing for gas onthe basis of price, they compete on the basis of contract terms. Increased"take-or-pay" contractual requirements are one form of suchnonprice competition. This behavior is a rational response to the ar-105

tificial constraints imposed by price controls and the general expectationof future shortages. In essence, increased "take-or-pay*' requirementsare a way for pipelines (and implicitly their customers) to buyinsurance against future shortages. Pipelines with high levels of"take-or-pay" commitments must now take and pay for relatively expensivegas, even though "cheaper** gas is available. This is "irrational"only in hindsight since surpluses of gas exist. If shortages haddeveloped instead, the use of "take-or-pay*' commitments would lookquite rational and "farsighted."EMERGENCY PREPAREDNESSConditions in the world oil market and preceptions about the effectsof supply disruptions have both changed substantially in the lastseveral years. Trends in world oil production and consumption aresimilar to those of the United States. World (non-Communist) consumptionfell from 51.5 million barrels per day (mmbd) in 1978 to45.5 mmbd in 1982. Production outside of the Organization of PetroleumExporting Countries (including Communist nations) increasedfrom 30.3 mmbd in 1978 to 34.3 mmbd in 1982 (for the first 10months). Furthermore, excess production capacity in OPEC has increasedto at least 8.5 mmbd. It is likely that a future oil supply disruption,should one occur, would have smaller proportionate priceeffects than those caused by disruptions during the 1970's. Both theincreasing geographic diversification of production and the presenceof substantial excess production capacity would mitigate the effect offuture disruptions.The threat to use oil production as a political weapon may be lesseffective then was previously perceived. It is very difficult to "target*'individual nations with such a weapon because the international oiltransport industry has substantial capacity to transfer oil among nations.This is why the United States and the Netherlands, despitetheir status as the intended targets of the 1973 embargo, faced thesame prices for imported oil as other oil-importing nations. Gasolinelines in the United States were caused by the U.S. regulations. Equallyimportant, oil producers cannot impose large penalties uponothers without imposing substantial revenue losses upon themselves.The policies of this Administration reflect the view that preparationfor disruptions in energy supplies can best take place throughthe operation of market forces, and that price adjustments presentthe most effective mechanism for dealing with such disruptions whenthey occur. Minimizing the aggregate adverse effects of energysupply disruptions is most efficiently accomplished by allowing pricesto allocate available supplies to their most productive uses and by encouragingmarket forces to increase production of substitute fuels.106

Price and allocation controls only redistribute some of the adverse effectsof the disruption away from politically favored groups, thereforemaking matters worse for other groups. In the aggregate, price andallocation controls would exacerbate the adverse effects of the disruption.Standby controls, even if never implemented, are harmful becausethey increase the perceived likelihood that controls will be imposedand thereby deter private preparedness. This is why the Presidentvetoed the standby controls legislation in March 1982.Present policies also reflect a recognition that firms may have insufficientincentives to prepare for energy supply disruptions, in substantialpart because of past government policy. Previous price andallocation controls had the effect of penalizing those who had preparedfor disruptions and subsidizing those who had not. Because ofgovernmental responses to energy supply disruptions in the past, andthe recent congressional proposal to establish standby price and allocationcontrols, firms must regard as substantial the likelihood thatcontrols would be imposed once again, despite this Administration'sfirm commitment to avoid such policies. This expectation discouragesboth those who expect to benefit from controls and those whoexpect to have their supplies appropriated from preparing sufficientlyfor a disruption beforehand.In recognition of this perverse effect of past policy, the Administrationis striving to build up crude oil stocks in the Strategic PetroleumReserve (SPR) at an efficient rate. Built up to only slightly more than100 million barrels from 1977 until early 1981, the SPR now containsover 290 million barrels and is growing steadily toward.the plannedlevel of 750 million barrels. The SPR is intended to supplement, notsubstitute for, private sector stocks; accordingly, it would be usedonly in the event of a severe disruption. Once a decision was made touse SPR crude oil, it would be sold at market-clearing prices towhomever wished to purchase it. The Strategic Petroleum ReservePlan submitted to the Congress in December 1982 contains a provisionallowing the Secretary of Energy to reserve for special groupsfaced with extraordinary circumstances up to 10 percent of a givenperiod's drawdown; oil allocated under this provision would bepriced at the level established in the most recent competitive auctionof SPR crude oil. This provision is not intended as a subsidy for particulargroups. The policy of this Administration to fill the SPR at asteady rate will move energy security preparedness in the UnitedStates toward a more optimal level. To the extent that the availabilityof SPR crude oil, combined with other energy policies and programs,enables future Administrations to resist pressures for price and allo-107

cation controls during a disruption, the SPR may enhance privatesector preparation as well.Except to the extent that use of foreign energy supplies is increasedartificially by price controls and other adverse policies, it isnot the policy of this Administration to reduce dependence on foreignenergy suppliers beyond the level determined by market forces.In a world with relatively free trade and substantial capacity for reallocationof supplies, the allocative effects of a change in oil prices(other than those operating through the exchange rate) are independentof whether a given nation's use of foreign supplies is greator small. A disruption would raise prices and thus reallocate all availablesupplies whether foreign or domestic. Thus, a nation totally selfsufficientin energy supplies still would face the same oil prices as anation totally dependent on foreign sources. It is the policy of thisAdministration to facilitate free trade while preparing for future contingenciesthrough primary reliance on market adjustments and judicioususe of the Strategic Petroleum Reserve.TRANSPORTATION AND COMMUNICATIONSThe transportation and communications industries serve vital linkagefunctions in our Nation's economy. Until recently, these industrieswere broadly subject to traditional rate and entry regulation.Regulation of most transportation sectors is probably not efficientunder contemporary market conditions. Most transportation markets,due to the mobility of most of the capital assets of the firms in thosemarkets, are highly contestable. That is, with nearly costless entryand exit, new firms can enter markets which have excessive pricesand can take advantage of the profitable opportunities that they provide.Thus, even with significant economies of scale in a transportationmarket, the threat of entry by new rivals should result in nearcompetitivepricing of transportation services. Additionally, mosttransportation firms face significant intermodal competition. Theyare also disciplined indirectly in some cases by competitive conditionsin the national or international markets in which the commoditiesthey transport are sold. The only segments of the interstatetransportation system for which regulation on a natural monopolybasis may be justifiable are the major gas pipelines, long-distanceelectric transmission lines, and those sections of the rail systemwhere shippers do not have an effective choice of carrier or mode oftransport.Telecommunications, due to a high rate of technological development,is one of the most rapidly changing sectors of the U.S. economy.The Federal Government plays an active role in the telecommu-108

nications industries through the regulation of common carriers andbroadcasters. Several important steps toward deregulation of theseindustries were initiated in 1982. The government can enhance thedevelopment of these industries through continued deregulation.EFFECTS OF AVIATION DEREGULATIONUntil the late 1970s the Civil Aeronautics Board (CAB) regulatedthe airline industry extensively. It allocated interstate routes amongthe airlines and controlled airline fares on those routes. Through itscontrol of air routes, the CAB restrained entry into the airline industry.From its inception in 1938 until the late 1970s, the CAB did notallow any new airline to enter the interstate trunk market. Largely asa consequence, air fares were higher on most interstate routes than ifprice competition and freedom of entry were permitted. This was reflectedby the differences in fares between intrastate city-pairs thatwere not subject to CAB regulation, such as Los Angeles-San Francisco,and comparable interstate city-pairs that were. The latter oftenhad fares that were as much as 60 percent higher than the former.In 1977 the CAB began to ease restrictions on fares and entry. In1978 the Congress affirmed and extended the CAB's measures bypassing the Airline Deregulation Act. This act provided for the gradualderegulation of the airlines, with the termination of CAB domesticroute authority in 1981, the termination of CAB domestic pricingauthority in 1983, and the elimination of the CAB itself in 1985. Subsequentsteps were taken to increase potential competition in internationalaviation. In July 1982 the U.S. Government entered a multilateralagreement with several European governments that permitsgreater flexibility in airline fares for trans-Atlantic flights than waspreviously allowed.While rising aviation fuel costs, the weak economy, and the 1981air traffic controllers strike complicate assessment of the effects ofgradual deregulation, route and fare competition have increased substantiallysince 1977. From 1978 to 1981, the number of U.S. certificatedairlines more than doubled (from 36 to 86). The market shareof the major trunk airlines declined from 87.3 to 80.4 percent in thepast 3 years while, during this same period, the market share of thelocal, intrastate, and new airlines increased from 11.5 to 16.4 percent.Aircraft departures from large, medium, small, and nonhub airportsincreased substantially over the 2 years immediately followingairline deregulation. The percentage of domestic markets with fouror more carriers grew from 13 in May 1978 to 73 in May 1981. InApril 1982, 77 percent of the domestic coach traffic of the major airlinesmoved on discount fares, compared to 46 percent in April1978. And while operating expenses per available seat mile rose by109

73 percent from 1976 to 1981, airline revenue per available seat milerose by only 58 percent in this same period.Deregulation has also led to increases in operating efficiency. Airlinelabor cost increases have slowed and have actually declined relativeto inflation. The established airlines have been forced to controltheir labor costs in order to compete effectively with the new entrants,many of which pay substantially lower wages. Load factors(the ratio of revenue passenger miles to available seat miles) rosefrom an average of less than 55 percent between 1973 and 1977 tomore than 59 percent between 1978 and 1982. Airlines are nowusing a wider variety of airplanes to serve their diverse markets.Small markets are more likely to be served by smaller airplanes.There is little need to fear monopoly in airline markets when theCAB expires. Several studies have demonstrated that no system-wideeconomies of scale exist. Since airplanes are easily transferable fromone market to another, airline markets are readily con testable. Theprospect of potential entry by rival carriers creates pressures forclose-to-competitive fares even in markets served by only one airline.Deregulation of airlines has established a competitive and more efficientairline industry. As air travel in the United States increasesover this decade and as the busiest airports become even more congested,the new competitive structure may be challenged. Allowingcompetition and the full transferability of the right to land and takeoff at these airports may be necessary to sustain this competitivestructure. Additionally, the maintenance and future development of asafe and effective national airway system is important to ensure thatconsumers are well served.EFFECTS OF PARTIAL DEREGULATION IN SURFACE TRANSPORTATIONThe traditional rate and entry regulation of the trucking, freightforwarder,intercity bus, barge, and maritime industries is now largelyout of date. Many studies have demonstrated the absence of significanteconomies of scale in these industries, weakening the "naturalmonopoly" rationale for entry restrictions. The high degree of capitalmobility in these industries implies that individual city-pair andport-pair markets are highly contestable. The existence of intermodalsources of competition and competitive international output marketsfor transported commodities further reduces any misallocations resultingfrom monoply behavior. Additionally, the high rate of technologicaldevelopment in the transportation sector renders many regulationsinapplicable. The experience since the recent deregulation ofairlines and the partial deregulation of surface transportation indicatesthat a competitive industry structure would not reduce the financialviability of firms in these industries.110

Several major pieces of legislation were enacted in the last fewyears to reduce the degree of regulation in the surface transportationindustries, including the Railroad Revitalization and RegulatoryReform Act of 1976, the Motor Carrier Act of 1980, the StaggersRail Act of 1980, and the Bus Regulatory Reform Act of 1982.The effects of the partial deregulation of trucking—initiated by theInterstate Commerce Commission and affirmed by the Motor CarrierAct of 1980—have proven very encouraging. Published trucking ratesare now subject to large and widely available discounts. Shippersappear to be overwhelmingly satisfied with the rates, service options,and competition for their business. Service to small communities hasnot deteriorated, as was originally predicted by the opponents of deregulation,and most shippers in small communities also appear tosupport deregulation. Both the number of new firms and failing firmshave increased substantially, the latter due in part to the recession.Concerns have been expressed over the last year that the InterstateCommerce Commission may be slowing the deregulatory process.For example, the percentage of applications for grants of operatingauthority approved by the ICC declined slightly in both fiscal yearssince the passage of the Motor Carrier Act. On net, however, theICC has facilitated increased competition in the trucking industry.The chaos predicted by the opponents of deregulation has not materialized,even during a sustained recession. The experience to dateclearly supports the case for more general deregulation of surfacetransport.The experience since the partial deregulation of railroads is similar.Although direct evidence on rail rates is not available, thenumber of contracts negotiated between rail carriers and shippers (ameasure of the operating flexibility granted by the Staggers Rail Act)increased from 580 in fiscal 1980 to 2907 in fiscal 1982. Railroadshave increased their share of total freight traffic and have substantiallyincreased their shipments of some commodities, such as fruits andvegetables, that were previously carried almost exclusively by trucks.Railroad profits remained essentially steady despite the sustained recession.While recent partial deregulation of the surface transportation industrieshas increased the competitiveness of these industries, the opportunityremains for significant gains from further deregulation.There seems to be little danger that further deregulation would enhancethe monopoly power of carriers. The high degree of capitalmobility in the trucking, bus, barge, and maritime industries shouldprevent monopoly pricing over a sustained period, even where thereis only one carrier on a route.Ill

FURTHER DEREGULATION OF SURFACE TRANSPORTATIONFor many decades, both carriers and shippers have made decisionsbased on expectations that the general regulatory system would continue.As a consequence, the transition to deregulation can be disruptive.The major conceptual problems of further deregulation involvethe following four issues: (1) the antitrust status of the rate bureaus,(2) the vulnerability of shippers who do not have an effectivechoice of carrier or mode, (3) the restrictions on multimodal ownership,and (4) the restrictions on route abandonment.As suggested below, these problems especially affect the prospectsfor further deregulation of the railroads.Antitrust Status of Rate BureausFor many years the regional rate bureaus (composed of transportationfirms) have performed the normal functions of a trade associationand have provided the forum for multilateral agreements onboth single-line and interline rates. These rate bureaus were exemptedfrom the antitrust laws, and their proposed rates were generallyendorsed by the ICC. The Motor Carrier Act of 1980 removed theantitrust immunity of the truck rate bureaus for single-line rates beginningin mid-1984, and established the Motor Carrier RatemakingStudy Commission to study whether the antitrust immunity for multilateralagreements on interline rates should be maintained. In testimonyto this commission, the Administration supported eliminationof the antitrust immunity of the truck rate bureaus. Members of thecommission, which was scheduled to complete its study by the end of1982, were equally divided on this issue at that time. Additionally,following the Railroad Revitalization and Regulatory Reform Act of1976, the ICC restricted the authority of the rail rate bureaus to addresssingle-line rates and restricted the carriers that could participatein an agreement on interline rates.There remains a legitimate dispute about whether the rail rate bureausshould retain antitrust immunity when setting interline rates.The general view of economists is that further deregulation shouldbe accompanied by the elimination of antitrust immunity. This approachwould prevent the adverse effects of a carrier cartel andpermit interline agreements to be treated as a joint venture. Someclarification of the application of the Sherman Act would also be appropriateto provide a stable legal environment for these interlineagreements. The contrary view is that the antitrust immunity shouldbe maintained as long as no carrier is bound by any bureau rates towhich it did not agree. A multilateral agreement on interline ratesmay have substantially lower transactions costs on small shipmentsthan the alternative pattern of bilateral joint ventures, and any at-112

tempt to set cartel rates would be disciplined by the freedom of anycarrier to set other rates. (This issue is less important for trucks, becauseinterline traffic is now less than 15 percent of total truck traffic,and complete freedom of routes would further reduce such interlinetraffic. Interline rail traffic, however, is 48 percent of total rail traffic,and it is more important to maintain a process that economizes onthe contracting costs for small interline shipments.) The alternativemay be an undesirable situation in which rail carriers refuse small interlineshipments, use trucks for shipments to points beyond theirroutes, or face an artificial incentive for mergers.The "Captive Shipper Problem"The "captive shipper problem'* is what initially led to rail rate regulation.This problem was substantially reduced by the developmentof alternative carriers and modes but has not been eliminated. Twodimensions of this problem, however, have sometimes been misunderstood.This relation is a bilateral monopoly. Both the rail carrierand the shipper have substantial bargaining power, and it is not clearthat this relation leads to rates that are generally "too high." Second,this relation does not lead to any long-term misallocation of resourcesas long as the price of the shipped commodity is determinedin a competitive market. In any case, the sum of the rents on rail andshipper property is constant. This inherent tension suggests that it isimportant to avoid any effective restraint on the common ownershipof rail carriers and major shippers. One alternative may be to requirejoint track use by competing carriers. Another alternative would beto index the rate bands now authorized for, say, another decade andto terminate these bands at that time. Unless this problem is resolved,however, some form of maximum rate regulation is likely tobe maintained in the rail industry.Restrictions on Multimodal OwnershipThere no longer appears to be any case for restrictions on multimodalownership. It is especially important to allow rail carriers toown trucking operations to facilitate container and piggyback traffic.A change in the law would be required to allow rail carriers to ownbarge lines. A change in the law would also be required to allowfreight-forwarders to own trucks, even though trucking companiesare now allowed to own freight-forwarders. The Bus RegulatoryReform Act of 1982 provides a substantially streamlined process forapproving intermodal mergers not prohibited by law.Restrictions on Route AbandonmentThe primary problem of the railroads is excess route capacity, aproblem that reflects a combination of increased truck competitionand ICC restrictions on route abandonment. Some studies have indi-113

cated that less than half of the existing rail mileage generates enoughtraffic to cover total costs. The Staggers Rail Act provides for moreflexible procedures to resolve disputes on route abandonment.Recent highway legislation, by increasing allowable truck size, is expectedto make trucks more competitive with railroads in moving lowdensity freight. A better resolution of the route abandonment issue isprobably necessary for a healthy railroad industry and an efficientdistribution of freight traffic across modes.In summary, pending a resolution of these four issues as theyaffect railroads, it is probably appropriate to focus any near-term legislativeproposals on the other modes of surface transport and for theICC to pursue selective rail deregulation within its existing authority.Additionally, the government should continue, through the appropriateapplication of user fees, to ensure that each mode of transportbears the entire costs of its operations when utilizing public facilities.COMMON CARRIER TELECOMMUNICATIONSEconomies of scale provided the original rationale for makinglong-distance telecommunications a regulated monopoly. But rapidtechnological change has reduced the industry's natural monopolycharacteristics and has paved the way for a more competitive industrystructure. The growth of the market for telecommunications, duelargely to the convergence of data processing and telecommunicationstechnology, has further reduced the natural monopoly characteristicsof the industry. These rapid developments in both demandand supply conditions have probably made the inherited regulatoryframework inappropriate.Major legal changes were made recently to allow increased competition.In 1982 a U.S. district judge gave final approval to a settlementbetween the American Telephone and Telegraph Company(AT&T) and the Department of Justice, transforming long-distancetelecommunications services into a competitive market with a greaternumber of companies and less regulation.In conjunction with other deregulatory steps by the Federal CommunicationsCommission, the settlement is expected to have majorbenefits for both the telecommunications industry and its customers.Equal access to local facilities, which is the cornerstone of the settlement,should allow competition to act as an adequate substitute forregulation of interstate services. While the transition to equal accesswill take a few years, individual telephone customers will have progressivelyincreased opportunities to make their own arrangementswith AT&T's competitors in long-distance services. Meanwhile,AT&T will be allowed to develop its data processing subsidiary,American Bell Inc. While AT&T is prohibited from offering home114

computer information and advertising services via its long-distancelines for 7 years, it is likely to become a vigorous competitor in otherfields, such as cellular mobile radio technology. It is also likely toface increasing competition in these areas.In 1982 an appeals court affirmed the Federal CommunicationCommission's power to deregulate where technological changemakes regulation outmoded. Developments in data processing andtransmission have tended to make many Federal and State regulationsunnecessary, inappropriate, or unworkable.BROADCASTINGThe FCC regulates the radio and television industries through issuanceand renewal of broadcast licenses. It promulgates guidelines onthe amount of news and public affairs programming that stationsmust broadcast, the maximum number of commercials permissible inany time period, the recording of broadcast materials, and the ascertainmentand fulfillment of community needs. As a result, broadcastersare prevented in some cases from carrying programming that listenersand viewers would prefer.The original purpose of FCC regulation was to allocate broadcastspectrum space. The FCC allocated these valuable spectrum rights inexchange for commitments on program content. Whatever the meritsof this argument 50 years ago, it may be appropriate to review thisform of regulation to reflect the rapidly developing competition fromcable television, pay television, and direct satellite transmission.Recently, the FCC has made several moves toward deregulation. In1981 the Commission deregulated most commercial radio broadcastingand attempted, subject to legal challenge, to simplify the applicationrenewal process. The FCC is in the process of repeating thisderegulatory initiative for the television industry. It will soon attemptto amend the renewal process by eliminating the following criteriafor renewal: nonentertainment content, ascertainment of communityneeds, advertising concentration, and recording. The last Congressalso considered bills to repeal many requirements, such as the "reasonableaccess/' "equal time," and "fairness" doctrines that arecostly to broadcasters and unevenly applied to the mass media.These steps would partially remove the government from the determinationof broadcast content.DEREGULATION OF FINANCIAL MARKETSThe financial service sector has been among the most heavily regulatedareas of the economy. Price regulation, entry restrictions, andportfolio regulation were pervasive in both the banking and securities115

industries. Substantial and numerous innovations in the financial sectorsin the last decade largely preceded and were later facilitated byrecent partial deregulation.DEPOSITORY INSTITUTIONSThe present structure of regulatory restraints on commercial banksand other depository institutions was imposed primarily in responseto the collapse of the banking system in the 1930s. A common interpretationof the events at that time is that the banking collapse wasthe result of an unsound banking structure which caused too muchcompetition. Competition among banks was thought to force theminto paying high interest rates for deposits, which in turn led them toseek out high-yielding but risky—and ultimately unsound—investmentsin the stock, bond, and real estate markets.Legislative remedies in the Banking Acts of 1933 and 1935, andvarious revisions of the Federal Reserve Act, focused on limitingprice competition between banks, separating banking from securitiesmarket activity, supervising banking and financial markets moreclosely, and restoring public confidence in the financial system.Reflecting a general concern about excessive competition, the paymentof interest on demand deposits was prohibited by law. In addition,the Federal Reserve Board and the Federal Deposit InsuranceCorporation were given the power to place interest rate ceilings onthe passbook and time deposits of commercial banks. Interest rateceilings were extended to the deposits of mutual savings banks andsavings and loan associations in 1966.The type and quality of assets held by banks were closely monitored.Commercial banks were not permitted to hold securities of aspeculative nature in their portfolios, and thrift institutions were subjectto even greater limits on their asset acquisition powers. In addition,most securities activities were divorced from commercial bankingby the Glass-Steagall sections of the Banking Act of 1933, andentry into banking became more closely controlled. To maintain theconfidence of the public in the banking system, deposits were insuredby the Federal Deposit Insurance Corporation and the Federal Savingsand Loan Insurance Corporation. With the introduction of depositinsurance, the other regulations served mainly to limit the exposureof the insurance funds rather than to protect depositors. Nevertheless,recent studies suggest that the web of regulatory restraintswas generally greater than required for this purpose.Moreover, this extensive regulatory framework for financial institutionshas adapted slowly to the economic changes of the last two decades.High inflation rates and consequent high nominal interestrates, combined with reduced transactions costs from the application116

of computer technology to the payments system, have created seriousdistortions in financial markets. As market interest rates rose aboveRegulation Q, ceilings, inflows of funds to depository institutionswere curtailed, and new nonregulated instruments (especially moneymarket mutual funds) were created. The allocation of savings to varioussectors of the capital market—particularly housing vis-a-vis othersectors—was altered, and small and less informed savers suffered declinesin the real rate of return on their savings. In addition, RegulationQ, generated a considerable amount of nonprice competition betweenfinancial institutions, such as an excessive number of branchoffices, with resulting adverse effects on efficiency. Interest rate ceilingson selected deposits were removed progressively beginning in1978.The Administration continues to support the removal of unnecessaryand excessive regulatory constraints on depository institutions.It is now widely asserted that the length and severity of the bankingcollapse of the 1930s was not the result of overly risky bank portfolios.Rather, many economists argue that these failures became widespread,initially, because of the reluctance of the Federal ReserveSystem to engage in aggressive open market operations to counterthe conversion of deposits to currency and, later, because of the FederalReserve's failure to assure adequate liquidity to banks experiencingruns on their deposits. As banks scrambled to liquidate theirassets to meet the demands of their depositors for currency, theirasset values fell, thus creating insolvencies. The provision of adequateliquidity by a lender of last resort has long been recognized asa primary responsibility of the Federal Reserve System.Partial deregulation of depository institutions is now proceedingunder provisions of the Depository Institutions Deregulation andMonetary Control Act of 1980 and the Garn-St Germain DepositoryInstitutions Act of 1982. Under the 1980 act, interest rate ceilings ontime and savings deposits are to be phased out over a period of 6years. The same law permits depository institutions to offer negotiableorder of withdrawal (NOW) accounts and preempted certainState usury ceilings. This act also created the Depository InstitutionsDeregulation Committee (DIDC) to administer the phaseout of interestrate ceilings at banks and thrifts.In March 1982, the DIDC adopted a deregulation schedule thatphases out interest rate ceilings, beginning with longer term time deposits.With the deregulation schedule in place, the focus of theDIDC turned to short-term deposit instruments. Prevailing high interestrates had caused a continued erosion of low-cost deposits atbanks and thrifts, as depositors sought market rates elsewhere, particularlythrough money market mutual funds. The DIDC addressed117

this problem by authorizing, effective May 1, 1982, a 91-day time depositwith a $7,500 minimum denomination indexed to the 91-dayTreasury bill rate, and establishing, effective September 1, 1982, a 7-to 31-day deposit account with a $20,000 minimum denomination,also indexed to the 91-day Treasury bill rate.Following the directions given by the Garn-St Germain Act, theDIDC authorized, effective December 14, 1982, a new money marketdeposit account that can be offered by commercial banks, savings andloan associations, and mutual savings banks. In addition, the DIDGauthorized a new super NOW account, effective January 5, 1983. Neitheraccount is subject to interest rate ceilings when account balancesexceed $2,500. The DIDC also reduced to $2,500 the minimum denominationrequired on the 6-montfi money market deposits, the 91-day time deposits, and the 7- to 31-day time deposits.The introduction of NOW accounts nationwide in 1981, the authorizationof the new money market accounts at banks and thrifts,and the general phasing out of interest rate restrictions substantiallyincrease the ability of depository institutions to compete for funds.Simultaneously, various actions have been taken to allow thrift institutionsgreater flexibility in the investment of funds. The Deregulationand Monetary Control Act expands the asset powers of savingand loan associations and mutual savings banks to include consumer,corporate, and business loans. This will lead to more diversified portfoliosfor these institutions. In addition, new regulations issued bythe Comptroller of the Currency in 1981 and the Federal HomeLoan Bank Board in 1982 permit depository institutions to offer variablerate mortgages. Finally, the Garn-St Germain Act provides forFederal preemption of State laws and judicial decisions that restrictthe enforcement of due-on-sale clauses in real property loans.The Garn-St Germain Act also deals with the problems of the savingsand loan institutions discussed above. It provides capital assistanceto depository institutions that have suffered earnings and capitallosses resulting from regulatory restraints on their assets and liabilities.The assisted institutions issue capital investments, called "networth certificates," which the insuring agencies purchase with promissorynotes. This increase in net worth reduces the likelihood of insolvenciesarising from losses created by holdings of old, fixed-ratemortgages. As market rates of interest fall, and the earnings of thesedepository institutions improve, the net worth certificates will be retired.Legislation following the banking collapse of the 1930s tended toprevent competition among financial institutions and created a complexand often counterproductive labyrinth of financial regulations.Recent legislation and regulatory changes have begun to reverse this118

trend by widening the sources and uses of funds available to depositoryinstitutions, and by allowing for a far larger measure of pricecompetition in the financial services industry. These actions shouldcontribute to a stronger and more responsive financial system.STOCK EXCHANGESMuch of the regulation of the Nation's stock exchanges began inthe 1930s, largely in response to the crisis in the financial marketscreated by the Great Depression. This regulation was broad and diverse,and included mandatory and systematic disclosure of corporaterecords as well as rule-setting authority over stock exchanges. Overthe last several years, much of this regulation has been relaxed.Commission RatesPrior to 1968, commissions paid to members of stock exchangeswere fixed by those stock exchanges and approved by the Securitiesand Exchange Commission (SEC). After 1968, however, the fixedcommission schedule was slowly dismantled in favor of negotiatedcommissions. Beginning in May 1975, commission rates on all securitytransactions were negotiated.Negotiated commission rates were the product of a market-inducedbreakdown of the fixed-rate commission structure. From 1961 to1966 the dollar volume and market share of the regional stock exchangesincreased dramatically because of the fixed-rate system. Regionalstock exchanges allowed customers dealing on those exchangesto "give up" or have transferred a portion of their fixedcommission to a third party who supplied other services. The NewYork Stock Exchange (NYSE) stipulated that customers of that exchangecould only give up commissions to other members of theNYSE. This constraint that the NYSE imposed on its customers encouragedmany of those customers to turn to the regional exchanges,where competition had effectively driven down the cost of exchangeservices.Faced with a declining share of stock transactions, the NYSE askedthe SEC to force regional exchanges to eliminate the rules that wereaffording them a competitive advantage. Commenting on the NYSEproposal, the Department of Justice suggested that the broader issueof possible elimination of the fixed-rate commission structure shouldbe examined. In defense of the fixed-rate commission structure, aNYSE study suggested that "destructive competition," reflected in adecline in the quality of broker services, could result from the absenceof fixed commission rates.Despite the objections of the NYSE, the Congress passed the SecuritiesActs Amendments of 1975. These reconfirmed that nonmembercommission rates were fully negotiable and made exchange floor119

ates fully negotiable by May 1976. The deregulation of fixed commissionrates illustrates the efficiency gains that follow deregulation.Since the total deregulation of commission rates, average commissionscharged to customers have decreased. Services which were previouslyprovided jointly whether customers used them or not, arenow substantially unbundled.Financial DisclosureThe Securities Exchange Act of 1933 required financial disclosurefor corporations seeking to raise capital through the issuance of newsecurities. The Securities Exchange Act of 1934 required periodic financialdisclosure for corporations with publicly traded securities.One of the motivations for this original legislation was a belief thatcorporations must be forced to disclose financial information inorder to protect the interests of investors. In recent years there hasbeen concern that these requirements have precluded new securityissues thus inhibiting the efficiency of the capital market. Additionally,a growing body of scholarship has questioned whether these requirementshave served the interests of investors. Recently, some ofthese stringent disclosure requirements were ended for certain typesof corporations. Specifically, corporations with less than $3 million inassets and 500 stockholders are now exempt from the filing requirementsof the Securities Exchange Act of 1934.The SEC has also recently allowed, on an experimental basis, somefirms issuing new securities to use "shelf registration'* forms, thuseliminating the requirement to file for each new security issue. Theinitiation of shelf registration is expected to reduce the costs of raisingequity capital, allowing firms to manage their risk more efficientlyby entering the capital markets more often.Industry StructureBefore 1980, stocks listed on stock exchanges could not be tradedby members of those stock exchanges in any other markets. This barrierto entry was partially lifted in June 1980, when the SEC approvedRule 19c-3. This rule allows members of stock exchanges totrade securities in other markets that were listed on those stock exchangesafter May 1979.Stock exchange members are now also allowed to execute trades inthe "19c-3 securities" in markets other than the stock exchanges.The market share of non-19c-3 stocks on the Over-the-Counter(OTG) markets is considerably less than the OTC market share for19c-3 securities. This larger market share for the OTC in 19c-3 securitiessuggests that, for some exchange members, it is more efficientto execute orders on the OTC rather than on the stock ex-120

changes. That is, members can arbitrage price differentials that mayexist between the OTC market and the exchanges.Futures MarketsThe Commodity Futures Trading Commission (CFTC) has alsobeen very active in deregulation. In January 1982, the CFTC eliminatedthe 03 report, which had obligated large traders in future contractsto report their market positions daily to the CFTC. This actionreduced the filing costs of these large traders by around 50 percent.In an effort to lessen the burden of Federal regulation on the futuresindustry, the CFTC's new legislation eases the disclosure, registration,and rule approval process.OPPORTUNITIES FOR FURTHER DEREGULATION IN THE FINANCIALINDUSTRYWhile the financial and securities markets of today operate relativelyunencumbered by unnecessary regulations, owing to the deregulatoryadvances discussed above, several opportunities for further deregulationremain.Geographic Restrictions in BankingFederal laws, such as the McFadden Act of 1927 and the DouglasAmendment to the Bank Holding Company Act of 1956, continue toimpose geographic restrictions on commercial banking activities. Theformer law subjects the branching activities of national banks to thelimits imposed by the States; the latter law prohibits bank holdingcompanies from engaging in interstate banking unless given specificState authorization to do so. Although these prohibitions may reducethe concentration of financial resources on a national scale, they mayalso increase market concentration and lessen competition in localbanking markets.Moreover, these restrictions are effective only insofar as they affectthe taking of retail deposits. Loan production offices, Edge Act corporations,personal finance companies, mortgage lending companies,and bank holding companies have long been the means used bybanks to conduct wholesale and retail business on an interstate basis.With the emergence of automatic teller machine networks, the electronicrevolution is incorporating even retail deposit-taking intolarge-scale operations. This process would be enhanced by exemptingautomatic teller machines from the existing restrictions on the establishmentof branch offices. It is time to reconsider these geographicrestrictions because they are probably not in the best interestsof consumers or the more efficient financial institutions.121

Portfolio Restrictions in BankingThe prohibitions of the Glass-Steagall Act have been eroded inrecent years as both banking organizations and securities firms haveattempted, either directly or indirectly, to enter each others' traditionallines of business. Moreover, Glass-Steagall now makes no importantcontribution to the protection of the public against bank failureor undue concentrations of economic power. Other governmentmeasures, such as Federal deposit insurance and broadened andstrengthened Federal supervision, appear to have been more effectivein that role. The Administration has proposed an amendment to theGlass-Steagall Act that would authorize bank holding company subsidiariesto conduct two new activities immediately: (1) to underwriteand deal in municipal revenue bonds, and (2) to sponsor and underwriteshares of mutual funds. The Garn-St Germain Act authorizes anew account at banks and thrifts that is directly competitive withmoney market mutual funds. However, the act does not provide forthe operation and sale of shares in mutual funds or the underwritingof municipal revenue bonds. Moreover, the act also extends the longstandingprotection of insurance companies against bank competition.Margin RequirementsMargin requirements presently exist in the stock, options, and futuresmarkets. In futures trading, the margin is a performance bondintended to protect other participants from the consequences of afailure to make good on a contractual obligation. Each futures exchangedetermines the margin without Federal regulation or oversight.In stock and options exchanges, the Federal Reserve Boardsets initial margin requirements, and the exchanges set maintenancemargins subject to SEC oversight. Margin practices in the stock andoptions markets may be less efficient than in futures markets, sinceregulation constrains decisionmaking by participants. It is now appropriateto review these regulations.CONCLUSIONSFederal regulation of price and entry are products of an earlier era,when both economic conditions and perceptions of economic problemswere very different than they are today. Federal regulation ofrailroads began nearly a century ago, when there was no significantcompetition from other transport modes and political debate reflectedstrong populist sentiment. Most other Federal economic regulationsdate from the 1930s, when the severe economic problems, nowbelieved to be due to a collapse in aggregate demand, were per-122

ceived to be a consequence of excessive competition. The presentstructure of Federal regulation of the energy markets dates from the1970s and primarily reflects an attempt to protect consumers fromthe effects of the large increase in oil prices originating abroad.These policies may or may not have been appropriate to theperiod in which they were initiated. But both conditions and perceptionsare now very different. Increasing demand and changing technologyhave substantially reduced the initial monopoly power ofmany regulated firms. Our perceptions have also changed, largely inresponse to developing conditions during the long history of regulationand the encouraging developments during the more recentperiod of partial deregulation. There is now a more general perceptionthat the developments in regulated markets have largely outrunthe present structure of economic regulation.As we approach the 100th anniversary of the first broad body ofFederal economic regulation, it is time for a comprehensive review ofwhether this form of regulation serves the interests of the contemporaryeconomy. A resolution of this issue would then permit greaterattention to the different and more complex issues affecting therecent Federal regulation of health, safety, and environmental conditions.123

CHAPTER 6Review of 1982 and theEconomic OutlookFOR THE U.S. ECONOMY, 1982 was a year of painful transitiontoward price stability. The momentum of high inflation, built up overthe last 15 years, was broken and inflation was reduced to its lowestrate in a decade. Success in reducing inflation, however, was accompaniedby a recession that began in mid-1981 and lingered through1982. A drop in real exports, along with inventory adjustments, accountedfor the decline in U.S. production. Despite the recession,final sales to domestic purchasers increased. Expenditures for someinterest-sensitive goods, such as housing and consumer durablegoods, registered their first rise in recent years.Economic developments in 1982 clearly set the stage for a recoveryin 1983. The sizable slowdown in inflation contributed to the sharpdrop in interest rates in the summer of 1982. The inventory cyclethat held down production in 1982 is expected to turn around sometimein 1983. This development, combined with recovery in housingand durable consumer goods and continuing gains in defense spending,is expected to bring a moderate sustainable economic recovery.Prospects are good that this recovery can be maintained through the1980s without reigniting inflationary pressures.OVERVIEW OF 1982Real gross national product (GNP) in 1982 was no higher than in1979. After a surge of economic growth in 1978, the economy stalledin 1979. Cyclically volatile types of spending, such as auto sales andhousing starts, had peaked in 1978. Since 1978 the output of goodsand services in the United States has followed a saw-tooth pattern ofalternating periods of growth and decline. The recessions of 1980and 1981-82 bracketed the shortest economic expansion in 50 years.Employment in 1982 was below its 1979 level.Production and employment remained sluggish for 4 years whilesupplies of labor and capital continued to grow, so that by the end of1982 the unemployment rate rose to nearly 11 percent—its highestlevel since the early 1940s—and the capacity utilization rate fell to its124

lowest point in the post-World War II period. With this high level ofunused economic capacity, inflationary pressures subsided.The inflation rate fell dramatically in 1982 to its lowest level in adecade. The upward trend in inflation from 1976 through 1980strengthened the Federal Reserve's determination to slow the growthin the monetary aggregates and contributed to high interest rates foran extended period. By mid-1982, when evidence of progress againstinflation and continued weakness in economic activity became clear,interest rates began to fall sharply. The ensuing decline reduced interestrates to their lowest levels in more than 2 years, as illustratedin Chart 6-1.Chart 6-1PERCENT PER YEAR22Interest Rates2018PRIME RATE16141978 1979 1980 1981 1982SOURCES: DEPARTMENT OF THE TREASURY AND BOARD OF GOVERNORSOF THE FEDERAL RESERVE SYSTEM.The decline in interest rates brought much-needed relief to the interest-sensitive,cyclical sectors of the economy. By the end of 1982,clear progress toward recovery had been made, as reflected in continuinggains in the composite index of leading indicators of economicactivity, as shown in Chart 6-2.125

Chart 6-2Index of Leading Indicators and Real GNP1967-100145BILLIONS OF 1972 DOLLARS1,520REALGNP(RIGHT SCALE}1,5001401,4801351,460130mmtINDEX OF LEADINGINDICATORS(LEFT SCALE)1,4401,4201251,400120I I I I I I I I I I I I I I I I n1981 19821978 1979 1980SOURCE: DEPARTMENT OF COMMERCE.MAJOR SECTORS OF AGGREGATE DEMANDReal output declined 1.2 percent from the fourth quarter of 1981to the fourth quarter of 1982. This was the fourth consecutive year oflittle change in economic activity (Table 6-1). Businesses liquidatedinventories in 1982, in contrast to the previous year when inventorylevels increased. Another important factor in the decline was a sharpdrop in U.S. exports that reflected both the strong dollar and theworldwide recession. Real final sales to domestic purchasers increased1.3 percent in 1982, the largest increase in 3 years. Gains inpersonal consumption expenditures, residential investment, and Federalpurchases dominated a large decline in business capital spend-126

ing. Partly in response to the drop in interest rates, residential investmentincreased for the first time in 5 years, and consumer purchasesof durable goods increased for the first time since 1978. State andlocal government purchases of goods and services were virtually unchangedover the year.TABLE 6-L—Growth in major sectors of real GNP, 1978-82[Change^ fourth quarter to fourth quarter and 5-year average]Component 1978 1979 1980 1981 1982 *5-yearaverage'Percent change:Real gross national product5.81.4-0.70.7-1.21,5Personal consumption expendituresConsumer durablesBusiness fixed investmentResidential fixed investmentGovernment purchases of goods and services4.45.712.8—22.32.1-2.53.5-8.31.3.3-4.6-2.6-.12.7.74.7-19.42.92.66.5-8.44.52.62.1.13.3-8.01.6FederalDefenseState and local2.63.41.03.01.41.42.1.310.79.3-1.76.66.8.12.93.8.7Real final salesReal final sales to domestic purchasers 35.44.72.61.7-.4-.5.0.6.31.31.81.7Change in billions of 1972 dollars:Change in business .inventoriesNet exports of goods and services'Preliminary.2 Based on annual data.9 Final sales less exports plus imports.Source: Department of Commerce, Bureau of Economic Analysis.5.111.2-17.514.9-3.91.411.0-9.1-22.5-15.4-4.41.7PERSONAL CONSUMPTION EXPENDITURESDespite declines in production, employment, and real wage andsalary income, real disposable (after-tax) personal income increasedin 1982, due in part to the reduction in personal income tax ratesand an increase in transfer payments. The average effective Federalpersonal income tax rate fell from 12.5 percent to 11.4 percent betweenthe third quarters of 1981 and 1982. Real personal consumptionexpenditures increased 2.6 percent in 1982 to reach their highestshare of real GNP since 1949. Although real personal saving declinedfrom its high level at the end of 1981, the personal saving ratein 1982 was higher than in any year since 1976, as shown in Table6-2.Consumer purchases of durable goods increased 6.5 percent inreal terms in 1982, the first increase since 1978. The turnaround occurredearly in the year, when auto sales rebounded from the depressedlevel of late 1981. Sales then languished until late in theyear, when they again climbed, due in part to the decline in interestrates that produced lower financing costs. Nevertheless, domestic127

TABLE 6-2.—Real household income, consumption, saving, and residential investment, 1978-82[Percent change, fourth quarter to fourth quarter and 5-year average]Item 1978 1979 1980 1981 1982 »5-yearaverage 1 *Income by type:Labor Income 3 .....Other income *Net transfer payments'..,4.78.9-3.01.23.54.3-0.4-1.013.10.98.8-1.91U1.64.63.9Personal Income4.92.02.52.4Less.- Federal tax paymentsOther tax and nontax payments*Disposable personal income10.95.44.4Personal consumption expenditures...Personal saving rate T 61Personal saving-5.3Housing starts 8Single familyMuftifamilyMobile home shipments'Residential investment....-3.32.3-7.5-.2-29.2=7.9-9.8-8.3-5.2-2.5-6.7-12.7-45.0-37.3-13.1-19.448.038.912.14.5-14.4-5.3-2.8=8.0'Preliminary.'Based on annual data.Wage and salary disbursements and other labor income.•Proprietors' income, rental income, personal dividend income, and personal interest income."Transfer payments less personal contributions for social insurance.'State and local tax and nontax payments plus Federal nontax payments.Annual average.•Units.Note.—Income items, consumption, and saving deflated by the personal consumption deflator; residential investment deflatedby the residential deflator.Sources: Department of Commerce (Bureau of Economic Analysis and Bureau of the Census) and Council of Economic Advisers.auto sales in 1982 for the entire year were lower than in any yearsince the early 1960s.The extended period of weakness in durable goods sales accompanieda reduction in the burden of consumer debt. Consumer installmentdebt repayments relative to disposable personal income fellsteadily from their 1978 peak to reach, by the third quarter of 1982,their lowest level since 1964, as illustrated in Chart 6-3. Total householddebt has also fallen sharply relative to households' net worth.RESIDENTIAL INVESTMENTAs indicated in Table 6-2,1982 showed the first rise in housing activityin 5 years. By the fourth quarter of 1982, housing starts rose to 1.25million at an annual rate, up nearly 45 percent from their trough of865,000 units in the fourth quarter of 1981. Starts averaged less than onemillion units until mid-1982 as interest rates on mortgage commitmentsstayed around 17 percent. In August, mortgage interest rates beganto fall, dropping below 14 percent by year-end. This drop encour-4.0-1.75.61.81.52.1-11.45.9-23.1.39.35.8-4.31.83.62.6.339.86.4-42.3= 5.53.5.62.6-22.76.544.53.63.12.32.14.16.1-11.6128

Chart 6-3Ratio of Consumer InstallmentCredit to Personal IncomeRATIO (PERCENT)15.014.5 -14.0 -13.5 "1977 1978 1979 1980 19811982SOURCES: DEPARTMENT OF COMMERCE AND COUNCIL OF ECONOMIC ADVISERS,aged the sale of houses, reduced the inventory of unsold new housesrelative to current sales, and spurred new construction.For the first time in recent years, house prices increased at aslower rate than general inflation. Moreover, the conventional measuresof house price increases, which rose less than 3 percent, maywell have overstated the 1982 rise because increased builder andseller financing at below market rates is not fully captured in theprice data. Lower interest costs and more moderate house price increaseshelped to hold down mortgage payments and, thus, mayfavor a recovery in housing investment.BUSINESS FIXED INVESTMENTReal business fixed investment peaked in the last quarter of 1981,having grown at a 5.2 percent annual rate from 1977 to 1981. From129

its 1981 peak to the last quarter of 1982, real business fixed investmentdropped 8.4 percent.The 1982 decline in capital spending was broadly based, affectingeven sectors that had fared well in previous years. Industrial andcommercial construction declined about 1 percent in real terms fromthe fourth quarter of 1981 to the fourth quarter of 1982 havinggrown at an annual rate of more than 10 percent from 1977 to 1981.Computer, communications, and instrumentation equipment investmentfell about 4 percent in 1982, a sharp contrast to over 9 percentannual rate of real growth from 1977 to 1981.In the energy area, real investment in coal mine development continuedto rise strongly in 1982. Real investment in oil field explorationand development dropped 15 percent between the fourth quartersof 1981 and 1982 as weak oil prices impaired cash flow in thepetroleum industry. Reflecting the weakness in overall economicgrowth, investment in transportation equipment—autos, trucks, aircraft,ships, boats, and railroad equipment—continued to decline in1982.Business capital spending is likely to lag behind the recovery in theeconomy. Contracts and orders for new plant and equipment declinedabout 12 percent in real terms between the last quarters of1981 and 1982. In addition, a Department of Commerce survey ofbusiness spending plans indicated that real nonfarm investment willdecline about 5.2 percent in 1983.INVENTORY INVESTMENTSluggish sales and high carrying costs encouraged businessto pare inventories in 1982. A sharp drop in final sales in late1981 triggered a swing to inventory liquidation in the first half of1982. Even the more moderate sales forecasts for the second half of1982 proved overly optimistic, and inventory-sales ratios climbed,prompting further cutbacks in production, employment, and inventories(Chart 6-4). Toward the end of the year, inventories werebrought more in line with sales. Auto inventories, which accountedfor about one-third of inventory liquidation in the final quarter of1982, were especially lean, as the industry's aggressive pricing andmarketing efforts helped to increase sales.THE FARM ECONOMYTotal income per farm family in 1982 fell about 11 percent in realterms. Over two-thirds of farm family earnings came from off-farmsources as income from farm sources declined.Net farm nominal income from farm operations declined from $25billion in 1981 to about $19 billion in 1982. Relatively tight meat130

Chart 6-4RATIO1.85Real Inventory/Sales Ratioand Industrial Production1967=1001601.80 -INDUSTRIAL PRODUCTION,MANUFACTURING(RIGHT SCALE) .A- 1551.75 -1.70 -mm1.65 —1.60••t•tm»\\A\A**/9#*#0»#•#AT,A A/A / U *TVrVy ¥• * • /^ 1 1 f•A •-' -MA A f 1 1 •' if t v\ 1 /1 1 A • 1* 1 /L Wl • fa 1 /!• 1 • 1 ' II1 • 1••I/••1/\l / I If1I V\ / •I »\'\// '1

Lower crop prices, high mortgage rates, and lower inflation werethe major factors leading to a decline in land values. Farm liabilitiescontinued to increase and farmers' debt-to-asset ratio is estimated tohave increased to about 20 percent, a significant rise from the 15 to17 percent range typical of the late 1960s and 1970s.U.S. agricultural policies have once again become a major factor indetermining farm prices and incomes. Federal budget outlays forcommodity price support and related programs soared to $12 billionin fiscal 1982 from $4 billion in the previous fiscal year. A programof voluntary acreage controls, including payments to those who restrictproduction in the 1983-84 crop year, was adopted in 1982 andsupplemented by the addition of the "payment-in-kind" option inearly 1983.Food prices rose about 4 percent in 1982, with marketing costsrising at more than twice the rate of the farm value component offood prices.FOREIGN TRADEA reduction in U.S. trade was a key factor in the decline in aggregatedemand in 1982. The main causes of the decline in net exportswere the strength of the dollar and the worldwide recession. In December1982 the trade-weighted value of the dollar was about 40percent above its low point in 1980. Because exchange-rate appreciationlowers import prices and affects trade volume with a substantiallag, it initially tends to improve the trade balance. By the second halfof 1982, however, the reduced cost competitiveness of U.S. firmsbegan to overwhelm the short-term positive factors.A secondary cause of the deteriorating trade balance was the internationaldebt problem. Some heavily indebted developing countries,especially in Latin America, experienced difficulty in attracting capitalinflows and were forced to cut imports sharply in 1982. Because severalof the major high-debt developing countries have close tradingties with the United States, a large proportion of the import cutscame out of U.S. exports.Cyclical factors had conflicting effects on the trade balance in1982. On one side, the recession in the United States tended toreduce import demand, so that import volume fell more than 4 percent.On the other side, the recession in other industrial countriescontributed to the 13 percent decline in real U.S. exports.GOVERNMENT PURCHASES OF GOODS AND SERVICESReal Federal, State, and local government purchases of goods andservices increased 2.6 percent from the fourth quarter of 1981 to thefourth quarter of 1982. Much of the increase was attributable to a 6.8132

percent increase in real defense purchases. Federal nondefense purchasesrose in real terms, due to a large increase in real purchases ofagricultural commodities by the Commodity Credit Corporation.State and local government purchases were virtually flat.LABOR MARKET DEVELOPMENTSAlong with output, employment declined 1 percent in 1982, asshown in Table 6-3. At the end of the year, employment was 1.7million persons below the peak level reached in the second quarterof 1981. The reduction in employment predominantly occurredamong production workers and other blue-collar employees. Sales,clerical, and service workers' employment did not peak until September1982.TABLE 6-3.—Labor market developments, 1978-82[Fourth quarter of indicated year]Component 1978 | 1979 | 1980 | 1981 | 1982Change in civilian employment....Males 20 years and overFemales 20 years and over..Both sexes 16-19 yearsWhiteBlack and other...Unemployment rate 3 .Males 20 years and overFemales 20 years and over..Both sexes 16-19 yearsWhiteBlack and other..,Participation rate 4 .....Males 20 years and overFemales 20 years and over..Both sexes 16-19 yearsWhiteBlack and other..3.82.75.62.73.37.35.94.15.816.45.111.563.579.850.158.263.662.4Percent change from year earlier 12.31.54.0-.82.23.35.94.45.716.35.211.263.879.651.057.964.062.3-0.2-.61.6-6.6-.1-.6Percent 27.46.26.718.36.513.763.779.251.556.364.061.80.6.22.8-8.9.6-.18.37.17.221.27.315.363.878.852.354.664.261.4-1.0-1.5.7-8.0-1.2.410.710.09.024.39.518.664.178.852.954.164.562.01 1978 data adjusted to reflect changes in sample and estimation procedures, which increased employment and labor force by250,000 in January 1978.2 Seasonally adjusted.3 Unemployed as percent of civilian labor force.* Civilian labor force as percent of civilian noninstitutional population.Note.—Data relate to persons 16 years and over.Source: Department of Labor, Bureau of Labor Statistics.Generally speaking, the older the age cohort, the lower the unemploymentrate. For example, the unemployment rate for the 55 andover age group was 5.7 percent in the final quarter of 1982. Youngworkers experienced the highest unemployment rate. Employment ofthe 16 to 19 year age group has dropped in every year since 1979.This decline was far faster than the decline in the number of persons133

in this age group. Women workers now have somewhat lower unemploymentrates than men, a reversal of the historical relation.The labor force participation rate—the ratio of the labor force tothe population over 16 years of age—has experienced a modestupward drift as women workers continue to join the labor force. Thegrowth in adult women's labor force participation has been strong inthe past. Declining participation has occurred among workers lessthan 20 years of age and among workers, especially males, over 55—who are likely to have an income cushion provided by social security,private pension plans, and savings.WAGES, PRODUCTIVITY, AND PRICESIn response to slack labor markets and lower rates of price inflation,wage increases slowed substantially in 1982. As shown in Table6-4, the rate of increase in several measures of wages and compensationdeclined about 2 percentage points from 1981. The 5.9 percentincrease in the hourly earnings index for private nonfarm workerswas the smallest since 1973. As measured by the employment costindex, wages and salaries of private industry workers increased 6.9percent between the third quarters of 1981 and 1982. The decelerationwas about the same for union and nonunion workers. A surveyof major collective bargaining settlements reached in private industryshowed that in the first 9 months of 1982 the agreements providedwage adjustments that averaged 3.8 percent in the first contract year,exclusive of cost-of-living adjustments, compared with 8.3 percentwhen the same parties last bargained. Total labor compensation inthe nonfarm business sector increased 6.7 percent, compared withAdjusted hourly earnings index 3 .Employment cost index *Union workersNonunion workers.Nonfarm business sector:*TABLE 6-4.—Changes in wages and compensation, 1978-82[Percent change, fourth quarter to fourth quarter and 5-year average]MeasureCompensation per hourReal compensation per hour..19798.4 8.07.7 8.78.0 9.07.6 8.59.0 9.4.0 -2.919809.69.010.98.010.6-1.719818.48.89.68.58.81982*5.9•6.95 7.46 6.66.62.05-yearaverage 1 *'Preliminary.* Based on annual data.'Private nonfarm employees.4 Wages and salaries, private nonfarm industry workers.•Third quarter 1981 to third quarter 1982.'All persons.Sources: Department of Commerce (Bureau of Economic Analysis), Department of Labor (Bureau of Labor Statistics), andCouncil of Economic Advisers.8.28.18.87.89.C134

8.8 percent in 1981. These declines in wage inflation provide a basisfor expecting that recent reductions in price inflation may be sustained.Real compensation per hour rose 2.0 percent in 1982 as pay increasedmore rapidly than consumer prices. This was the first rise inthis series since early 1978 and suggests that the historic trend ofrising real wages and family incomes may resume.Even though output declined for the third straight year, as shownin Table 6-5, labor productivity in the nonfarm business sector experiencedits first substantial improvement since 1977. Lower rates ofincrease in hourly compensation and higher productivity growth togetherresulted in labor costs per unit of output increasing only 4.6percent. This was less than half the rate of increase recorded in1980, when labor productivity was weaker and hourly compensationrose at double-digit rates. The 4.6 percent increase in unit laborcosts was associated with a rise of 4.3 percent in the nonfarm businesssector price deflator.TABLE 6-5.—Productivity, costs, and prices in the nonfarm business sector, 1978-82[Percent change, fourth quarter to fourth quarter and 5-year average]Item 1978 1979 1980 1981 1982 > 5-yearaverage 1 2Output5.60.2-0.6-0.2-1.71.2Output per hour.3-1.9.3-.11.9.0Compensation per hour..9.09.410.68.86.69.0Unit tabor cost8.611.610.28.94.69.0Implicit price deflator8.28.510.79.64.38.31 Preliminary.2 Based on annual data.Note.—Data relate to alt persons.Source: Department of Labor, Bureau of Labor Statistics.By all other measures as well, the rate of inflation declined significantlyin 1982, as shown in Table 6-6. After increasing at doubledigitrates in 1980 and by nearly 9 percent in 1981, the broadestmeasures of inflation—the GNP fixed-weight price index and theGNP implicit price deflator—increased nearly 5 percent in 1982. Theall-urban consumer price index increased 4.5 percent, the slowestrate since 1972. Even when food and energy prices, which were especiallyweak, are excluded, consumer prices increased about 5 percent.Beginning in 1983, the homeownership component of the consumerprice index for all-urban consumers will be computed on a rentalequivalence basis. On this conceptual basis, consumer prices increasedabout 5 percent in 1982.Producer prices of finished goods increased only 3.6 percent in1982, about the same as in 1972 and 1976. Price increases for bothconsumer finished goods and capital equipment showed a markeddeceleration.135

GNP price measures:Fixed-weighted index..Implicit deflatorConsumer prices:'All itemsAll items less food and energy...Producer prices—finished goods:Total..Consumer goodsCapital equipment..TABLE 6-6.—/Vire changes, 1978-82[Percent change, fourth quarter to fourth quarter and 5-year average]Item 1978 1979 1980 1981 1982'8.98.59.08.58.79.07.89.38.212.710.712.713.98.810.310.212.612.212.412.611.78.98.99.610.27.26.89.15.04.64.55.23.63.44.25-yearaverage l1 Preliminary.1 Based on annual data.8 All urban consumers.Source: Department of Commerce (Bureau of Economic Analysis) and Department of Labor (Bureau of Labor Statistics).8.68.29.89.49.19.28.7CREDIT MARKETSDuring the first three quarters of 1982 the total amount of fundsraised in U.S. credit markets averaged slightly more, at an annualrate, than the volume raised in 1981. As shown in Table 6-7, overthe last 5 years the volume of funds raised by the nonfinancial sectorhas dropped from 18.6 percent to 13.6 percent of nominal GNP, areturn to the cyclical lows recorded in 1974 and 1975.TABLE 6-7.—Funds raised by the nonfinancial sector of the economy, 1978-82[Billions of dollars, except as noted]Sector 1978 1979 1980 1981 1982 •Total funds raised401.7402.0397.1406.9413.7Households169.3176.5117.5120.487.0Business........126.3146.9143.9149.5139.1Federal Government53.737.479.287.4139.1State and local government...19.120.227.322,337.2Foreign33.221.029.327.311.1Funds raised as percent of GNP....18.616.615.113.913.6'Average of first three quarters at seasonally adjusted annual rate.Note.—Detail may not add to total due to rounding.Sources: Department of Commerce (Bureau of Economic Analysis) and Board of Governors of the Federal Reserve System.Different sectors of the credit market experienced widely differenttrends in 1982. High interest rates 1 in the first half of the year andsluggish disposable income contributed to reduced borrowing for136

housing. Borrowing by the nonfinancial business sector also declinedduring the first three quarters of 1982. However, the easing of creditconditions in late summer encouraged an expansion in net corporatebond issues; the funds raised were used in part to pay off short-termdebt.Combined borrowing of State and local governments and the FederalGovernment rose approximately 60 percent in the first threequarters of 1982 from 1981 levels, as the growth of tax receiptsslowed sharply relative to expenditures. For fiscal 1982, U.S. Treasuryborrowing totaled $135.0 billion, of which $23.4 billion was usedfor making direct loans. Federally guaranteed loans declined sharplyfrom 1981 levels, but borrowing by federally sponsored enterprisessurged. Total Federal and federally assisted borrowing climbed to48.9 percent of the funds raised in U.S. credit markets, surpassingthe previous peacetime peak of 41 percent reached in 1976.INTEREST RATESAs shown in Chart 6-1, interest rates rose in the first part of 1982but began to, decline sharply in the summer. The decline in interestrates partly reflected diminishing inflationary expectations that tendto be built into nominal interest rates.The yield on 3-month Treasury bills, which had averaged justunder 11 percent late in 1981, held in the 12 to 13 percent rangeuntil mid-1982 and then fell to less than 8 percent in the closingmonths of the year. The prime rate charged by commercial banksbegan the year at 15% percent, climbed to 17 percent in February,and then in July began a steady fall to 11^ percent by December.The corporate Aaa bond rate, which peaked at 1534 percent in February,fell below 12 percent by November.The expected real after-tax interest rate is the correct measure ofthe cost of credit to borrowers and lenders. It is approximately equalto the after-tax nominal interest rate less the anticipated rate of inflation.For example, with a 12 percent nominal interest rate, the aftertaxcost of credit to a borrower in the 30 percent marginal tax bracketis 8.4 percent. If a 5 percent inflation rate is anticipated, the expectedreal after-tax cost of credit is 3.2 percent.Because the tax brackets of borrowers differ widely and the expectedrate of inflation cannot be observed directly, the realized realpretax interest rate—-approximated by the nominal interest rate lessthe actual rate of inflation—is a more convenient measure of the costof credit. The nominal 3-month Treasury bill rate and the correspondingrealized real pretax rate are shown in Chart 6-5 for theperiod since 1955. The real pretax Treasury bill rate was abnormallylow in 1972-73 and 1976-77, tending to increase aggregate demand.137

It then moved to relatively high levels from 1980 through the firsthalf of 1982, tending to reduce aggregate demand. By the end of1982, however, the real pretax Treasury bill rate had fallen to aboutthe same level as its highs in the 1950s and 1960s.Chart 6-5Nominal and Real 3-Month Treasury Bill YieldPERCENT15 -10 ~1955 1960 1965 1970 1975 1980'CONVERTED TO EFFECTIVE ANNUAL YIELD FROM DISCOUNT BASIS.^EQUALS NOMINAL YIELD LESS ACTUAL RATE OF INFLATION, DEFINED BY PERSONALCONSUMPTION DEFLATOR, OVER THE PERIOD TO MATURITY. DEFLATOR FOR FIRSTQUARTER 1983 FORECAST BY COUNCIL OF ECONOMIC ADVISERS.SOURCES: DEPARTMENT OF COMMERCE, BOARD OF GOVERNORS OF THE FEDERAL RESERVESYSTEM, AND COUNCIL OF ECONOMIC ADVISERS.The sharp run-up and subsequent decline in real pretax ratesduring the 1980-82 period probably reflect in part the adjustment ofcredit markets to the decontrol of interest rates. During the late1970s variable interest rate time and savings accounts were introducedby depository institutions, and the process of financial innovationspeeded up the movement of funds out of regulated, fixed-rateaccounts. In addition, the consumer has recently become a more vig-138

orous competitor for credit as usury laws have been eliminated. As aresult, the financial system now relies less on nonprice rationing ofcredit and may exhibit higher interest rates when credit is tight.Even though real short-term rates have returned more nearly tothe levels of the 1950s and 1960s, the equilibrium level of both longandshort-term rates may now be somewhat higher than before. Tothe extent that the accelerated cost recovery system in the EconomicRecovery Tax Act of 1981 reduced the tax on earnings of depreciableproperty, it raised the real interest rate that business borrowersare willing to pay. In addition, large budget deficits in many countrieshave lowered national saving rates, tending to lead to higherreal interest rates worldwide.At the end of-1982, long-term interest rates were considerablyhigher than short-term interest rates, perhaps reflecting the concernthat-the inflation rate may be higher in the future than at present. Tothe extent that these inflationary expectations decline, further declinesin nominal long-term interest rates can be anticipated.MONETARY DEVELOPMENTSThe Administration's economic program includes support for apolicy of gradual reduction in the rate of monetary growth in orderto bring down inflation. Consistent with this policy, the Federal Reservereduced the Ml target growth rate range from 3.5 to 6 percentin 1981 to 2.5 to 5.5 percent in 1982. The target range for M2growth was kept at 6 to 9 percent.In its February 1982 review of the tentative target ranges for 1982,established in July 1981, the Federal Open Market Committee recognizedthat the rapid increase of Ml in December 1981 and January1982 had already placed it well above the top of its target range.Judging that the rapid money growth was temporary and that nobasic change in the relation between the monetary aggregates andnominal GNP had occurred, the committee reaffirmed the tentativetargets for 1982.Consequently, the Federal Reserve slowed the growth of nonborrowedreserves during the first half of the year, with a view to graduallybringing Ml and M2 back into their target ranges. By June, Mlwas within its target range, while M2 remained somewhat above thetop of its range. Because Ml had shown virtually no growth sinceJanuary, resumption of growth implied a step-up in the provision ofbank reserves. After midyear, continued weakness in the economy,and a more ample supply of reserves and money contributed to asharp drop in short-term interest rates. The 3-month Treasury billrate fell from about 12 percent in July to 9 percent in August. Aseries of reductions in the Federal Reserve's discount rate followed,139

maintaining its alignment with short-term market rates and preventingsharp changes in the incentive for banks to borrow from the FederalReserve.Starting in August, Ml growth began to speed up. By the fourthquarter of 1982, Ml had risen 8.5 percent above its level in thefourth quarter of 1981, well above the upper end of the 1982 targetrange. Over the same period, M2 increased 9.8 percent, slightly morethan the top of its target range. These increases in the monetary aggregatesoccurred against the background of an economy that wasstill in recession.Part of the strength in Ml may be attributable to the effects of alarge volume of All-Savers Certificates maturing in the fourth quarterof 1982, as the maturing funds moved through checking accounts orwere temporarily "parked" there. Federal Reserve analysis suggestedthat an additional factor was an unusual demand for liquidity. Muchof the increase in Ml was in interest-bearing negotiable order ofwithdrawal (NOW) accounts, which provide elements of both savingsand transactions accounts. From the fourth quarter of 1981 to thefourth quarter of 1982, checkable deposits other than demand depositsgrew about 35 percent. With market interest rates falling, theseinterest-bearing deposits, such as NOW accounts, provided a safeand convenient store of liquidity at a time of economic and financialuncertainty. Increased liquidity demand may also account for theabove-target growth of M2.As discussed in Chapter 1, the behavior of the "income velocity"measures—the ratios of GNP to the various monetary aggregates—was unusual in 1982. The velocity of Ml rose 3.2 percent a year onaverage over the 20 years ending in 1981, but in 1982 it declined 4.9percent. While a tendency toward slower velocity is not unusual inthe midst of a recession when interest rates generally are falling, theonly other fourth quarter to fourth quarter decline in Ml velocitysince the beginning of the current series in 1959 was a 0.1 percentfall in 1967. The velocity of M2, which historically has been relativelytrendless, declined 6.0 percent in 1982; the largest previous declinewas 3.8 percent in 1976. Without some accommodation of monetarygrowth—particularly for M1 —to this drop in velocity, monetarypolicy would have been more restrictive than had been"intendedwhen the 1982 targets were established.The number, size, and rapidity of recent changes in the financialsector may well have affected the behavior of velocity. As indicated inTable 6-8, checkable deposits other than ordinary demand depositsaccounted for only 2.3 percent of Ml in December 1978. In December1980, just before NOW accounts were authorized nationally,other checkable deposits were 6.5 percent of Ml, but by December140

1982 their share had risen to over 21 percent. Because these interestbearingdeposits may be regarded by their holders in part as savingsrather than solely as transactions balances, the reported growth ofMl in 1981 and 1982 probably overstates the growth in transactionsbalances.TABLE 6-8.—Components of Ml and M2, 1978-82[Averages of daily figures; billions of dollars; seasonally adjusted, except as noted]Item19781979December198019811982 »CurrencyPlus* Demand deposits %Equals- MlOther checkable depositsPlus* Savings deposits 3Small time depositsOvernight repurchase agreements (RPs) and overnight Eurodollars *...Equals- M2 9Money market mutual fund balances (excluding institution accounts)*97 4257 484363 2479 9533 924.0711,403.91061265 916 9389 04217652 626.334 41,518.91161271426 9414 5398.9751.735.061.91,656.21231240 777 0440 9343 6854 738.115121,822.7132 6244 61013478 5400 3904 245.6177 51,999.11 Preliminary.includes travelers checks.'Includes Money Market Deposit Account introduced December 14, 1982.4 Not seasonally adjusted.B M2 will differ from the sum of components by a consolidation adjustment that represents the estimated amount of demanddeposits and vault cash held by thrift institutions to service time and savings deposits.Source: Board of Governors of the Federal Reserve System.In general, the demand for any particular monetary aggregate—and hence its income velocity—depends in part on the difference betweenmarket rates of interest and the rates earned on the deposits inthat aggregate. Consequently, the increased portion of Ml depositsthat pay interest and the decline in market interest rates have combinedto lower Ml velocity.The rapid growth of general purpose and broker/dealer moneymarket mutual fund balances, which are included in M2 but not inMl, has tended to raise Ml velocity and to lower M2 velocity. FromDecember 1980 to December 1982 these money market mutual fundbalances grew from $61.9 billion to $177.5 billion, which exceededthe growth in other checkable deposits by $41.2 billion. Althoughmost money market mutual fund balances are subject to transfer bycheck, the average turnover of these accounts has been relatively low.Interpretation of the macroeconomic significance of changes in themonetary aggregates became more difficult in late 1982 when theDepository Institutions Deregulation Committee authorized two newaccounts. In mid-December, banks and thrift institutions introduced aMoney Market Deposit Account with limited transactions capabilitiesand no interest rate ceiling. Within about 2 weeks, these accounts141

had attracted an astonishing $87 billion. The Depository InstitutionsDeregulation Committee also authorized a new super NOW accounteffective January 1983, with no transactions limitations and no interestrate ceilings, having the same $2,500 minimum balance as theMoney Market Deposit Account.Financial deregulation and innovation favorably affect the efficiencyof the U.S. financial system but also complicate the implementationof monetary policy. Large asset reallocations caused by changesin the financial and regulatory system can have large and unpredictableeffects on Ml and M2 and on their relations to nominal GNP. Inlight of the particular difficulties with regard to Ml, the FederalOpen Market Committee has voted to place greater emphasis on M2and M3 for an indefinite period. However, the broad framework oftargeting the monetary aggregates has been retained, as have the reserveoperating procedures, for implementing it.PROSPECTS FOR 1983Assuming that the Administration's 1984 budget proposals are enactedand that the monetary aggregates grow within the Federal Reserve'starget ranges, the prospects for a moderate, sustainable economicrecovery beginning early in 1983 are good (Table 6-9). As wastrue in the early stages of previous recoveries, the unemploymentrate is likely to stabilize for several months before a downward trendbecomes evident. A pattern of reduced inflation in 1982 is expectedto continue in 1983. The sharp rise in the Federal budget deficit reflectsreduced receipts because of lower inflation, as well as the effectsof the 1981-82 recession.The expectation of economic recovery is based on the view thatcontinuing strength in household and defense spending will bring aturnaround in the inventory cycle. Cuts in production and increasesin sales brought business inventories more in line with sales by theend of 1982. Future sales gains are thus likely to be met by increasesin production, income, and employment, enhancing sales further.Once even a moderate but sustained increase in sales is underway,this sequence of events may lead to a temporary surge of above-averageeconomic growth.Increases in sales will come primarily from households whoseincome will be bolstered by the third stage of the personal incometax cut, whose debt burden has declined sharply relative to incomeand assets, and whose financial assets, in many cases, appreciated inrallies in the stock and bond markets. With continued moderate increasesin food and oil prices, more income will become available forother consumer purchases. Because outlays on durable consumer142

TABLE 6-9.—Economic outlook for 1983Item 19822 1 *1983forecastPercent change (fourth quarter to fourth quarter):Real gross national productPersonal consumption expenditures.,Nonresidential fixed investmentResidential investmentFederal purchasesState and local purchases6NP implicit price deflatorCompensation per hour 2Output per hour 2Level in fourth quarter: 3Unemployment rate (percent) *Housing starts (millions of units, annual rate)....-1.22.S-8.44.56.6.14.66.61.910.7n3.12.727*i1.2-2.05.66.02.210.41.5Preliminary.2 Nonfarm business, all persons.3 Seasonally adjusted.4 Actual rate for 1982 is percent of civilian labor force; forecast rate for 1983 is percent of total labor force including personsin the Armed Forces stationed in the United States.Sources: Department of Commerce (Bureau of Economic Analysis and Bureau of the Census), Department of Labor (Bureau ofLabor Statistics), and Council of Economic Advisers.goods and houses have been depressed for the last 4 years, consumersare expected to devote increases in their income, and perhapssome of the recent gains in their financial wealth, to replenishingtheir holdings of durable goods. The sharp easing of credit termsand lower house price increases have already encouraged morehouseholds to consider buying houses. This uptrend is expected tointensify in 1983. New house purchases are invariably followed by apickup in expenditures for furniture, appliances, and other housingrelatedgoods.The pace of the recovery in 1983 will probably be moderate by historicalstandards. Low capacity utilization rates and the need to rebuildcorporate liquidity will restrain capital spending. The worldwiderecession and the lagged effect of the appreciation of the dollarwill curtail the growth of exports. Continued reductions in the nondefensepublic sector will limit it as a source of increased aggregatedemand.PROSPECTS AND POLICIES BEYOND 1983Economic prospects for the rest of the 1980s depend greatly onthe economic policies that are followed. The Administration believesthat the four-point program it has pursued—reducing the growth ofFederal outlays, taxes, regulation, and the money supply—constitutesthe best approach for attaining and maintaining the economic goalsset forth in the Full Employment and Balanced Growth Act of 1978.143

The Full Employment and Balanced Growth Act calls for annualnumerical goals for several key economic indicators over a 5-yearperiod. The projections provided in Table 6-10 show gradual, steadyprogress toward our economic goals. These figures illustrate the Administration'sbelief, explained in Chapter 1, that policies based onconsistent, long-term objectives can simultaneously achieve full employment,price stability, and sustained growth in real income. Amajor cause of our present economic ills was the inclination in thepast to pursue one economic goal single-mindedly, without adequateattention to the longer run consequences for other economic objectives.This Administration remains determined to avoid the errors ofpast policies.TABLE 6-10.—Projections of economic goals, 1983-88[Calendar years, except as noted]Item 1983 1984 1985 1986 19871988LevelEmployment (millions) 1101.5104.2107.0109.6112.3114.9"Jnemployment rate (percent) a .10.79.98.98.17.36.5: ederal budget outlays as percent of GNP (fiscal year basis).Consumer prices 325.24.924.3 24.1Percent change4.6 4.623.94.623.54.523.04.4Real GNP1.43.94.04.04.04.0Real compensation per hour *1.2.81.11.41.61.6Output per hour *2.11.91.61.71.61.71 Labor force series includes persons in the Armed Forces stationed in the United States.3 Unemployed as percent of total labor force. See footnote 1.3 Wage earners and clerical workers.•Nonfarm business, all persons.Source: Council of Economic Advisers.A major prerequisite for achieving our economic goals is control ofinflation. Marked progress toward this end has been made in the last2 years. With continued moderate growth in the monetary aggregates,increased reliance on the private sector, and increased domesticand international economic competition, the prospects for sustainingand extending the progress against inflation are now quite favorable.An important factor in achieving and sustaining high real economicgrowth is a high level of capital formation. Chapter 4 of this volume,which fulfills the legislative requirement for an annual InvestmentPolicy Report, explains that lower inflation and the recently enactedtax incentives for saving and investment are the important first stepsin fostering capital accumulation. Controlling the Federal deficit isnow the single most important method of encouraging more capitalformation.144

A critical element in achieving healthy economic growth is maintaininga liberal worldwide trading system. As explained in detail in Chapter 3,the world's economies are now more integrated than ever before. Thissystem has recently experienced severe strains. It is of utmost importancethat these challenges be met in a manner consistent with an open,growing, balanced network of international trade.Just as an open worldwide trading system is crucial for the freeworld economies, a competitive free market system unfettered by unnecessarygovernment regulation is essential for a strong domesticeconomy. As Chapter 5 points out, substantial progress toward reductionof traditional price and entry regulation has been made inrecent years, but further opportunities for deregulation exist.The year 1983 is expected to be the first of many years of sustainedeconomic growth. Continued economic growth is the only wayto sustain progress in reducing unemployment. But macroeconomicpolicies alone cannot reduce structural unemployment and achieve anacceptable level of employment. Chapter 2 describes some of themacroeconomic policies that, along with a sustained recovery, arenecessary to achieve noninflationary full employment. These policies aredesigned". . . to foster and promote free competitive enterprise . . ."as mandated in the Full Employment and Balanced Growth Act.One major remaining threat to a sustainable, balanced recovery isthe danger that large Federal budget deficits would preclude the continuingdeclines in real interest rates that are necessary for healthygrowth in all sectors of the economy. The Administration's 1984budget provides a plan which can lead to a steady decline in budgetdeficits and thus, ultimately, to a balanced Federal budget.145

Appendix AREPORT TO THE PRESIDENT ON THE ACTIVITIESOF THECOUNCIL OF ECONOMIC ADVISERS DURING 1982

LETTER OF TRANSMITTALCOUNCIL OF ECONOMIC ADVISERS,Washington, D.C., December 31, 1982.MR. PRESIDENT:The Council of Economic Advisers submits this report on its activitiesduring the calendar year 1982 in accordance with the requirementsof the Congress, as set forth in section 10(d) of the EmploymentAct of 1946 as amended by the Full Employment and BalancedGrowth Act of 1978.Sincerely,MARTIN FELDSTEIN, ChairmanWILLIAM A. NISKANENWILLIAM POOLE149

Council Members and their dates of service are listed below:NamePositionOath of office dateSeparation dateEdwin 6. NourseLeon H. KeyserlingJohn D. ClarkRoy BloughRobert C TurnerArthur F. BurnsNeilH. 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. McCrackenHendrikS. HouthakkerHerbert SteinEzra SolomonMarina v.N. WhitmanGary L SeeversWilliam J FellnerAlan GreenspanPaul W. MacAvoyBurton G MalkielCharles L. SchultzeWilliam D. NordhausLyle E GramleyGeorge C. EadsStephen M. GoldfeldMurray L WeidenbaumJerry L. JordanWilliam A. NiskanenMartin FeldsteinWilliam PooleChairmanVice ChairmanActing ChairmanChairmanMemberVice ChairmanMemberMemberChairmanMemberMemberMemberChairmanMemberMember .MemberMemberChairmanMemberMemberMemberChairmanMemberMemberMemberChairmanMemberMemberMemberChairmanMemberMemberChairmanMemberMemberMemberMemberChairmanMemberMember . .ChairmanMemberMemberMemberMemberChairmanMemberMemberChairmanMemberAugust 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, 1981July 14,1981June 12, 1981October 14, 1982December 10, 1982November 1, 1949.January 20, 1953.February 11,1953.August 20, 1952.January 20,1953.December 1,1956.February 9, 1955.April 29, 1955.January 20,1961.October 31, 1958.January 31,1959.January 20,1961.January 20,1961.November 15, 1964.July 31, 1962.December 27,1962.February 15, 1968.August 31, 1964.February 1,1966.January 20. 1969.June 30, 1968.January 20, 1969.January 20, 1969.December 31, 1971.July 15, 1971.August 31, 1974.March 26,1973.August 15, 1973.April 15, 1975.February 25,1975.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.July 31, 1982.150

Report to the President on the Activities of theCouncil of Economic Advisers during 1982The Employment Act of 1946 (P.L. 304-79th Congress), as amended,provides the statutory base for the activities of the Council ofEconomic Advisers. The Council, through the Chairman, providesadvice to the President on a wide range of domestic and internationaleconomic policy issues.Martin Feldstein became Chairman on October 14, 1982, succeedingMurray L. Weidenbaum, who returned to Washington University(St. Louis). The Chairman is on leave from Harvard University,where he is a Professor of Economics. On July 31, 1982, Jerry L.Jordan resigned to return to the University of New Mexico, where heis a Professor of Economics at the Anderson Schools of Management.On December 10, 1982, William Poole became a Member of theCouncil. Mr. Poole is on leave from Brown University where he is aProfessor of Economics. William A. Niskanen continued to serve as aMember.MACROECONOMIC POLICIESAs is its tradition, during 1982 the Council devoted much of itstime to assisting the President in the formulation of broad economicpolicy objectives and the programs to carry them out. The developmentof economic assumptions and monitoring of current developments,under Council Member Jordan and subsequently CouncilMember Poole, were an area of major interest. Monetary policy developmentsreceived especially close attention.Council Member Jordan and later Council Member Poole chairedthe interagency subcabinet "Troika" forecasting group, consisting ofrepresentatives from the Department of the Treasury and the Officeof Management and Budget, with participation by the Department ofCommerce. The Chairman of the Council continued his responsibilityfor presenting to the President the economic assumptions developedwith the Office of Management and Budget and the Departmentof the Treasury.Council Members chaired or participated in numerous CabinetCouncil working groups dealing with such issues as economic statistics,Federal credit programs, alternatives to Federal regulation, andFederal housing programs.151

The Chairman actively participated during the early months of theyear, and then during the late fall budget cycle, in Cabinet level reviewsof agency budget requests and appeals.MICROECONOMIC POLICIESA wide variety of microeconomic issues received Council attentionduring the year. Council Member Niskanen chaired Cabinet Councilworking groups dealing with employee pension legislation and alternativesto Federal regulation. Trade issues were an area of continuingattention.The Council assisted in the preparation of agency guidelines forimplementing Executive Order 12291 dealing with Executive Officereview of agency regulatory proposals, and worked closely with theOffice of Management and Budget on selected regulatory issues.PUBLIC INFORMATIONThe Council's Annual Report is the principal medium through whichthe Council informs the public of its work and its views. It is also animportant vehicle for presenting and explaining the Administration'sdomestic and international economic policies. Distribution of theReport in recent years has averaged about 50,000 copies. The Councilalso assumes primary responsibility for the monthly Economic Indicators,a publication prepared by the Council's Statistical Office, underthe supervision of Catherine H. Furlong. The Joint Economic Committeeissues the Indicators, which has a distribution of approximately10,000 copies. Information is also provided to members of the publicthrough speeches and other public appearances by the Chairman,Members, and staff economists of the Council.ORGANIZATION AND STAFF OF THE COUNCILOFFICE OF THE CHAIRMANThe Chairman is responsible for communicating the Council'sviews to the President. This function is carried out through directconsultation with the President and through written memoranda andreports on economic developments and on particular programs andproposals. The Chairman exercises ultimate responsibility for directingthe work of the professional staff. He represents the Council atmeetings of the full Cabinet and the various Cabinet Councils, andthe Trade Policy Committee.COUNCIL MEMBERSThe two Council Members are responsible for all subject mattercovered by the Council, including direct supervision of the work ofthe professional staff. Members represent the Council at a wide vari-152

ety of interagency and international meetings and assume major responsibilityfor selecting issues for Council attention.In practice, the small size of the Council permits the Chairman andCouncil Members to work as a team in most circumstances. Therewas, however, an informal division of subject matter among them in1982. Mr. Jordan and subsequently Mr. Poole, assumed primary responsibilityfor domestic and international macroeconomic analysis,economic projections, and monetary and financial issues. Mr. Niskanenis primarily responsible for microeconomic and sectoral analysis,international trade questions, and regulatory issues.PROFESSIONAL STAFFAt the end of 1982 the professional staff consisted of the SpecialAssistant to the Chairman, who also acts as staff director, the SeniorStatistician, a domestic policy economist, an international policyeconomist, 12 senior staff economists, 3 staff economists, and 6junior staff economists.The professional staff and their special fields at the end of 1982were:Eric I. HemelSpecial Assistant to the ChairmanLawrence H. Summers Domestic Policy EconomistPaul R. Krugman , International Policy EconomistSenior Staff EconomistsLincoln F. AndersonGeoffrey O. CarlinerDaniel J. FrischDavid R. HendersonThomas J. KniesnerEvan R. KwerelThomas S. McCalebStephen K. McNeesGlenn L. NelsonAdrian W. ThroopRobert S- VillanuevaBenjamin ZycherCatherine H. FurlongEconomic ForecastingInternational TradeTaxation and Social Insurance ProgramsHealth Policy and Social Insurance ProgramsLabor and Employment PolicyRegulatory Policies and Natural ResourcesTaxation and Public FinanceMacroeconomic PolicyAgricultural PolicyMonetary Policy and Financial RegulationCurrent Economic Conditions, Housing, andEconomic ForecastingEnergy Policy and RegulationStatisticianSenior StatisticianStaff EconomistsLawrence B. Lindsey Taxation and Public FinanceN. Gregory Mankiw Macroeconomic Policy and Public FinanceRobert H. MeyerLabor and Employment Policy153

Junior Staff EconomistsChristopher B. Ballinger World Trade and International FinanceJohn H. CochraneMacroeconomic Analysis and ForecastingJohn S. EarlePublic Finance and Labor PolicyThomas W. Gilligan Transportation and Regulatory PolicyDavid S. Reitman Social Insurance Programs and GeneralBudget PolicyDan C. RobertsFinancial Institutions and MacroeconomicPolicyCatherine H. Furlong, Senior Statistician, continued to be incharge of the Council's Statistical Office. Mrs. Furlong has primaryresponsibility for managing the Council's statistical informationsystem. She supervises the publication of Economic Indicators and thepreparation of all statistical matter in the Economic Report. She alsooversees the verification of statistics in memoranda, testimony, andspeeches. Natalie V. Rentfro, Linda A. Reilly, and Barbara L. Sibelassist Mrs. Furlong.Serving as consultants during the year were Stephen H. Brooks(consultant), Jose A. Gomez-Ibanez (Harvard University), and RobertA. Leone (Harvard University).In preparing the Economic Report the Council relied upon the editorialservices of John Phillip Sawicki.SUPPORTING STAFFThe Administrative Office of the Council of Economic Advisersprovides general support for the Council's activities. Serving in theAdministrative Office were Elizabeth A. Kaminski, Staff Assistant tothe Council, and Catherine Fibich, Administrative Assistant.Members of the secretarial staff for the Chairman and CouncilMembers during 1982 were Patricia A. Lee, Susan A. Lindsey, GeorgiaA. O'Connor, and Alice H. Williams. Secretaries for the professionalstaff were Carolyn L. Bazarnick, Bessie M. Lafakis, RosemaryM. Rogers, Margaret L. Snyder, and Lillie M. Sturniolo.DEPARTURESThe Council's professional staff are in most cases on leave of absencefrom universities, other government agencies, or research institutions.Their tenure with the Council is usually limited to 1 or 2years. Senior staff economists who resigned during the year and theirsubsequent affiliations were James B. Burnham (The World Bank),William D. Dobson (Purdue University), Michele U. Fratianni (IndianaUniversity), Steven H. Hanke (Johns Hopkins University), Laur-154

ence J. Kotlikoff (Yale University), Michael J. McKee (Department ofthe Treasury), David C. Munro (General Motors), Susan C. Nelson(Department of the Treasury), Allen M. Parkman (University of NewMexico), Paul H. Rubin (Baruch College), and Elinor Y. Sachse (consultant).Junior economists who resigned in 1982 were Robert G. Murphy(Massachusetts Institute of Technology), Chris P. Varvares (WashingtonUniversity, St. Louis), and F. Katharine Warne (Yale University).155

Appendix BSTATISTICAL TABLES RELATING TO INCOME,EMPLOYMENT, AND PRODUCTION

CONTENTSNATIONAL INCOME OR EXPENDITURE:PageB-l. Gross national product, 1929-82 163B-2. Gross national product in 1972 dollars, 1929-82 164B-3. Implicit price deflators for gross national product, 1929-82 166B-4. Fixed-weighted price indexes for gross national product, 1972weights, 1959-82 168B-5. Changes in gross national product and GNP price measures, 1929-82 169B-6. Gross national product by major type of product, 1929-82 170B-7. Gross national product by major type of product in 1972 dollars,1929-82 171B-8. Gross national product by sector, 1929-82 172B-9. Gross national product by sector in 1972 dollars, 1929-82 173B-10. Gross national product by industry, 1947-81 174B-l 1. Gross national product by industry in 1972 dollars, 1947-81 175B-12. Gross domestic product of nonfinancial corporate business, 1929-82 176B-l3. Output, costs, and profits of nonfinancial corporate business,1948-82 177B-14. Personal consumption expenditures, 1929-82 178B-15. Gross private domestic investment, 1929-82 180B-I6. Gross and net private domestic investment, 1929-82 181B-17. Inventories and final sales of business, 1946-82 182B-18. Inventories and final sales of business in 1972 dollars, 1947-82 183B-l9. Relation of gross national product, net national product, and nationalincome, 1929-82 184B-20. Relation of national income and personal income, 1929-82 185B-21. National income by type of income, 1929-82 186B-22. Sources of personal income, 1929-82 188B-23. Disposition of personal income, 1929-82 190B-24. Total and per capita disposable personal income and personal consumptionexpenditures in current and 1972 dollars, 1929-82 191B-25. Gross saving and investment, 1929-82 192B-26. Saving by individuals, 1946-82 193B-27. Number and median income (in 1981 dollars) of families and persons,and poverty status, by race, selected years, 1947-81 194POPULATION, EMPLOYMENT, WAGES, AND PRODUCTIVITY:B-28. Population by age groups, 1929-82 195B-29. Noninstitutional population and the labor force, 1929-82 196B-30. Civilian employment and unemployment by sex and age, 1947-82.. 198B-31. Selected employment and unemployment data, 1948-82 199B-32. Civilian labor force participation rate by demographic characteristic,1954-82 200159

B-S3. Civilian unemployment rate by demographic characteristic,1948-82 201B-34. Unemployment by duration, 1947-82 202B-35. Unemployment by reason, 1967-82 203B-36. Unemployment insurance programs, selected data, 1946-82 204B-37. Wage and salary workers in nonagricultural establishment, 1929-82 205B-38. Average weekly hours and hourly earnings in selected private non-B-39.agricultural industries, 1947-82 206Average weekly earnings in selected private nonagricultural industries,1947-82 207B-40. Productivity and related data, business sector, 1947-82 208B-41. Changes in productivity and related data, business sector, 1948-82. 209PRODUCTION AND BUSINESS ACTIVITY:B-42. Industrial production indexes, major industry divisions, 1929-82.... 210B-43. Industrial production indexes market groupings 1947-82 211B-44. Industrial production indexes, selected manufactures, 1947-82 212B-45. Capacity utilization rate in manufacturing, 1948-82 213B-46. New construction activity, 1929-82 214B-47. New housing units started and authorized 1959-82 216B-48.Nonfarm business expenditures for new plant and equipment1947-83 217B-49. Sales and inventories in manufacturing and trade, 1947-82 218B-50. Manufacturers' shipments and inventories, 1947-82 219B-51. Manufacturers' new and unfilled orders, 1947-82 220PRICES:B-52. Consumer price indexes, major expenditure classes, 1929-82 221B-53. Consumer price indexes, selected expenditure classes, 1939-82 222B-54. Consumer price indexes, commodities, services, and specialgroups, 1939-82.. 224B-55. Changes in consumer price indexes, commodities and services,1948-82 225B-56. Changes in special consumer price indexes, 1958-82 226B-57. Producer price indexes by stage of processing, 1947-82 227B-58. Producer price indexes by stage of processing, special groups,1974-82 229B-59. Producer price indexes by major commodity groups, 1940-82 230B-60. Changes in producer price indexes for finished goods, 1950-82 232MONEY STOCK, CREDIT, AND FINANCE:B-61. Money stock measures and liquid assets, 1959-82 233B-62. Components of money stock measures and liquid assets, 1959-82... 234B-63. Commercial bank loans and investments, 1939-82 235B-64. Total funds raised in credit markets by nonfinancial sectors, 1974-82 236B-65. Federal Reserve Bank credit and member bank reserves, 1929-82... 238B-66.Aggregate reserves of depository institutions and monetary base,1959-82 239B-67. Bond yields and interest rates, 1929-82 240B-68. Consumer credit outstanding and net change, 1950-82 242B-69. Consumer installment credit extended and liquidated, 1950-82 243160

B-70. Mortgage debt outstanding by type of property and of financing,1939-82 244B-71. Mortgage debt outstanding by holder, 1939-82 245GOVERNMENT FINANCE:B-72. Federal budget receipts, outlays, and debt, fiscal years 1973-84 246B-73. Federal budget receipts and outlays, off-budget outlays, and debt,fiscal years 1929-84 248B-74. Relation of Federal Government receipts and expenditures in thenational income and product accounts to the unified budget,fiscal years 1982-84 249B-75. Government receipts and expenditures, national income and productaccounts, 1929-82 250B-76. Federal Government receipts and expenditures, national incomeand product accounts, 1958-84 251B-77. State and local government receipts and expenditures, nationalB-78.income and product accounts, 1946-82 252State and local government revenues and expenditures, selectedfiscal years, 1927-81 253B-79. Interest-bearing public debt securities by kind of obligation, 1967-82 254B-80. Estimated ownership of public debt securities, 1967-82 255B-81.Maturity distribution average length and of marketable interestbearingpublic debt securities held by private investors, 1967-82, 256CORPORATE PROFITS AND FINANCE:B-82. Corporate profits with inventory valuation and capital consumptionadjustments, 1929-82 257B-83. Corporate profits by industry, 1929-82 258B-84. Corporate profits of manufacturing industries, 1929-82 259B-85. Sales, profits, and stockholders' equity, all manufacturing corporations,1950-82 260B-86. Relation of profits after taxes to stockholders' equity and to sales,all manufacturing corporations, 1947-82 261B-87. Relation of profits after taxes to stockholders' equity and to sales,all manufacturing corporations, by industry group, 1981-82 262B-88. Determinants of business fixed investment, 1955-82 263B-89. Sources and uses of funds, nonfarm nonfinancial corporate business,1946-82 264B-90. Current assets and liabilities of U.S. corporations, 1939-82 265B-91. State and municipal and corporate securities offered, 1934-82 266B-92. Common stock prices and yields, 1949-82 267B-93. Business formation and business failures, 1929-82 268AGRICULTURE:B-94. Farm income, 1929-82 269B-95. Farm output and productivity indexes, 1929-82 270B-96. Farm input use, selected inputs, 1929-82 271B-97. Indexes of prices received and prices paid by farmers, 1940-82 272B-98. U.S. exports and imports of agricultural commodities, 1940-82 273B-99. Balance sheet of the farming sector, 1929-83 274INTERNATIONAL STATISTICS:B-100. Exchange rates, 1967-82 275B-101. U.S. international transactions, 1946-82 276161

B-102. U.S. merchandise exports and imports by principal end-use category,1965-82 278B-103. U.S. merchandise exports and imports by area, 1973-82 279B-104. U.S. merchandise exports and imports by commodity groups, 1960-82 280B-105. International investment position of the United States at year-end,selected years, 1970-81 281B-106. World trade: Exports and imports, 1965, 1970, 1975, and 1979-82 282B-107. World trade balance and current account balances, 1965, 1970,1975, and 1979-82 283B-108. International reserves, selected years, 1952-82 284B-109. Growth rates in real gross national product, 1960-82 285B-110. Industrial production and consumer prices, major industrial countries,1960-82 286B— 111. Unemployment rate, and hourly compensation, major industrialcountries, 1960-82 287General 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).162

NATIONAL INCOME OR EXPENDITURETABLE B-l.—Gross national product, 1929-82[Billions of dollars, except as noted; quarterly data at seasonally adjusted annual rates]Year or quarterGrossnationalproductPersonalconsumptionexpendituresGrossprivatedomesticinvestmentNetexportsNet exports of goodsand servicesExports ImportsGovernment purchases of goods andservicesTotalFederalTotalNationaldefenseNondefenseStateandlocalFinalsalesPercent changefrom precedingperiod lGrossnationalproductFinalsales1929....1933....1939....1940....1941....1942....1943....1944....1945....1946....1947....1948....1949....1950....1951....1952....1953....1954....1955....1956....1957....1958....1959....I960....19611962....1963....1964....1965....1966....19671968196919701971....197219731974....1975....19761977....19781979198019811982"..1980:III.IllIV1981:III"111IV1982:I IIIllIV...103.455.890.9100.0125.0158.5192.1210.6212.4209.8233.1259.5258.3286.5330.8348.0366.8366.8400.0421.7444.0449.7487.9506.5524.6565.0596.7637.7691.1756.0799.6873.4944.0992.71,077.61,185.91,326.41,434.21,549.21,718.01,918.32,163.92,417.82,633.12,937.73,057.52,575.92,573.42,643.72,739.42,864.92,901.82,980.93,003.22,995.53,045.23,088.277.345.867.071.080.888.699.4108.2119.5143.8161.7174.7178.1192.0207.1217.1229.7235.8253.7266.0280.4289.5310.8324.9335.0355.2374.6400.5430.4465.1490.3536.9581.8621.7672.2737.1812.0888.1976.41,084.31,204.41,346.51,507.21,667.21,843.21,972.01,618.71,622.21,682.01,745.81,799.91,819.41,884.51,919.41,947.81,986.33,101.3 2,034.616.21.49.313.117.99.95.87.210.630.734.045.935.353.859.252.153.352.768.471.069.261.978.175.974.885.490.997.4113.5125.7122.8133.3149.3144.2166.4195.0229.8228.7206.1257.9324.1386.6423.0402.3471.5421.9424.0391.0384.1410.3455J475.5486.0468.9414.8431.5443.3397.91.11.21.81.5-L9-1.7~7.*811.96.96.52.24.43.21.32.53.05.37.33.31.45.56.66.47.610.18.86.56.34.34.26.74.1.714.213.426.813.8-4.0-1.113.225.226.116.514.024.239.023.531.223.725.923.531.334.96.9-6.97.02.44.65.46.15.04.65.57.415.120.217.516.314.419.719.118.018.721.025.028.124.224.828.929.931.834.238.841.144.647.352.457.565.768.877.5109.6146.2154.9170.9182.7218.7281.4339.2367.3349.7335.7337.3337.2346.7365.4368.9367.2367.9359.9365.8349.5323.75.92.03.43.64.74.86.57.27.97.38.310.59.812.215.315.916.716.218.019.820.821.023.423.423.325.426.628.832.338.141.048.153.359.064.776.795.4132.8128.1157.1186.7219.8268.1314.0341.3333.2321.7313.1298.2323.2334.2345.1341.3344.4328.6330.9342.5330.68.88.213.514.224.959.888.997.082.827.525.532.038.438.560.175.682.575.875.079.487.195.097.6100.3108.2118.0123.7129.8138.4158.7180.2199.0208.8220.1234.9253.1270.4304.1339.9362.1393.8431.9474.4538.4596.9647.1519.2536.0538.5559.8578.1583.2600.2626.3630.1630.9651.7675.71.42.15.26.116.952.081.389.474.617.612.716.720.418.738.352.457.547.944.545.950.053.953.953.757.463.764.665.267.378.890.998.097.695J96.2101.7102.0111.0122.7129.2143.4153.6168.3197.2228.9257.3189.6198.8193.3207.0217.0218.2230.0250.5249.7244.3259.0276.11.22.213.749.479.787.473.514.89.010.713.214.033.545.848.641.138.440.244.045.645.644.547.051.150.349.049.460.371.576.976.373.670.273.172.877.083.086.092.8100.3111.8131.4153.7178.5126.8130.0130.5138.1143.1150.5154.4166.9166.2176.2182.7188.93.93.93.22.61.62.01.12.83.76.07.24.74.86.58.96.86.05.75.98.38.39.310.412.714.316.217.818.519.521.221.222.226.028.529.133.939.743.250.653.356.565.875.278.862.868.862.868.973.967.775.783.683.568.276.387.27.46.18.38.18.07.87.57.68.29.912.815.318.019.821.823.225.027.830.633.537.141.143.746.550.854.359.064.671.179.889.3101.0111.2124.4138.7151.4168.5193.1217.2232.9250.4278.3306.0341.2368.0389.8329.6337.2345.2352.8361.1365.0370.1375.7380.4386.6392.7399.6101.757.490.597.8120.6156.7192.8211.6213.5203.5233.5254.8261.4279.7320.5344.8366.3368.4394.1417.0442.6451.2482.2503.6522.2558.8590.7632.1681.2741.9789.3865.5934.2989.51,070.01,175.71,307.91,420.11,556.11,706.21,895.32,137.42,403.52,643.12,917.33,078.92,576.62,573.92,664.82,757.12,852.72,877.22,949.12,989.93,031.13,061.43,083.53,139.86.6-4.27.010.025.026.721.39.6.9-1.211.111.310.915.55.25.4.09.05.45.31.38.53.83.67.75.66.98.49.45.89.28.15.28.610.111.88.18.010.911.712.811.78.911.64.112.2-.411.415.319.65.311.43.0-1.06.85.81.7-5.65.38.123.230.023.09.8.9-4.714.89.12.67.014.67.66.2.67.05.86.11.96.94.43.77.05.77.07.88.96.49.77.95.98.19.911.28.69.69.611.112.812.410.010.45.511.8-.414.914.614.63.510.45.75.64.12.97.5'Changes are based on unrounded data and therefore may differ slightly from changes computed from data shown here.Source: Department of Commerce, Bureau of Economic Analysis.163

TABLE B-2.—Gross national product in 1972 dollars, 1929-82[Billions of 1972 dollars, except as noted; quarterly data at seasonally adjusted annual rates]Year orquarterGrossnationalproduct1929193319391940194119421943194419451946194719481949195019511952195319541955195619571958195919601961196219631964198519661967196819691970197119721973197419751978197719781979198019811982".1980:IIIIllIV1981:IIIIllIV1982:IIIIllIV"315.7222.1319.8344.1400.4461.7531.6569.1560.4478.3470.3489.8492.2534.8579.4600.8623.6616.1657.56/1.6683.8680.9721.7737.2756.6800.3832.5876.4929.3984.81,011.41,058.11,087.61,085.61,122.41,185.91,254.31,246.31,231.61,298.21,369.71,438.61,479.41,474.01,502.61,475.51,494.91,457.81,463.81,479.41,507.81,502.21,510.41,490.11,470.71,478.41,481.11,471.7PersonalconsumptionexpendituresTotalDurablegoods215.1170.5219.8229.9243.6241.1248.2255.2270.9301.0305.8312,2319.3337.3341.6350.1363.4370.0394.1405.4413.8418.0440.4452.0461.4482.0500.5528.0557.5585.7602.7634.4657.9672.1696.8737.1767.9762.8779.4823.1864.3903.2927.6930.5947.6957.1937.0915.8928.0941.0951.1944.6951.4943.4949.1955.0956.3968.0durable Services20.910.718.621.224.215.714.013.014.425.430.132.535.542.639.138.042.142.551.148.848.645.350.751.449.354.759.764.872.678.479.588.391.889.198.2111.1121.3112.3112.7126.6138.0146.8147.2137.1140.0138.7145.4128.9134.6139.5145.3138.6142.2134.1137.5138.3136.4142.8Nonlurablgoods98.182.9115.1119.9127.6129.9134.0139.4150.3158.9154.8155.0157.4161.8165.3171.2175.7177.0185.4191.6194.9196.8205.0208.2211.9218.5223.0233.3244.0255.5259.5270.5277.3283.7288.7300.6307.4302.5307.5321.9333.4344.4353.1355.8362.4365.2357.8352.7353.7359.0361.6361.7363.0363.1362.2364.5365.9368.296.176.986.188.891.895.5100.2102.8106.3116.7120.9124.7126.5132.9137.2140.9145.6150.5157.6165.0170.3175.9184.8192.4200.2208.8217.8229.8240.9251.8263.7275.6288.8299.3309.9325.3339.2348.0359.3374.7393.0412.0427.3437.6445.2453.2433.9434.3439.7442.5444.2444.3446.2446.2449.5452.2454.0457.0Gross private domestic investmentTotal55.88.433.644.555.829.518.119.727.770.970.082.165.493.593.983.085.383.1103.8102.697.087.5108.0104.7103.9117.6125.1133.0151.9163.0154.9161.6171.4158.5173.9195.0217.5195.5154.8184.5214.2236.7236.3208.4225.8196.9222.7201.9199.2209.6221.6229.5233.4218.9195.4202.3206.3183.6Fixed investmentTotal51.213.232.038.343.824.318.022.031.458.770.276.669.883.080.278.783.885.396.196.895.589.3100.9101.2100.9109.7117.5125.9140.1146.2142.7152.6160.4154.8165.8184.8200.4183.9161.5176.7200.9220.7229.1213.3216.9205.4225.3204.4207.8215.9219.2217.4216.9214.1210.8206.7202.9201.3NonresidentialTotal37.510.420.925.830.417.614.018.727.642.148.951.146.050.052.952.156.355.461.365.466.259.363.666.966.772.075.182.797.4108.0105.6109.5116.8113.8112.2121.0138.1135,7119.3125.6140.3158.3169.9166.1172.0165.4171.9162.4163.8166.4169.7170.1173.9174.2172.0166.7163.4159.6StructuresProducers'durableequipment21.15.08.710.012.06.84.25.58.318.917.418.417.919.220.720.622.623.625.428.328.426.827.429.530.231.631.934.440,643.442.042.845.043.942.844.147.443.638.339.540.444.649.148.551.653.251.148.547.147.549.551.052.553.353.553.753.052.716.45.512.115.818.510.99.813.219.223.231.532.628.130.832.231.533.731.835.937.037.832.536.237.436.540.443.148.356.864.563.666.871.869.969.376.990.792.181.186.199.9113.7120.8117.6120.4112.2120.8113.9116.7118.9120.1119.1121.4120.9118.5113.0110.4106.9ResidentialTotal13.72.811.112.513.36.74.03.43.816.621.325.623.833.027.326.627.529.934.831.529.230.037.434.234.337.742.543.142.738.237.143.143.641.053.763.862.348.242.251.260.762.459.147.244.940.053.442.044.049,549.647.342.939.938.940.139.541.7Nonfarmstructures13.02.510.411.612.36.03.53.03.415.319.723.822.131.325.725.126.128.533.530.027.828.635.932.932,836.340.941.541.236.635.441.341.739.251.661.559.945.339.848.757.959.556.344.342.137.149.939.441.546.647.044.639.936.736.037.036.638.8FarmstructuresProducers'durableequipment0.6Changeinbusinessinventories0.1.1.2.1.0.0.1.2.3.3.3.3.3.3.3.3.4.4.4.5.6.5.5.6.6.7.7.8.8.91.11.11.31.51.71.71.61.71.81.92.02.02.01.92.12.02.02.02.02.02.02.01.91.91.91.94.6=4.91.66.212.05.2~2!3~3.fi12.2.25.5-4.410.613.74.31.5-2.27.75.81.5= 1.87.03.53.07.87.57.111.816.81119.011.13.88.110.217.211.6-6.77.813.316.07.3-5.09.08.52.6--2.5-8.5-6.22.412.116.54.8= 15.44.43.4= 17.7See next page for continuation of table.164

TABLE B-2.—Gross national product in 2972 dollars, 1929-82—Continued[Billions of 1972 dollars, except as noted; quarterly data at seasonally adjusted annual rates]Year or quarterNet exports of goods andservicesNetexportsExports ImportsTotalGovernment purchases of goods andservicesTotalFederalNationaldefenseNondefenseStateandlocalFinalsalesPercent changefrom precedingperiod 1GrossnationalproductFinalsales19291933193919401941194219431944 ..194519461947194819491950195119521953195419551956195719581959196019611962 ...19631964196519661967196819691970197119721973197419751976197719781979198019811982 p1980:IIIIIIIV1981:1IIIIIIV1982:|IIIIV *3.7.43.44.43.2-.6-59-6.2-3.713.218 910,810.75910.17.94.8697.310111.8562.7778.5759412.81016.55.41.9.93.916.715.527.832.225.422.024 037.250.642.030.350 553.253.145.648 244.239.236.536.935.727.521.116.79.114.315.516.411.49.810.513.827.332 226.325.823 628.627.926.627.830.735.338.033.233.838439.341.844 850.351.754.456.761.265.070.571.077.597.3108.5103.5110.1112.9126.7146.2159.2158.5147.5164 4161.2155.9155.1159 3159.7157.8156.9151.7154.4147.5136.412.98.610.9U.l13.212.015 716.817.514.013 315.515.217 718.520.021.820 923.425 226.127 631.130 730.934 335 437.541647.951.359.364.166.669 376.781.880.771.484.790.9102 7109.0108.6116.4117.2113 9108.0102.8109.6111 1115.5118.7120.4114.7118.7120.0115.341.042.963.065.397.8191.62713300.4265.493.175 784.796.8981133.7159.8170.1156.0152.3153.5161.2169.8170.6172 8182.9193.2197 6202.6209 8229.7248.5260.2257.4251.12501253.1253.3260.3265.2265.2269.2274.6278.3284.6287.1291.2284 7286.9283.4283.2286 8283.9286.4291.3289.2285.3291.1299.07.010.922.826.761,0157.4239 6269.7233.758.236.342.849.247 382.2107.2114.796188.286 890.693 491.490 495.3102 81018100.2100 3112.6125.1128.1121.8110.6103 7101.795.996.697.496.8100.4100 3102.1106.5110.4116.1106 4109.1105.5104.8107 9107.0110.7116.0114.4110.3116.2123.773.168.366.966.464.965.465 767.470.173.578.770 370.470.069.671072.974.376.174.578.280.681.3=28.527.629.731.031.835.034,734.836.436.837.436.138.735.535.236 934.136.539.939.832.135.542.433.932.040.338 636.834 331730.731.734.939441.947.550 851.552.755.359 964.166 770.676.479.282 487.590.495 8102.4109 5117.1123.4132.1135.6140.5146 4151.4157.4163.6167.8168.4168.8174.3176.2178.1176.7175.0178 3177.8177.9178.4179 0176.9175.7175.3174.9175.0174.9175.4311.0227.0318.2337.9388.4456.55315571.4564.0466.1470 6484.3496.6524 2565.6596.5622.1618.2649.8665.8682.2682.7714.7733 7753.7792.4825 0869.3917.5968.0999,21,049,11,076.61,081.81,114.31,175.71,237.11,234.71,238.41,290.41,356.41,422.61,472.21,479.01,493.71,484.01,497 51,460.31,472.31,485.71505 41,490.11,493.91,485.31,486.11,482.71,477.81,489.36.6-2.27.87.616.315.31517.1-1.5-14.7-174.1.5878.33.73.8-1.26.72.11.8-.46.02.22.65.84.05.36.06.02.74.62.8-.23.45.75.8-.6-1.25.45.55.02.8-.41.9-1.81.5-9.61.64.37.9-1.52.2-5.3-5.12.1.7-2.5-3.16.36.214.917 516 475-1.3-17 4102.92.51 Changes are based on unrounded data and therefore may differ slightly from changes computed from data shown here.Source: Department of Commerce, Bureau of Economic Analysis.567.95.54.3-65.1252.54.7272.75.1415.4555.53.25.02.6.5305.55.2-.2.34.25.14.93.5.51.0-.616-9.63.33.754-4.01.0-2.3-.9-1.33.2165

TABLE B-3.—Implicit price deflators for gross national product, 1929-82[Index numbers, 1972. 100, except as noted; quarterly data seasonally adjusted]Personal consumption expendituresGross private domestic investment lf'ixed investmentYear orquarterGrossnationalproduct»TotalDurablegoodsNondurablegoodsServicesTotalTotalNonresidentialStructuresTotalResidentialProducers'durableequipmentNonfarmstructuresFarmstructuresProducers'durableequipment192919331939 ..19401941 .1942194319441945194619471948 .. .....194919501951195219531954 .19551956 .19571958 .1959I9601961196219631964 .196519661967 .1968196919701971197219731974 .19751976 .197719781979 .198019811982 P1980:IIIllIV1981:| ||IIIIV1982:1||HIIV P32.7625.1328.4329.06312334.32361437.0137 9143.8849.5552.9852.4953.5657.0957 9258.8259.5560.8462.7964.9366.0467.6068.7069.3370.6171.6772.7774.3676.7679.0682.5486.7991.4596.01100.00105.75115 08125.79132.34140.05150.42163,42178.64195.51207.23172.31176.52180.60185.16190 01193.17197.36201.55203.68205.98208.51210.7335.926.930.530.933 236.740142.444147.852.956055.856.960.662 063.263.764.465.667.869.270.671.972.673.774.875.977.279.481.484.688.492.596 5100.0105.71164125.31317139.3149.1162.5179.2194.5206.0172.8177.1181.2185.5189 2192.6196.4199.8202.2204.0207.7210.244.232.535.936.740 043.746 751.355562167.870 370.572.276 376 777.275.075677.780 981.383.883.884.385.486.287.186.886.788.291.193.395.799 0100.01017108 2117.3123 9129.2136 4145.0156.3167 5174.9151.9154.4158 0161.1163 0166.2169.7171.3173 0174.0176.1176.338.426.830.530.933 639.143 746.247 852.158.762 360.360.765.866 566.366.666.367.369.471.071.472.673.373.974.975.877.380.181.985.389.493.696 6100.0108 51234132.5137 2143.6153 4169.9188.4202.7208.9181.9186.2190.5195.1199 3201.7204.2205.6206 8207.1210.0211.431.626.129.229.530 832.434 236.137 338.841.744 446.047.449.952 655.457.258460.162 264.166.067.969.070.471.772.774.276.478.781.986.090.595 6100.0104 7113 0121.61296139.31500162.3178.8196 3213.3172.2176.5180.9185.4189 6193.4198.6203.6207 4210.6215.3219.828.322.427.728.530 733.535 737.037 241.349.053.754.956.760.962 363.163.665.068.571.171.071.872.171.872.272.372.974.076.378.882.287.091.195.7100.0105.5116 7131.9139 2149.8163 2178.5193.3208.0215.8188.5191.5195.1198.3202 3207.4209.4212.9213 6216.6216.2216.828.322.928.229.131033.935 936.836 740.046.951.553.054.559.160161.261.762.967.371.070.972.272.572.072.573.173.874.776.979.582.886.791.396 2100.0103 81154132.2138 6146.3157 2170.8186.12013210.1181.0184.9187.9190.8194 5200.7203.0206.8207 6211.3210.7210.924.319.223.023.424 928.432 433.833 936.644.048.848.449.355.156 357.456.557.662.464.963.964.263.763.363.664.164.966.469.272.275.881.588.294 5100.0107.7128 2144.8149 0159.41764200.2227.72515266.4216.9224.9232.7237.22415249.1252.7261.9264 5267.6266.7266.733.426.232.032.834.937.337.338.037.942.848.653.056.057.861.762.663.865.566.671.175,576.678.379.479.379.479.780.180.682.184.387,289.993.297 2100.01018109 3126.21339141.0149 7158.8169.0179.8183.4165.8167.9169 9172.31751179.9181.4182.51819184.6183.8183.528.220.726.627.430 032.434 938.140844.653.758.158.760.064.466 466.967.168.771.071.471.271.171.471.371.570.971.272.374.677.080.787.790.594.8100.0109.1120 3131.0140.7158.0178.3200.5218.5233.6239.3212.5217.2221.8223.4229 0231.7235.8239.2240 5238.6238.8239.427.819.826.327.229 731.834.337.340.043.953.057.558.159.563.865.866.366.668.270.570.970.770.670.970.971.170.570.872.074.376780.587.590.394.7100.0109.4120.8131.6141.3159.0179.8202.7221.7237.1242.8215.2220.6225.2226.4232 2234.9239.4243.3244.3242.1242.3242.728.619.523.423.626 630.735 740.842 946.652.857.358.059.463.865 766.266.568.370.670.970.870.771.170.771.270.670.972.274.276.780.687.590.695.0100.0109.2120.5131.9140.7157.0180.0202.7218.8236.9242.6214.7219.1221.2224.3227 3233.4237.9242.7243.8242.0241.9242.977.258.861.159.663 871.371.475.084.695.2105.61U.5107.9107.4114.9114.6114.2112.4109.1104.3103.4101.9101.8100.899.096.895.394.392.190.891.093.595.797.899.3100.0100.6106.8116.9122.7126.7132.6140.3149.2159.4168.3145.2148.0150.8153.0155.4158.3161.3162.8165.7168.1169.4170.0See next page for continuation of table.166

1929193319391940194119421943194419451946194719481949195019511952195319541955195619571958195919601961196219631964196519661967196819691970197119721973197419751976197719781979198019811982 p1980:I .,IIIIIIV1981:IIIIIIV1982:IIIll ...IV PTABLE B-3.—Implicit price deflators for gross national product, 1929-82—ContinuedYear or quarter[Index numbers, 1972=100, except as noted; quarterly data seasonally adjusted]Exports andimports of goodsand services 1Exports42.226.532.134.937.343.646.851.953.655.462.866.563.161.068.868 667.567.268.571.074.073173.575.276176.076377.279.481983 585.588.593.297.0100.0112.7134 8149 6155.3161.9172.6192.5213.1231.8237.1204 2209.2216.3223.5229 3230.9232.6234.5237 3236 8236 9237.4Imports45.523.631.032.835.440 041.342 744.951.862.367.864.668.882.679 976.777.277.178.479.676175.276.175 574.275 276.877.779 479 981.183.288.693 3100.0116.7164 6179 6185.6205.5214.1246.1289.3293.1284.3282 5289.8290.1294.93007298.7287.7286.1286 4278 8285 4286.7Government purchases of goods and servicesTotal21.519.221.421725.531232.832 331.229 633.637.739.739.245.047 348.548.649.251.754.056057.258.059161.162 664.166.069 172 576.581.187.793 9100.0106 7116 8128 2136.6146.3157.3170.4189.2207.9222.3182 4186.8190.0197.72015205.5209.5215.0217 8221 1223 9226.0Total20.519422.722 727.833 034.033131.930 235.039 041.439.646.648 950.149.950.452.955.157 759.059.460 262.063 565167.170 072 776.580.186.692 7100.0106 3114 9126 0133.5142.8153.1164.8185.2207.4221.6178 2182.2183.3197.52012204.0207.8216.0218 3221 6223 0223.3FederalNationaldefenseioo.o106.6 115.1124 9132.4141.9152.7166.0187.4209.0226.9180 3184.6186.5198.42017206.4207.9219.5223 0225 2226 5232.4Nondefense100.0105.6114.2128 2135.7144.6153.8162.5181.0204.2210.41741177.9176.8195.7200 3198.9207.4209.4209 6212 6214 9205.9Stateandlocal21.819.120.720 921.722 823.724 825.828 532.436 437.838.942.344145.246.547.650.252.653 855.156.558 060.161663.164.968 272 476.482.088.694 7100.0107.0118.0129 4138.3148.4159.7173.7191.6208.2222.7184 8189.6194.0197.82017206.3210.7214.3217 5220 9224 5227.9Finalsales32.725.328.429 031.034 336.337 037.943 749.652 652.653.356.757 858.959.660.662.664.966167.568.669 370 571672.774.276 679 082.586.891.596 0100.0105.7115.0125 7132.2139.7150.3163.3178.7195.3207.51721176.3181.0185.6189 5193.1197.4201.3204 0206 5208 7210.8Percent changefrom precedingperiod 2GNPimplicitpricedeflator0.0-2.1-.8227.5995.3242.415 712.969-.92.16.6141.61.22.23.23.4172.41.691.8151.52.232304.45.15.4504.25.88.89.35.25.87.48.69.39.46.010.510.19.610.510 96.89.08.84.34.6504.3Finalsalesimplicitpricedeflator1 Separate deflators are not calculated for gross private domestic investment, change in business inventories, and net exports ofgoods and services.2 Changes are based on unrounded data and therefore may differ slightly from changes computed from data shown here. Quarterlychanges are at annual rates.Source: Department of Commerce, Bureau of Economic Analysis.-2.6-.9187.21065.6212.215 313.760.11.36.2201.91.21.83.33.6192.11.7101815152.132314.45.25.4504.15.78.8935.25.77.58.79.59.36.210.110.111.210.5877.89.38.15450434.2167

TABLE B-4.—Fixed-weighted price indexes for gross national product, 1972 weights, 1959-82[Index numbers, 1972=100, except as noted; quarterly data seasonally adjusted]Year or quarterGrossnationalproductGross private domesticinvestment 1TotalFixed investmentExports andimports of goodsand services 1ExportsImportsGovernment purchases of goods and servicesTotalTotalFederalNationaldefensePersonalconsumptionexpendituresNonresidentialResidentialNondefenseStateandlocalPercentchangefromingperiod,grossnationalproductfixedweightedpriceindex*195919601961196219631964196519661967196819691970197119721973197419751976197719781979198019811982"1980:IIIIIIV1981:IIllIV1982:|IllIV**69.870.871672.473.274.175 377579 883 187.391896 2100 0106 0115.9126.4133 7142.2153 3167.8184.4202 0214.6177 8182.1186 3191.3195.9199 9204,2208.4210 8213.0216.0218.873.174.174 875.576.377.278 280182 085088.792 796 6100 01061117.1126 3133 0141.21516166.3184.82021213.8178 2182.7187 0191.5196.6200 2203.9207.5209 9211.6215.4218.474.474.774 474.274.074.375 277 079 382587.391295 8100 0105 8117.9132.3140 215L8167 0185.4204.1220 9231.11971202.5207 5210.2215.0219 0223.2226.8229 2230.4232.0233.074.174.574 374.474.775.376 177 980 383 387.091696 3100 0104 0116 5132 91399148 5160 9177.2196.0213 5225.7188 7194.2199 2202.820712117215.6219.3222 0225.0227.4228.774.974.974 773.972.672.673 575 377 581087.890.694 9100.0109.2120.5131.2140 8158.0178.4200.8219.5235.0241.3213.2218.4223.0224.3229.9233 0237.5241.2242 7240.7240.7241.173.475.076.076.076.377.179 481883 385 588.593.197 0100.0112 6137.4151.8156 9164.0174.9197.2218.6239.3245.7210 4214.3221.2229.1235.4238 4241.1242.5245.6246.3245.2245.575.076.075 273.774.776.377 178 879 380.783.088.493.3100.0116.7161.5175.1178 7195.0210.1244.5303.7319.0315.52910300.6309.8314.6322.6323 4316.3314.03191313.6313.6315.356.958.359 561.362.864.466 269 272 476.481.387.994.0100.0106.9117.9129.2137.3147.0158.4173.2193.8212.2226.2186.6191.4195.1202.1206.0210 3213.6219.3222 4224.5227.2231.058.559.660 561.763.365.367169.671575.779.886.792.9100.0106.7117.0128.0135.4145.0155.4169.5192.7214.7230.1184.9189.5191.9203.9208.1212 2214.5223.92271228.4230.1234.9100.0106.9117.5127.9135.6145.5156.5171.7196.5219.7236.4188.2193.7196.1208.2211.6217 4219.6230.12334234.6236.3241.4100.01061115.6128.3135.0143.6152.6164.0182.8201.7214.0176.4178.7181.4192.7199.11988201.6207.92110212.6214.2218.255.857.458.961,062.563.965668.873176 982.388.794 8100.0107.0118.4130.0138.5148.4160.4175.7194.6210.6223.6187.7192.7197.2200.9204.62090212.9216.1219 2221.9225.2228.31 Separate deflators are not calculated for gross private domestic investment, change in business inventories, and net exports ofgoods and services.* Quarterly changes are at annual rates.Source: Department of Commerce, Bureau of Economic Analysis.1.5111.21.11.2172930415.05.2484.0609.49.15.86.37.89.59.99.66.210.510.09.411.210.08.48.98.54.84.15.95.2168

TABLE B-5.—Changes in GNP and GNP price measures, 1929-82[Percent change from preceding period; quarterly data at seasonally adjusted annual rates]Gross national productPersonal consumption expenditures19291933193919401941194219431944194519461947194819491950195119521953195419551956195719581959I9601961196219631964196519661967196819691970197119721973197419751976197719781979 .198019811982 *1980:|||IIIIV1981:IIIIIIV1982:||IIIIV PPeriodCurrentdollarsConstant(1972)dollars6.6 6.6-4.2 -2.27.0 7.810 0 7625.0 16 326 7 15 321.3 15.19.6 7.1.9 -1512 -14 711.1 -1.7113 41-.5109 8715.5 8352 375.4 38.0 1290 675.4 2153 181.3 -.48.5 6.03.8 223.6 2.67.7 585.6 4.06.9 5.38.4 6.094 605.8 2.79.2 468.1 2.85.2 -.28.6 34101 5711.8 588.1 68.0 -1210 9 54117 5512.8 5011.7 2889 411.6 1.94.1 -1.812 2 15_ 4 9611.4 1.615.3 4319 6 7953 15114 223.0 -5.31.0 -5168 217581.725Implicitpricedeflator0.0-2.1-.82.27.59.95.32.42.415.712.96.9-.92.16.6141.61.22.23.23.41.72.41.6.91.81.51.52.23.23.04.45.15.45.0425.88.89.3525.87.48.6939.46.010.51019.610.510.968908.84.34.65.04.3Chainpriceindex1.61.21.41.31.41.93.13.04.35.05.34.94.16.09.19.25.76.17.68.99.09.46.49.0969.711.09.38.2928.45.04.66.05.2Fixed*weightedpriceindex(1972weights)1.51.11.21.11.21.7293.04.15.05.24.8406.09.49.1586.37.895999.66.210 510 09.411.210 084898.54.84.15.95.2Currentdollars-5.74.66013.89712.28.810.520.312.58.01.9787.9485.82.7764.95.43.27.44.53.16.05.56.97.58.15.49.58.46.98.19610.29.49.911011.111.811.910.610.67.010.7915.616.113.04.41133.47.66.18.110.1Constant(1972)dollars-2.05.3465.9-1.02.92.86.211.11.62.12.3561.3253.81.86.52.92.11.05.42.62.14.53.85.55.65.12.95.33.72.23.75.84.2-.72.25.65.04.52.7.31.81.0-.7-8.75.45.74.4-2.72.9-3.32.52.5.65.0Implicitpricedeflator-3.8-.7137.410.89.05.84.18.310.75.8206.5231.9.91.01.93.32.21.91.91.01.51.61.41.82.92.44.04.54.64.33.75.710.17.65.15.87.09.010.38.65.911.510.59.69.88.37.38.27.05.03.57.54.9Chainpriceindex1.71.1111.41.21.52.72.53.84.54.64.3366.110.47.7536.07.39.310 79.16.012.61019.810.010.37.4807.25.23.67.15.6Fixedweightedpriceindex(1972weights)1.5.991.21.11.32.42.43.64.44.54.2356.110.47.8536.27.49.711.29.35.813.410 49.810.110.97.7767.14.83.27.35.7Note.—Changes are based on unrounded data and may differ slightly from changes computed from data shown elsewhere in thesetables.Source: Department of Commerce, Bureau of Economic Analysis.169

TABLE B-6.—Gross national product by major type of product, 1929-82[Billions of dollars; quarterly data at seasonally adjusted annual rates]GoodsYear orquarterGrossnationalproductFinalsalesInventorychangeTotalTotalFinalsalesInventorychangeDurable goodsFinalsalesInventorychangeNondurable goodsFinalsaleslnven»torychangeServicesStructuresAutooutput192919331939194019411942194319441945..194619471948194919501951..1952195319541955195619571958 ..............19591960 .19611962..1963196419651966..19671968..1969197019711972..197319741975197619771978197919801981..1982 ".1980;||IllIV1981:||IllIV1982:||'IllIV ".103.455.890.9100.0125.0158 5192.12106212.4209.82331259.5258.3286.5330 8348.0366.8366 8400.0421.7444 0449.7487.9506 5524.6565 0596.7637.7691.1756 0799.6873 4944.0992.71,077.61185 9U26.41,434 21,549.21,718.01,918.3216392/17.82,633.12,937 73,057.52,575.92,573.42 643 72J39.42,864.92 90182 980 93,003.22,995.53 045 23 088 23ilO1.3101.757.490.597.8120.6156.7192.82116213.5203.5233.5254.8261.4279.7320.5344.8366.3368 4394.1417.0442.6451.2482.25036522.2558.8590.7632.1681.2741.9789.3865.5934.2989.51,070.01175.71,307.91,420.11,556,11,706.21,895.32137 42;403.52,643,12917.33iO78.92,576.62,573.92 664 82,757.12,852.72 877 22 94912,989.93,031.13 06143'083 53[l39.81.7-1.6.42.24.518-.6= 10-1.06.44.7= 3.16.810.33.1.4- 156.04.713-1.55.7302.3636.05.69.914110.3799.83.27.710 218.514.1=6.911.823.026 514.3= 10.020 5=21.4-.7= .4212-17.712.224 631813.2=35.6-16 247=38.556.127.049.056.072.593 7120.4132 3128.9125.3139.8154.4147.7162.4189.5194.6203.11961214.5223.3232 3228.2248.5254 2257.4278 5290.3309.8338.4375 0389.44213450.2459.9 456.6485.3 477.7529 6 5194604.1 585.6646 7 632.5694.0 700.9771.1 759.3855.0 832.09586 93211,065.6 1,051.31,141.91,289 21,280.61,125.21,114.5114041,187.41,265.3127611317 01,298.41,269.41,283 11295 5l|274.554.428.648.653.868.091.9121.0133.3129.9118.9140.3149.7150.8155.6179.2191.5202.7197 6208.5218.6231.0229.7242.92513255.0272.2284.3304.2328.5360.9379.1413.4440.41,151.91,268.71,302.01,125.81,114.911616l>05.11,253.1125141*285 11,285.21,305.01 299.3l'29O71J313.01.7= 1,6.42.24.51.8= .6-1.0-1.06.41.7=3.16.810.33.1.4-1.56.04.71.3-1.55.73.02.36.36.05.69.914.110.37.99.83.27.710.218.514.1=6.911.823.026.514.3= 10.020.5-21.4= .7— 4=2U= 17.712.224.631.813.2-35.6= 16.24.7= 38.516.15.412.415.423.834.554.258.550.131.844.448.050.056.266.472.577.873.981.485.991.384.490.893.392.7102.9109.4118.9131.6147.0153.5167.9178.5179.2187.1207.4237.6250.7279.4312.5354.9402.1454.3482.5519.4510.7488.1461.4481.2499.2519.8519.7527.5510.5513.2512.6506.8510.31.4=.5.31.23.11.0.0= .6-1.35.31.41.0-1.83.66.11.21.5-2.53.42.1=2.83.11.6=.13^42.74.06.710.25.54.76.4= .12.87.213.112.0-8.47.710.419.110.5= 5.28.7= 15.5-11.8= .5-13.14.62.218.519 8-5.6=30.96.610.1-34.738.323.236.238.444.257.466.874.879.887.195.9101.7100.999.4112.8119.0124.9123.7127.1132.7139.6145.3152.1158.0162.4169.3174.9185.3196.9213.9225.6245.5261,9277.5290.6312.0348.0381.8421.5446.7477.2530.1597.0669.4749.4791.3637.7653,5680.4705.9733.3731.7757.6774.7791.8786.7783.9802.70.3= 1.1.11.01.4-.6.21.1= 1.93.7= 1.33.24.22.0-1.11.02.62.6.81.32.51.32.42.83.31.63.23.94.93.13.43.34.83.05.32.21.54.212.67.33.8=4.811.7=5.911.1.08.1=22.310.06.112.018.9=4.8-9.6=-5.4-3.835,925.934.435.740.850.863.072.377.068.871.677.282.288.5103.5113.9121.6126.2136.1146.2158.7167.7179.8193.8207.0222.0237.1255.0273.3299.0326.5358.2391.9429.9472.0519.0571.5636.1705.2779.3867.2972.21,089.71,225.51,364.31.492.11,174.71,207.21,243.31,277.01,313.51,340.21,382.11,421.51,444.41,476.71,509.51,537.611.42.97.58.311.814.08.76.16.515.721.728.028.435.637.839.442.044.549.552.253,053.859.558.560.264.569.372.979.382.083.694.0101.8102.9120.3137.3150.8151.4150.0167.6196.1233.1262.5265.7284.2284.9276.0251.8259.9275.1286.1285.6281.9283.3281.7285.3283.2289.27"28.811.915.413.312.016.114.721.216.919.414.419.421.317.822.525.225.931.230.428.035.134.928.739.141.646.239.240.755.965.169.568.059.869.265.763.151.956.867.566.173.778.758.353.569.975,264.3Source: Department of Commerce, Bureau of Economic Analysis.170

TABLE B-7.—Gross national product by major type of product in 1972 dollars, 1929-82[Billions of 1972 dollars; quarterly data at seasonally adjusted annual rates]Year orquarterGrossnationalproductFinalsalesInventorychangeGoodsTotalTotalFinalsalesInventorychangeDurable goodsFinalsalesInventorychangeNondurable goodsFinalsalesInventorychangeServicesStructuresAutooutput1929193319391940194119421943194419451946194719481949195019511952195319541955195619571958195919601961196219631964196519661967.196819691970197119721973197419751976197719781979 .198019811982 >1980:\\"""ZZIIIIV1981:IIIIllIV1982:I IIIllIV P.315.7222.1319.8344.1400.4461.7531.6569.1560.4478.3470.3489.8492.2534.8579.4600.8623.6616.1657.5671.6683.8680.9721.7737.2756.6800.3832.5876.4929.3984.81,011.41,058.11,087.61,085.61,122.41,185.91,254.31,246.31,231.61,298.21,369.71,438.61,479.41,474.01,502.61,475.51,494.91,457.81,463.81,479.41,507.81,502.21,510.41,490.11,470.71,478.41,481.11,471.7311.0227.0318.2337.9388.4456.5531.5571.4564.0466.1470.6484.3496.6524.2565.6596.5622.1618.2649.8665.8682.2682.7714.7733.7753.7792.4825.0869.3917.5968.0999.21,049.11,076.61,081.81,114.31,175.71,237.11,234.71,238.41,290.41,356.41,422.61,472.21,479.01,493.71,484.01,497.51,460.31,472.31,485.71,505.41,490.11,493.91,485.31,486.11,482.71,477.81,489.34.6-4.91.66.212.05.2.1-2.3-3.612.2-.25.5-4.410.613.74.31.5-2.27.75.81.5-1.87.03.53.07.87.57.111.816.812.29.011.13.88.110.217.211.6-6.77.813.316.07.3-5.09.0-8.5-2.6-2.5-8.5-6.22.412.116.54.8-15.4-4.43.4-17.7144.397.5154.3171.7198.6221.4263.3287.3278.5238.3237.7244.8240.3261.5283.7292.1306.8292.7316.7320.9321.7311.6332.5335.8338.0361.3372.2393.8422.6456.4463.4483.1496.0486.9497.2529.6572.3562.5547.4587.2628.1662.0677.7667.9689.5661.1682.5658.2659.5671.6692.8689.8697.2678.0661.8663.2665.1654.5139.7102.3152.7165.5186.6216.2263.3289.6282.2226.2237.9239.4244.7250.9270.0287.8305.3294.9309.0315.1320.2313.4325.5332.3335.0353.5364.7386.7410.8439.6451.2474.1484.9483.2489.1519.4555.1550.9554.2579.4614.8645.9670.4672.9680.5669.6685.1660.7668.0677.8690.4677.7680.7673.2677.2667.5661.7672.14.6-4.91.66.212.05.2-2.3-3.612.2-.25.5-4.410.613.74.31.5-2.27.75.81.5-1.87.03.53.07.87.57.111.816.812.29.011.13.88.110.217.211.6-6.77.813.316.07.3-5.09.0-8.5-2.6-2.5-8.5-6.22.412.116.54.8-15.4-4.43.4-17.740.417.535.543.157.875.7118.8135.9121.260.375.577.378.386.198.2107.9116.2109.0117.2117.8119.4109.2113.6115.6114.7125.7132.5143.0157.2174.0178.3187.4193.0187.5188.7207.4236.1234.1230.2242.7264.7285.4299.1290.8289.3273.3304.2279.8286.9292.4298.9290.5290.2277.6278.7274.9269.2270.63.5-2.1.73.48.23.5-1.8-3.710.81.41.6-2.95.59.01.72.3-3.74.52.9.9-3.43.92.0-.14.23.45.18.212.36.65.47.2.03.07.212.79.4-6.45.46.911.86.2-2.63.8-6.5-4.7-1.2-6.21.8.19.18.6-2.5-13.7-2.64.8-14.799.384.9117.2122.4128.7140.5144.4153.7161,0165.8162.4162.1166.4164.8171.8179.9189.1185.9191.9197.2200.8204.3211.9216.6220.3227.8232.2243.7253.6265.6272.9286.7291.9295.7300.4312.0319.0316.8324.0336.7350.1360.5371.3382.1391.2396.3380.8380.9381.1385.5391.5387.2390.5395.6398.5392.6392.5401.51.1-2.82.83.81.7-.6-.5U-1.63.8-1.55.14.72.6-.81.53.22.9.61.63.11.63.03.74.21.93.64.55.63.63.93.75.13.04.52.2~2A6.34.31.1-2.45.1-2.02.2-1.3-2.4-8.02.33.07.97.3-1.7-1.7-1,5-2.9127.4110.7135.2139.9158.5193.9242.0263.7263.0200.8188.1192.5198.3207.4231.3243.2247.5249.1260.1270.2282.4287.6299.4312.5326.9341.5356.2374.0390.7412.6434.1453.0469.2482.4497.8519.0542.8562.8575.9595.0617.3644.7670.7687.1695.6701.3684.2686.0690.0688.2693.1693.2697.5698.6697.0702.2703.6702.343.914.030.332.543.346.326.218.118.839.144.652.453.665.964.365.569.374.380.780.579.781.789.889.091.797.4104.1108.6116.0115.9113.9122.0122.5116.3127.3137.3139.1121.0108.3116.0124.4131.9131.0118.9117.6113.1128.3113.6114.3119.6121.9119.2115.7113,4111.9113.0112.5114.912.313.918.023.019.317.122.621.629.823.024.518.623.225.321.226.028.729.435.734.831.838.537.429.838.941.646.437.135.745.350.750.347.038.741.537.642.033.836.742.241.644.545.634.431.339.742.337.1Source: Department of Commerce, Bureau of Economic Analysis.171

TABLE B-8.—Gross national product by sector, 1929-82[Billions of dollars, except as noted; quarterly data at seasonally adjusted annual rates]Year or quarterGrossnationalproductTotal 1TotalGross domestic productBusiness *Nonfarm 1FarmStatisticaldiscrepancyHouseholdsandinstitutionsTotalGovernmenFederal2StateandlocalRestof theworldPercentfromprecedperiod,grossnationalproduct 319291933193919401941...19421943194419451946194719481949...1950...19511952...195319541955 ..19561957...19581959..1960..19611962...1963196419651966196719681969197019711972... , ..197319741975..197619771978.19791980..19811982 p .1980:IIIIIIV1981:1IIIllIV....1982:IIllIV P103455.890.9100.0125 0158.5192.1210.6212 4209.82331259.5258.3286 5330.8348 0366 8366.8400 0421.7444 0449.7487.9506 5524.6565 0596.7637 7691.1756 0799.6873 4944.0992 71,077.61185 91,326.41434 21,549.21,718.01,918.32,163.92,417.82,633.12,937.73.057.52,575.92,573.42,643.72,739.42,864.92,901.82,980.93,003,22,995.53,045.23 088 23,101.3102.655.590.599.6124.5157.9191.6210.1212.0209.0231.8257.9256.9284.8328.7345.7364.6364.5397.3418.5440.5446.6484.65029520.7560.5591.8632.3685.2750.3793.7866.7937.198541,068.51,175.01,310.41,414.41,531.91,697.51,894.92,134.32,375.22,587.02,888.53,011.92,527.22,526.62,597.82,696.52.817.92,855.22,931.22,949.82,949.62,995.73,041.63,060.595.449.180.689.4112.6139.9162.8174.2172.8183.8210 0234.9231.5257 5294.4307.3324 9323.9354 0372.1390 8393.1428.3442 0455.7490 6517.25516598.4652.6685.17454803.2837 3907.1998 61,118.71206 41,301.71,447.31,624.01,837.22,052.12,228.82,492.42,582.52,183.32,173.72,237.22,321.12,433.42,463.92 533.92,538.62,530.62,570.12,610.02,619.384.743.872.981.8103.1127.7149.3156.2152.7164.4188 2213.1212.2236 3268.3283 4302 3302.3333 9355.7373 7372.2410.6424 2435.74681495.0532 2577.76284663.3725 0782.18131875.4963 41,068.01155 01,247.31,396.31,574.21,781.01,982.12,159.52,418.52,507.62,106.42.108.62,168.02,255.22,357.52,394.62 454 72,467.42,465.12,494.42 530.22,540.69.74.66.36.48.913.015.315.316.018.820.223.318.820.022.922.220.319.718.818.618.420.719.020 220.220 420.519 321.922.822.122.625.125 827.631949.947 748.945.948.458.771.665.475.874.866.361.267.066.970.873.980.178.472.974.876.175.21.1.71.41.1.6-.8-1.82.74.1.51.5-1.6.6133.21.7232.013-2.1-12.21324-.1211.71-1.21.4.3-2.1-3.9154.133.8375.55.11.4-2.6-1.53.91.9.110.53.82.2-1.05.1-4.6= .8-7.2-7.5.83.63.62.S1.72.32.42.52.93.23.74.14.55.15.65.96.46.97.27.88.19.19.810.511.412.313 814.415.516.617.819.221.123.426.129.432.335.438.642.145.850.655.660.567.875.685.496.4106.781.584.086.589.792.995.297.1100.3103.3105.3107.9110.44.34.77.67.89.415.125.632.235.220.816 717.419.420.927.431.231932.534.236.639142.144.047150.554 358.062.967.676.585.195.2104.5115 8126.0137 8149.6162 2179.6194.6210.3229.3247.4272.82997322.7262.4269.0274.0285.8291.6296.2300.1310.9315.8320.3323.8330.80.91.23.43.55.010.620.927.229.814.69.48.910.010.716.218.918.617.818.419.019.620.520.921.722.624.125.227.028.332.435.639.341.944.846.850.151.954.959.062.466.371.775.782.992.399.879.881.481.688.789.990.591.097.998.698.999.1102.43.53.54.24.34.44.54.74.95.46.27.38.59.410.111.212.313 314.715.817.619 621.623.125.527.930.232.935.939.344.149.555.962.671179.387.797.7107.3120.6132.3144.0157.6171.8189.9207.4222.9182.7187.6192.4197.0201.7205.6209.2213.0217.1221.4224.7228.41 Includes compensation of employees in government enterprises.8 Compensation of government employees.3 Changes are based on unrounded data and therefore may differ slightly from changes computed from data shown here.Source: Department of Commerce, Bureau of Economic Analysis.0.8.3.5.4•5.5.4.81.21.61.41.62.12.3222.32.83.23.53.03.33.63.94.64.95.55.95.65.96.76.97.39.210.916.019.817.320.523.529.642.646.149.245.748.746.845.942.947.146.649.753.345.849.546.640.86.6=4.27.010.025.026.721.39.6.9-=1.211.111.3= .510.915.55.254.0905.45.31.38.53.83.67.75.66.98.49.45.89.28.15.28.610.111.88.18.010.911.712.811.78.911.64.112.215.319.65.311.43.0-1.06.85.81.7172

TABLE B-9.—Gross national product by sector in 1972 dollars, 1929-82[Billions of 1972 dollars, except as noted; quarterly data at seasonally adjusted annual rates]Year or quarterPrrxeeUfOSSnationalproduct315.7222.1319.8344.1400.4461.7531.6569.1560.4478.3470.3489.8492.2534.8579.4600.8623.6616.1657.5671.6683.8680.9721.7737.2756.6800.3832.5876.4929.3984.81,011.41,058.11,087.61,085.61,122.41,185.91,254.31,246.31,231.61,298.21,369.71,438.61,479.41,474.01,502.61,475.51,494.91,457.81,463.81,479.41,507.81,502.21,510.41,490.11,470.71,478.41,481.11,471.7Gross domestic productTotal313.2220.9318.2342.8398.7460.1530.3567.7559.3476.4467.8486.8489.4531.8575.6596.9619.8612.1653.0666.5678.3676.2716.8732.0751.0793.8825.6868.9921.4977.51,003.91,050.01,079.71,077.61,112.81,175.01,239.21.229.01,217.81.282.61,352.81,418.71,453.21,447.91,477.21,453.21,466.41,431.01,438.11,456.01,482.81,477.81,485.01,463.31,448.01,454.11,458.61,452.2Business lTotal l271.5180.0261.0282.7327.6361.8385.6403.6397.9385.5393.8412.0409.8448.7478.0492.8515.6508.5547.0557.4566.1561.7600.0610.1625.1663.2691.6730.3777.7824.0842.0882.1907.1904.8938.6998.61,060.71,047.41,032.41,095.41,163.71,224.31,255.61,246.71,274.31,249.71,266.61,230.01,236.21,254.01,279.71,274.81,282.41,260.21,244.41,250.51,255.41,248.4Nonfarm 1244.7152.5231.3254.6299.8335.3362.1370.1362.8358.6367.0389.0383.4419.4447.2463.7484.3477.0516.0531.5539.5532.0574.0584.2596.3631.5659.7701.3749.6794.1812.8855.6881.9875.4901.7963.41,028.41,012.4994.51,059.51,129.51,193.51,222.41,210.31,236.81,210.11,224.91,192.61,200.91,222.61,242.91,240.91,241.91,221.51,210.01,212.21,214.41,204.0Farm23.624.925.224.526.228.627.727.125.625.824.025.825.627.025.826.427.728.429.328.928.229.327.829.228.928.829.628.829.828.229.529.029.531.132.631.931.631.833.632.133.132.634.234.238.439.635.635.334.032.034.136.340.942.338.138.039.342.8StatistiraiC3Idiscrepancy3.12.64.63.61.6-2.1-4.26.49.41.12.9-2.8.82.45.02.63.63.11.8-3.0-1.7.3-1.9-3.3-.22.92.3.2-1.61.7-.3-2.5-4.4-1.74.23.3.73.24.43.81.0-1.8-1.02.2-.9.06.12.11.2-.52.7-2.4-.4-3.6-3.7 .41.71.7Urn teanouseholdsandinstitutions15.612.215.116.115.916.415.215.115.015.116.016.717.318.318.718.619.319.421.422.523.124.224J26.627.028.128.929.830.932.634.335.437.036.737.638.639.439.340.540.941.543.344.645.846.948.145.345.446.046.446.846.746.747.447.847.948.048.6Government 2Total26.228.842.144.055.281.9129.4149.1146.475.958.058.162.364.779.085.585.084.184.686.789.190.392.295.398.9102.5105.2108.8112.7120.8127.7132.4135.7136.1136.7137.8139.1142.3144.9146.3147.7151.2153.0155.4156.0155.4154.4155.6155.9155.7156.3156.2155.9155.8155.7155.7155.2155.1Federal5.26.616.918.629.656.7105.0125.2121.849.729.829.231.332.746.251.649.647.245.945.645.844.544.545.246.248.348.248.548.753.057.258.058.255.252.550.148.248.548.448.548.649.349.049.549.749.849.049.849.849.449.649.749.849.849.849.849.849.9Stateandlocal21.022.125.225.425.625.224.523.924.626.228.229.031.032.032,833.935.436.938.641.043.345.847.750.152754.357.060.464.067.970.574.477.480.984.287.790.893.896.597.899.1101.9104.1105.9106.3105.6105.4105.8106.1106.3106.8106.5106.1106.0106.0105.9105.4105.3Restof theworld2.41.31.61.41.71.51.31.41.11.82.53.02.73.03.73.93.74.04.55.15.54.64.95.25.76.56.97.57.97.47.58.27.98.09.510.915.117.313.815.616.919.926.326.125.422.228.626.825.723.425.024.425.426.722.724.222.519.5Percentchangefromprecedingperiod,grossnationalproduct 36.6-2.27.87.616.315.315.17.1-1.5-14.7-1.74.1.58.78.33.73.8-1.26.72.11.8-.46.02.22.65.84.05.36.06.02.74.62.8-.23.45.75.8-.6-1.25.45.55.02.8-.41.9-1.81.5-9.61.64.37.9-1.52.2-5.3-5.12.1.7-2.5192919331939194019411942194319441945194619471948....19491950195119521953195419551956195719581959....196019611962....1963196419651966....196719681969....197019711972....1973....197419751976....1977 ....1978....1979....1980....1981....1982 »..1980:I IIIllIV1981:if.'.'."'.IllIV1982:if.'."'.!IllIV..1 Includes compensation of employees in government enterprises.2 Compensation of government employees.3 Changes are based on unrounded data and therefore may differ slightly from changes computed from data shown here.Source: Department of Commerce, Bureau of Economic Analysis.173

TABLE B-10.—Gross national product by industry, 1947-81[Billions of dollars]Year19471948194919501951195219531954195519561957195819591960196119621963196419651966196719681969197019711972197319741975197619771978197919801981Grossnationalproduct233.1259.5258.3286.5330.8348.0366.8366.8400.0421.7444.0449.7487.9506.5524.6565.0596.7637.7691.1756.0799.6873.4944.0992.71,077.61,185.91,326.41,434.21,549.21,718.01,918.32,163.92,417.82,633.12,937.7AnrirnlAgriculture,forestry,andfisheries20.824.019.520.823.823.121.320.719.919.719.521.920.221.421.521.922.021.023.824.824.225.027.828.630.835.453.852.253.351.254.666.079.674.185.6Mining6.89.48.19.310.210.110.610.912.413.413.512.412.312.612.712.813.113.413.514.214.615.316.117.617.419.021.732.238.843.047.452.066.894.1127.2fVinconstruction9.111.511.513.015.416.617.117.218.520.621.421.022.823.224.025.727.429.832.835.937.541.346.348.953.659.466.369.269.976.686.6102.1115.7121.2127.2Gross domestic productManufacturingTotal66.274.772.183.798.7103.0112.1106.4120.9126.8131.4123.8141.3143.8144.4157.9167.4179.4197.7216.6222.3242.8256.7252.2265.6292.5326.1340.7358.2410.4464.8518.7563.2581.2644.0Durablegoods33.538.137.145.855.458.965.960.870.673.777.769.781.282.181.391.597.6105.3118.0130.4133.6146.0154.5146.2153.9173.2195.9201.3207.6240.0277.7316.7344.3347.8388.4Nondurablegoods32.736.535.037.943.344.146.245.650.353.253.754.160.061.763.166.469.874.279.786.388.796.8102.2105.9111.7119,3130.2139.4150.6170.4187.1202.0218.9233.4255.6Trans*portationandpublicutilities20.523.123.425.729.231.032.932.635.638.340.240.443.745.847.450.253.056.360.565.368.674.080.085.793.8104.3114.3122.9135.7152.6170.9193.3209.6232.4261.9Ulhnlownoiesaleandretailtrade44.248.448.051.356.458.559.860.866.270.473.975.281.984.286.392.196.1104.7112.6121.5130.1144.4157.0166.5181.4199.5221.5241.5266.2291.4322.3362.3401.5425.7472.7Finance,insurance,andrealestate23.226.228.631.935.238.742.846.550.053.557.662.467.371.675.480.685.391.098.0105.9114.2123.8133.6142.4156.4169.8184.9202.0216.2238.6275.5317.4358.3405.2448.2Services20.221.922.624.025.927.529.430.534.037.340.242.346.349.252.356.160.065.370.878.486.194.2105.3114.4123.6136.5153.1167.5186.2208.2234.3265.9302.4342.5386.9Governmentandgovernmententerprises19.320.222.523.830.835.336.436.938.540.744.047.150.053.456.761.165.971.276.786.496.3108.1118.2130.5141,8155.4167.8182.7202.0220.4237.2259.1279.6306.8336.7Statisti-Cdldiscrepancy1.51.6.61.33.2.1.72.32.01.3-2.1= 1.2.2-1.3-2.4= .12.11.7.1= 1.21.4— 3-2!l-3.9= 1.54.13.3.83.75.55.11.4=2,6= 1.53.9-1.9Daetnestof theworld1.21.61.41.62.12.32.22.32,83.23.53.03.33.63.94.64.95.55.95.65.96.76.97.39.210.916.019.817.320.523.529.642.646.149.2Note.—The industry classification is on an establishment basts and is based on the 1972 Standard Industrial Classification.Source: Department of Commerce, Bureau of Economic Analysis.174

TABLE B-ll.—Gross national product by industry in 1972 dollars, 1947-81[Billions of 1972 dollars]Gross domestic productYearGrossnationalproductTotalManufacturingAgriculture,forestry,andfisheriesMiningConstructionDurablegoodsNondurableTransportationandpublicutilitiesWholesaleandretailtradeFinance,insurance,andreatestateServicesGovernmentandgovernmententerprisesStatisticaldiscrepancyResidual'Restof theworld19471948194919501951195219531954195519561957195819591960196119621963196419651966196719681969197019711972197319741975197619771978197919801981470.3489.8492.2534.8579.4600.8623.6616.1657.5671.6683.8680.9721.7737.2756.6800.3832.5876.4929.3984.81,011.41,058.11,087.61,085.61,122.41,185.91,254.31,246.31,231.61,298.21,369.71,438.61,479.41,474.01,502.626.328.228.029.328.429.230.531.332.131.731.132.230.632.131.831.732.531.832.831.332.632.132.734.435.935.435.335.837.135.836.937.038.939.143.410.811.39.911.112.111.912.211.813.213.913.812.713.313.513.613.914.515.115.716.517.017.618.218.918.419.019.219.218.919.119.520.120.821.622.322.926.526.529.332.533.834.836.038.240.940.942.145.546.146.748.449.952.254.454.653.456.955.853.457.959.460.153.348.352.855.058.858.253.352.0114.9121.4115.1131.1146.0150.8161.1149.6165.7166.9167.7153.3171.2171.8172.0186.7202.2216.7236.7254.9254.3268.2277.2261.2266.8292.5325.3311.7289.6317.4339.2357.2367.0351.2359.268.572.066.378.189.994.3102.691.7103.4102.5102.988.8100.9101.099.5110.0119.5129.8144.6157.3157.4165.5170.3155.2156.4173.2194.2186.3168.8187.2202.9217.4223.4210.0215.346.449.448.853.056.156.558.557.962.364.464.864.570.370.872.576.782.886.892.097.696.9102.7106.8106.0110.4119.3131.1125.3120.8130.1136.3139.8143.6141.2143.942.342.139.241.245.545.546.645.849.752.153.251.955.457.558.661.565.068.173.479.481.688.292.694.997.9104.3110.6111.9113.5118.6125.1134.2140.0140.8142.175.978.079.887.588.391.093.994.5103.1106.2107.9107.8115.4117.5118.7126.3131.1139.1148.2156.3160.1169.9173.6176,4185.5199.5211.1207.0209.7220.2231.0244.6250.7243.3250.454.756.659.863.966.770.973.977.381.885.889.893.498.5102.7107.3113.3116.8122.1128.5133.9139.4145.7152.9155.8162.6169.8177.2184.5187.9194.8207.2217.8229.4237.9243.655.957.557.659.760.861.662.762.967.670.974.176.280.883.586.690.394.098.8103.1109.0115.0118.8124.0126.7128.4136.5144.8147.9148.5154.7164.3174.2183.0189.0196.768.769.273.375.690.096.996.395.295.797.8100.4101.7104.0107.7111.6115.5118.7123.1127.8136.9144.1148.9152.5152.9153.9155.4157.2161.2164.3165.7167.5171.7174.3177.3178.12.45.02.63.63.11.8-3.0-1.7.3-1.91 Equals GNP in constant dollars measured as the sum of incomes less GNP in constant dollars measured as the sum of gross productby industry.Note.—-The industry classification is on an establishment basis and is based on the 1972 Standard Industrial Classification.Source: Department of Commerce, Bureau of Economic Analysis.-3.3-.22,92.3-1.61.7-lis-4.4-1.74.23.34.43.81.0-1.8-1.02.2-.9-7.4-1.2-.6.8.22.64.14.64.23.4.94.54.03.14.43.2-1.51.72.33.06.76.24.64.71.2.0-2.5-6.5-4.2-.26.04.9-8.1-7.7-9.72.53.02.73.03.73.93.74.04.55.15.54.64.95.25.76.56.97.57.97.47.58.27.98.09.510.915.117.313.815.616.919.926.326.125.4175

TABLE B-12.—Gross domestic product of nonfinancial corporate business, 1929-82[Billions of dollars; quarterly data at seasonally adjusted annual rates]Year orquarter1929193319391940194119421943194419451946194719481949195019511952195319541955195619571958195919601961196219631964196519661967196819691970197119721973197419751976197719781979198019811982"1980:ll"Z!Z!IllIV1981:1nZZZIIIIV1982:1IIIllIV "GrossHnmacdomesticproductofnonfinancialcorporatebusiness50.124.443.750.465.682.998.7102.195.399.3120.0137.3133.5151.9174.5182.3195.0191.9216.7231.6242.3236.3266.0277.0285.0311.3331.8358.4393.6431.5454.1500.2544.1563.7609.9678.0759.4818.9890.01,001.31,128.41,276.21,416.81,537.71.732.31,779.31,501.11,499 71,543.61,606.51,683.31,715.01,763.61,767.21,756.61,771.01,794.4Capitalconsumptionallowanceswithcapitalconsumptionadjustment5.54.34.84.95.46.16.26.36.57.69.310.911.712.614.615.816.817.919.121.823.824.825.826.827.528.429.430.832.735.638.942.647.152.257.362.667.979.594.9104.8115.7130.9149.6172.0195.8213.7162.7169.3175.4180.8186.3192.6199.1205.1207.8212.1216.0219.0Total44.520,239.045.460.276.892,495.888.891.8110.7126.4121.8139.3159.9166.6178.2174.0197.6209.8218.5211.6240.2250.2257.5283.0302.3327.6360.9395.9415.2457.6497.0511.4552.6615.5691.6739.4795.1896.51,012.71,145.31,267.31,365.71,536.51,565.61,338.41,330.51,368.21,425.71,497.01,522.41,564.51,562.01,548.81,559.01,578.4Indirectbusinesstax,etc. 13.43.85.15.56.46.87.38.18.910.111.212.112.614.115.216.818.217.419.220.822.422.825.428.330.133.035.638.441.142.945.851.558.063.470.576.783.789.797.1105.3112.6122.0130.5148.6178.3182.0138.4143.5151.3161.0172.9179.0179.9181.3176.3181.2184.2186.4Total41.216.333.940.053.870.085.287.779.981.699.6114.3109.2125.2144.7149.7160.0156.6178.4189.0196.1188.8214.8221.9227.3249.9266.8289.3319.8353.0369.5406.1439.1448.1482.1538.7607.9649.7697.9791.2900.11,023.31,136.71,217.11,358.21,383.61,200.01,186.91,216.91,264.71,324.01,343.41,384.51,380.81.372.41,377.81,394.2Compensationofemployees32.316.728.231.239.851.062.265.161.967.279.187.885.394.7110.2118.3128.7126.5138.5151.4159.1155.9171.6181.1185.1199.8210.7226.3246.1273.5291.9322.8358.5378.4402.0447.0506.2556.5581.1654.4738.5844.3958.11,041.71,150.11,189.21,020.61,023.61,043.21,079.61,118.61,140.01,167.01,174.51,181.61,190.41,195.81,188.8Net domestic productDomestic incomeCorporate profits with inventory valuation and capitalconsumption adjustmentsTotal7.5-2.14.27.412.717.721.821.617.113.819.725.622.929.633.430.230.028.638.335.934.930.240.137.438.345.651.257.767.772.268.873.367.552.762.172.778.663.686.1107.3129.5142.1134.7123.0145.6121.9129.6112.8121.8127.7150.4142.1151.8138.2120.3114.8125.3ProfitsProfitsbeforetax8.4.66.1B.B16.420.123.622.217.822.029.131.824.938.539.133.834.932.142.041.839.833.743.139.739.544.248.955.465.270.366.372.969.456.865.476.696.0105.3107.3135.0156.5178.4191.8183.0186.6136.5201.6157.4181.3191.6202.5181.8191.5170.5134.8131.3139.8Profitstaxliability1.2.51.42.77.511.213.812.610.28.610.811.89.316.921.217.818.515.620.220.119.116.220.719.219.520.622.824.027.229.527.733.433.127.029.833.640.042.041.252.659.666.969.264.863.340.674.353.563.667.871.561.465.554.838.937.142.1Profits after taxTotal7.3.14.76.19.08.99,89.67.613.418.320.015.621.617.916.016.416.421.821.820.717.522.420.520.123.526.231.438.040.838.639.536.229.835.643.056.063.366.182.396.8111.5122.5118.2123.395.9127.3103.9117.7123.8131.0120.4126.0115.795.894.297.6Dividends5.12.03.33.53.93.73.94.14.14.85.56.06.07.57.17.17.37.48.59.09.39.310.010.610.611.412.613.715.616.817.519.119.118.518.520.121.121.425.730.131.937.739.842.452.961.038.342.743.544.949.451.254.456J58.059.762.663.8Undistributedprofits2.2-1.91.42.65.05.25.85.63.58.612.814.09.614.110.88.89.19.013.412.711.48.212.49.99.512.213.517.722.424.021.220.417.111.317.122.935.041.940.452.264.973.882.875.870.334.989.061.274.278.981.669.271.658.937.834.535.0Inventoryvaluationadjustment0.5-2.1-.7=.2-2.5-1.2— 8-'.Z-.6-5.3= 5.9-2.21.9-5.0-1.2' 1.0-1.0= .3-1.7-2.7-1.5-.3-=.3-.2 .3.0.1=.5-1.2-2.1-1.6-3.7-5.9-6.6-4.6-6.6=20.0=40.0-11.6-=14.7= 16.2-24.0-43.1-43.0-24.6"9.4-57.2-28.2-41.1-45.5-35.5-22.8-23.0-17.1-4.4-=9.4= 10.3-13.4Capitalconsumptionadjustment= 1.4= .6= 1.1-1.2-1.3= 1.2-.9-.3= .2=3.03 5=3.9=3.9=4.6-4.5-3.9-3.2-2.0=3.2=3.4-3.2-2.7=2.1-1.51.42.32.93.73.94.04.04.02.41.32.72.6=1.8-9.7-13.0= 10.8-12.3= 13.9-17.0= 16.3-5.2-14.8 16.3-18.4= 18.4-16.6-16.9= 16.7= 15.1-10.0= 7.1=4.2.5 Netinterest1.41.71,51.41.31.31.11.01.0.7.8.91.0.91.11.21.31.51.61.72.22.73.13.53.94.54.85.36.17.48.710.113.117.018.019.123.029.630.829.532.136.943,952.462.572.549.850.551.857.555.061.265.768.170.572.673.173.81 Indirect business tax and nontax liability plus business transfer payments less subsidies.Source: Department of Commerce, Bureau of Economic Analysis.176

TABLE B-13.—Output, costs, and profits of nonfinancial corporate business, 1948-82[Quarterly data at seasonally adjusted annual rates]Gross domesticCurrent-dollar cost and profit per unit of output (dollars) 1Year orquarternonfinancialcorporatebusiness (billionsof dollars)Currentdollars1972dollarsTotalcostandprofit 2CapitalconsumptionallowanceswithcapitalconsumptionadjustmentIndirectbusinesstax,etc. 3CompensationofemployeesCorporate profits withinventory valuation andcapital consumptionadjustmentsTotalProfitstaxliabilityProfitsaftertax 4NetinterestOutputper hourof allemployees(1972dollars)Compensationper hourof allemployees(dollars)19481949137 3133.5229 7219.90.598.6070 047.0530 053.0570 382.3880112.1040 051.0420 060.0620 004.004195019511952..19531954151.9174 5182.3195.0191.9247.52702275.2292.0283.4.614646.663.668.677.051054.057.058.063.057056.061.062.061.383408.430.441.446.120124.110.103.101.068079.065.063.055051045045.040.046.004004.004.004.00519551956195719581959.216.723L6242.3236.3266.0315.1324.1328.3313.4347.4.688.715.738.754.766.061.067.073.079.074.061.064.068.073.073.439.467.484.497.494.122.111.106.097.116.064.062.058.052.060057.049048.045.056.005.005.007.009.0095.2065.4332.5892.68419601961196219631964277.0285.0311.33318358.4358.4367.2399.74263455.6.773.776.779778.787.075.075.071069.068.079.082.083083.084.505.504.500494.497.104.104.114120.127.054.053.052053.053.051.051.062067.074.010.011.011Oil.0125.5365.7275 9976 2486.4692.7972.8872.9983 0893.21319651966..196719681969393.64315454.1500.2544.1495.2530.7543.0578.9604.0.795.813.836.864.901.066.067.072.074.078.083.081.084.089.096.497.515.538.558.594.137.136.127.127.112.055056.051.058.055.082080.076.069.057.012.014.016.017.0226.6736.7766.8477.0747.0923.3163.4923.6803.9454.20919701971197219731974563.7609.9678.0759.4818.9599.6626.8678.0731.9708.2.940.9731.0001.0381.156.087.091.092.093.112.106.113.113.114.127.631.641.659.692.786.088.099.107.107.090.045.047.049.055.059.043.052.058.053.030.028.029.028.031.0427.1157.4507.6647.8497.5554.4914.7785.0525.4295.93719751976197719781979890.0100131,128.41,276.21,416.8694.2745.5795.8846.3876.11.2821.3431.4181.5081.617.137141.145.155.171.140141.141.144.149.837878.928.9981.094.124144.163.168.154.059071.075.079.079.065073.088.089.075.044040.040.044.0507.7748 0028.1448.2178.2026.5077.0247.5588.1998.970198019811982*.1,537.71,732.31,779.3860.3881.3856.41.7871.9662.078.200.222.250.173.202.2131.2111.3051.389.143.165.142.075.072.047.068.093.095.061.071.0858.1698.3119.89110.8461980:IIIllIV1,501.11,499.71,543.61,606.5874.1847.3852.5867.41.7171.7701.8111.852.186.200.206.208.158.169.178.1861.1681.2081.2241.245.148.133.143.147.085.063.075.078.063.070.068.069.057.060.061.0668.1648.0898.1928.2359.5339.77110.02410.2491981:IIIIIIV1683 3l>15.01,763.61,767.2883 0884.2887.5870.41.9061.9401.9872.030211,218.224.236196.202.203.20812671.2891.3151.349170.161.171.159081.069.074.063089.091.097.096.062.069.074.0788 3288.3208.3248.27310 55110.72710.94711.1631982:\\ZZZZ.Ill1,756.61,771.01,794.4858.8857.9859.32.0452.0642.088.242.247.251.205.211.2141.3761.3881.392.140.134.146.045.043.049.095.091.097.082.085.0858.2798.3348.42911.39111.56411.7301 Output is measured by gross domestic product of nonfinancial corporate business in 1972 dollars.2 This is equal to the deflator for gross domestic product of nonfinancial corporate business with the decimal point shifted 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).177

TABLE B-14.—Personal consumption expenditures, 1929-82[Billions of dollars; quarterly data at seasonally adjusted annual rates]Durable goodsNondurable goodsYear or quarterDurablegoodsconsumptionexpendituresNondurablegoodsServicesMotorvehiclesand partsFurnitureandhouseholdequipmentOtherFoodClothingandshoes1929193319391940194119421943194419451946194719481949195019511952195319541955195619571958195977.345.867.071.080.888.6994108 2119 5143 8161 7174 7178 1192 0207 L217 L229 1235 8253 7266 0280 4289 531089.23.56.77.89.76.96.56.78015.820422.925.030829.829.132.531.838 637.939.336.842.437.722.335.137.042.950.858.664.371982.790.996.694.998 2108.8113.9116.5118.0122.9128.9135.2139.8146.430.320.125.226.228.231.034.337.139.645.350.455.358.263 068.574.080.686.192.199.2105.9112.8121.93.31.12.32.83.5.7.8.8104.16.68.010.613 712.211.313.913.017.815.817.214.818.94.71.93.43.84.84.63.93.8458.410.611.511.313.714.014.014.614.616.217.116.916.617.81.2.51.01.11.31.61.92.12.53.2333.43.2333.63.94.14.24.65.05.25.45.819.511.519.120.223.428.433.236.740647.452 354.252.553960.463.464.465.467.269.973.676.479.19.44.67.17.58.811.013.414.616 518.218 820.119.319 621.221.922.122.123.124.124.324.726.1I9601961196219631964196519661967196819691970197119721973197419751976197719781979198019811982 p1980:ItilIV1981:IIIIIIV1982:IIIIIIV P324 9335 0355.2374 6400 54304465. L490 3536 95818621.?672 2737 1812 0888 1976.41 084.31,204.41 346.51,507.21667 21,843.21,972.01618 71622 21682 01,745.81,799.91819 41,868.81,884.51919.41947 81,986.32,034.643.141.646.751.456.463 068.070.180 585.785.297.2111.1123.31215132.2156 8178.2200 2213.4214 3234.6242.7220 8199 0212 7224.7236 9230 4241.2229.6237.9240.7240.3251.71511155.3161.6167.1176.9188 6204.7212.6230 6247.8265.7278.8300.6333 4373 4407.34417478.8528 2600.0670.4734.5762.7650 6656 7673 7700.5720 6729 6741.3746.57491755 0768.4778.3130.7138.1147 0156.1167.1178 7192.4207.6225 8248.2270.8296.2325.3355 2393 2437.0485 7547.46180693.7782 5874.1966.6747 3766 6795 6820.6842 4859 4886.3908.3932.49521977.61,004.519.717.821.524.426.130 030.430.136 338.736.245.452.457.150 455.872 684.895.796.689.798.6106.297.979 288193.7102194 2104.093.9103.2103 3104.3114.117.717.918.920.322.824 727.729.532 334.135.237.241.747.150 653.559165.772.881.886.393.492.785 583 486 090.493193 393.893.391.093 292.794.05.85.86.36.77.68.39.910.511813.013.914.616.919.220 522.925.227.731.735.138.342.643.737.536 438 640.641.742 943.442.443.744.243.343.681.183.285.587.892.798.9106.6109.6118 7127.5138.9144.2154.9172.1193.7213.6230.6249.8275.9311.6343.7375.3397.8333.9336 4346 4358.0368.83721378.0382.3387.9395 0401.3406.826.727.428.729.531.933.536.638.242.145.546.850.655.461.464.869.675.382.692.499.1104.7114.6118.6103.0102 2104 8108.9112.3114 0115.9116.0117.5118 4119.1119.5See next page for continuation of table.178

TABLE B-14.—Personal consumption expenditures, 1929-82—Continued[Billions of dollars; quarterly data at seasonally adjusted annual rates]Year orquarterNondurable goods-cont'dGasolineand oilFuel oiland coalOtherHousing 1TotalHousehold operationElectricityand gasServicesOtherTransportationTotalOtherMedicalcare19291933193919401941194219431944194519461947194819491950195119521953195419551956195719581959I9601961196219631964196519661967196819691970197119721973197419751976197719781979198019811982 p1980:|IIMlIV1981:1IIIIIIV1982:1IIIllIV1.81.52.22.32.62.11.31.41.83.44.04.85.35.56.16.87.4788.69.410.210.611.312.012.012.612.913.514.716.017.018.620.722 423.925.428.636.640.444.048.151.266.687.096.893.982.086.187.092.895.296.797.797.595.391.394.294.91.61.21.41.51.7192.0202.22.53.03.43.13.43.53.43.4353.83.94.14.24.0383.73.74.0414.44.74.84.74.5444.5506.27.78.29.810 711.916.119.019.717.618.818.619.319.220.019.919.919.217.317.318 417.65.43.55.35.66.4758.79610.811.312.814.114.715.817.618.319.319 220.321.623.024.025.927 529.031.132.834 637.240.943.046.549.653 255.559 865.070.575.582.187 696.9106.6116.0128.2134.8112.9113.4116.2121.6124.3127.0129.8131.5131.1133.1135 4139.611.78.19.49.710.411.211.812.312.814.216.017.919.621.724.327.029.832.234.336.739.342.045.048.151.254.758.061465.569.574.179.887.093 9102.7112.5123.8137.4149.8166.51859209.6236.0266.0295.3324.7254.8261.6269.6278.1284.4291.3298.7307.0314.5320.4328.2335.54.02.83.84.04.3485.2596.46.87.58.18.59.510.411.112.012 614.015.216.217.318.520121.022.223.424 826.328.030.032.235.037 741.045 249.655.263.371.681190.199.3111.7128.9144.1105.1108.9114.7118.2120.7125.2132.8136.9141.4140.7145.0149.31.21.11.41.51.5161.7181.92.12.32.62.93.33.74.14.5505.56.16.57.17.6838.89.49.910 410.911.512.213.114.215 417.018 820.524.029.232.938 542.947.856.666.875.250.954.859.261.461.964.669.471.275.172.675 277.82.91.72.42.62.7323.5414.54.75.15.45.66.26.77.07.5768.59.29.710.210.911812.212.813.614 415.416.517.819.220.822 224.026 429.131.234.138.742 647.251.555.162.168.954.254.155.556.858.860.763.565.766.368.169.971.52.61.52.02.12.4273.4374.05.05.35.85.96.26.77.17.8798.28.69.09.310.110 711.211.712.212 813.715.016.217.619.522 025.127 528.830.933.238.646.451.256.362.965.470.361.261.664.164.666.264.365.565.766.969.571.573.412.07.710.010.311.212 213.915 216.419.421.723.624.125.627.028.831.033 335.638.741.444.348.351754.858.362.568173.379.987.296.2106.8117 2127.41401153.0169.8190.7209.0234.1267.1302.0341.9384.4427.6326.2334.5347.2359.8371.1378.5389.3398.7409.6421.5432.9446.42.21.52.12.22.4262.9333.64.55.56.36.46.97.38.08.99710.311.012.013.114.315 416.418.019.522 323.926.028.431.436.541045.951457.464.573.783.396.5108.4124.1143.5170.9194.7134.7140.6145.9152.9159.7166.9175.6181.5186.4192.1197 9202.41 Includes imputed rental value of owner-occupied housing.Source: Department of Commerce, Bureau of Economic Analysis.179

TABLE B-15.—Gross private domestic investment, 1929-82[Billions of dollars; quarterly data at seasonally adjusted annual rates]Fixed investmentChange inYear or quarterTotalTotalNonresidentialTotalResidentialGrossprivatedomesticinvestmentStructuresProducers'durableequipmentNonfarmstructuresinventoriesTotalFarmstructuresProducers'durableequipmentNonfarm1929.16.214.510.65.15.53.93.60.20.11.71.81933.1.43.02.41.01.4.6.5.0.0-1.6~ 1.41939.9.38.85.92.03.92.92.7.1.1.4.3194019411942194319441945194619471948194913.117 99.9587.210 630.734 045.935.310.91348.1648.111724.334 441.138.47.5946.05.06.910.116.923 026.324.42.33.01.91.41.92.86.97.79.08.75.2644.13.75.0739.915.317.315.73.44.02.21.41.31.57.411.414.913.93.23.61.91.21.11.46.710413.712.8.2.2.2.1.5.7.9.8.1.1.1.0.0.0.3.32.24.51.8=.6-1.0-1.06.4= .54.7-3.11.940.7= 6= .6- 66.4133.0=2.21950 . .195119521953195419551956.19571958.195953.859.252.153.352 768.471069.261.978.147.048.949.052 954 362.466367.963 472.527.331.331.334.534 238.544 047.042 045.99.511.411.612.913 414.617.718.417.217.617.819.919.721.520 823.926328.624 928.319.817.617.718.420123.922.320.921.426.618.616.416.517.319 022.821.219.720.325.3.8.8.8.8.7.6.7.7.7.7.4.4.4.4.4.4.5.5.5.66.810.33.1.4-1.56.04.71.3-1.55.76.09.12.11.1=•215.55.1.8=2.3571960.196119621963196419651966.19671968196975 974.885 490.997 4113.5125 7122.8133.3149.372 972 579 284.9917103.71116112.5125 4139.548 548.052 254.861072.783183.9907101.318 819.120.120.522 427.030.130.332.436.729 728.932134.438 745.853 053.758 264.624 524.527.030.130.730.928.528.634.838.223 323.225.828.929 429.627.127.233.336.5.6.6.7.6.7!6.5.5.5.6.67.7.91.03.02.36.36.05.69.914.110.37.99.8272,05.55.26.28.914.39.67.8971970.1971197219731974197519761977.1978.1979144 2166.4195.0229 8228.72061257.93241386 6423.01410158.8184 82113214 5213 0246.030103601408.8103 9107.91210143 3156.6157 7174.1205 22489290.238740.544.151055.955458.864.478 798.365 267.476992 3100.7102 3115.3140 81702191.937150.963.868 057.955.372.095.81112118.635.448.961.565 654.852.468.892.0107 0114.0.67.71.31.01.11.51.71.71.11.31.51.71.81.92.12.32.52.93.27.710.218.514.1-6.911.823.026.514.33.16.49.615.216.0 10.513.921.925.48.6198019811982"402.3471.5421.9412.4451.1443 3309.2346.1347.5110.5129.7141.7198.6216.4205.8103.2104.995.898.399.790.11.92.12.53.03.23.2= 10.020.5-21.4=5.715.0=21.61980:(||IIIIV424 03910384.1410.3424 63914405.3428.03112300 2307.8317.5110 91091109.5112.6200 21912198.2204.9113.591297.6110.5107 486 993.5105.43.1141.02.03.02.93.03.1= .7= 4-21.2= 17.7740-15.4= 12.31981:||IIIIV455 7475 5486.0468.9443 5450 9454.2455.7330 03413353.0360.2119 6127 0132.7139.6210 4214 3220.2220.6113 6109 5101.295.51091104 795.689.41.3162.42.93.23.23.23.212.224 631.813.210 019 324.66.01982:IIIIII.IV P414 8431.5443.3397.9450 4447.7438 6436.4357 0352.2344.2336.61414143.6141.3140.4215 6208.6203.0196.293 495.594.399.887 989.688.794.1242.82.42.43.13.23.23.2=35.6-16.24.7-38.5=36 0= 15.03739.0Source: Department of Commerce, Bureau of Economic Analysis.180

TABLE B-16.—Gross and net private domestic investment, 1929-82[Billions of dollars]Less:fIquals: Net private domestic investment9.77.48.79.110.011.211.511.712.214.017.320.221.823.527.229.331.032 734.838.741.743.544.946.347.549.050.652.956.060.765.972.180.088196.5106.4116.5136 0159.3175.0195.2222.5256.0293 2330.1356.8Total6.5-6.0.64.17.9-1.3-5 7-4.6-1616.616 625.613.530.332.022.822.420 033.632.327.518.433.229.627.336.540.344.557.565.057.061.269.356 269.988.6113 392 746.882.8128.9164.1167.01091141.465.1Total4.845.11.93.430-5.036-.610.317.120.916.623.521.719.721.921627.627.626.119.927.526.724.930.234.438.947.650.946.653.359.552 962.378.494 878 553.771.0105.9137.7152.7119.1121.086.5Total3.1-3.5Nonresidential6.72.0-2.5-3.5-1.7136.610211.38.19.610.79.110.89111.913.914.38.110.612.310.914.015.319.728.935.431.933.638.133 931.137.051949 230.334.350.773.689.077 382.960.91.716107-.317-2.6201.22.42.12.72.32.93.93.84.85.15.97.97.96.46.47.37.37.97.89.112.914.813.814.516.616 315.616.620.718 913.114.116.023.333.736.045.949.5fYet fixed investment1.418.31.4227_9.3244.2828.65.86.76.75.36.0406.06.06.41.84.25.03.66.17.510.616.020.618.219.121.517 615.520.431230 317.320.234.750.455.341.337.011.5Total1.710.81.215-.6-1.6-1.9-183.76.89.78.513.911.010.611.112.515.713.711.811.816.914.414.016.219.019.118.715.514.719.821.319.031.241.342.929.323.436.855.264.063.741.838.125.6ResidentialGrossprivateYeardomesticinvestment192916.219331.419399.3194013.1194117.919429.919435819447.2194510 6194630.7194734 0194845.9194935.3195053.8195159.2195252.1195353.3195452 7195568.4195671.01957.. . . 69.21958.. . . 61.91959...78.1196075.9196174.8196285.4196390.9196497.41965..113.51966125.71967122.81968 . . .. 133.31969149.31970144 21971166.41972195.01973229.81974228 71975206.11976257.91977324.11978386.61979423.01980402 31981471.51982 p 421.9consumptionallowanceswithcapitalconsumptionadjustmentStructuresProducers'durableequipmentNonfarmstructures1.79.81.114-.5-14-1.7-163.4649.17.913.410.610.310.812 215.613.411.711.616.714.313.916.118.818.918.615.314.519.621.018 930.940.942.528 423.136.554.563.363.241.437.725.1ChangeProducers'Farmstructuresequip-durablement-0.1 0.0-.1 -.0-.0 .0.0 .00-.1 -.0o_ l-.1 -.1_ 2 - 1.123.4 .2.4 .1.3 .2.3 .1.3,\2 ,1.0.1 .1.1 .1.1 .1.1 .2-.0 .1.1 .1.0 .1,0 .1.0-.0 .2.0.0 '.2-.1 A-.0A-.2-.2-.2 '.6-.4 .7 .2 .7-.2 .5-.2.1 .6 .1 .6-.2-.2 .6-.1 .5.2 .2businessinventories1.7-1.6.42.2451.8 6-1.0106.44.7-3.16.810.33.1A-1,56.04.71.3-1.55.73.02.36.36.05.69.914.110.37.99.83.27.710.218.514.1-6.911,823.026.514.3-10.020.5-21.4Source: Department of Commerce, Bureau of Economic Analysis.181

TABLE B-17.—Inventories and final sales of business, 1946-82[Billions of dollars, except as noted; seasonally adjusted]Inventories 1HonfarmYear and quarterTotal FarmTotalManufacturingWholesaletradeFourth quarter:194672.0 22 7 49.3 26 7 10.1194782.6 25.1 57.5 29.3 10.5194887.2 22 9 64.3 32.5 11.7194978.7 19.8 59.0 28.9 11.8195098 0 261 719 35 2 13.81951110.5 28.3 82.2 43.4 14.61952109 2 260 83.1 44 4 14.81953110.1 24.6 85.5 46.4 15.01954107.6 23.8 83.9 44.3 15.31955114 8 22 5 92.2 48 8 16.61956124.0 22.9 101.0 54.5 17.91957127 6 24 3 103.3 548 18.21958127.3 25.6 101.7 53.2 18.31959132.0 24.4 107.6 55.7 20.0I960136 0 25 6 1104 56 6 2041961137.9 25.9 112.1 57.7 , 20.91962144 6 27 3 117 3 60 9 21.51963150.4 27.6 122.7 62.9 23.11964156.2 26.5 129.7 66.4 24.41965170.5 29.9 140.6 71.5 26.31966187.4 296 157.8 817 29.91967199.4 29.5 169.9 88.7 32.41968213.5 306 1829 952 34.31969234.6 33.3 201.3 104.8 37.71970244.0 32.3 211.6 108.4 41.71971260.8 36.7 224.1 109.9 44.91972288 7 45 6 2431 116 8 4941973357.7 66.6 291.2 141.1 60.21974434.4 62.4 372.0 189.6 76.91975439.4 64 5 374.9 189 8 77.31976473 6 606 4130 207 5 86 91977519.5 59.9 459.6 224.7 98.71978602 3 739 528 3 254 2 114 61979705.0 81.9 623.1 306.6 135.71980776.0 86.9 689.1 342.6 153.01981822.4 818 740 5 366 4 163.01982 p806.1 80.6 725.5 346.9 162.11980:724.1 79.0 645.1 321.0 140.5II737 2 811 6561 3281 144 0Ill757.3 86.2 671.1 333.2 148.5IV776.0 86.9 689.1 342.6 153.01981:791.6 85.9 705.7 352.6 156.5•I804.2 86.5 717.7 357.2 158.1III814.3 81.5 732.8 365.1 159.5IV822.4 81.8 740.5 366.4 163.01982:| 809.7 84.5 725.2 358.1 158.4|| 812.5 86.4 726.1 352.7 160.8111816.0 83.5 732.5 351.3 161.9IV P 806.1 80.6 725.5 346.9 162.1Retailtrade11.413.115.114.017 518.017.718.318.520.921.722.922.923.925 324.926 327.629.031.934.635.339042.844.350.555 764.874.174 682 993.71090121.0127.7140 7141.8121.3122 4126.1127J129.0134.2139.1140.7137.6140.2145.6141.8Other3.54.65.04.35.46.16.25.85.96.06.97.37.38.08.18.78.69.29.910.911.613.514.416.017.318.821225.031.333.335742.550.659.865.770.574.862.261563.465.767.668.369.170.571.172.473.774.8Finalsales •16018.319.619.521724.626,127.227.529.731.432.733.735.636938.841143.746.251.054.157.663 367.470.877.285 894.5102.0113.61241138.9159 5176.9194.92104221.5182.01812188.2194.9201.8203.3208.5210.4213.8215.5217.1221.5Inventory—finalsales ratioTotal4,504.514.444.034.534.494.184.053.913.863.953.903.773.713.693.553 523.443.383.343.463.463.373.483.453.383.373.794.263.873.823.743.783.993.983.913.643.984.074.023.983.923.963.913.913.793.773.763.64Nonfarm31 End of quarter.8 Quarterly totals at monthly rates. Business final sales equals final sales less gross product of households and institutions,government, and rest of the world, and includes a small amount of final sales by farms.3 Ratio based on total business final sales, which includes a small amount of final sales by farms.Note.—The industry classification of inventories is on an establishment basis and is based on the 1972 Standard IndustrialClassification (SIC) beginning 1948 and on the 1942 SIC prior to 1948.Source: Department of Commerce, Bureau of Economic Analysis.3 083.143 273.023 323.343183.153.053103.223163.013.022992.892 852.812.812.762.922.952 892.992.992.902833.083.653.303 333.313.313.523.543.523.283.543 623.573.543.503.533.513.523.393.373.373.28182

TABLE B-18.—Inventories and final sales of business in 1972 dollars, 1947-82[Billions of 1972 dollars, except as noted; seasonally adjusted]Year and quarterTotalFarmTotalInventories'ftonfarmManufacturingWholesatetradeRetailtradeOtherFinalsales 2Inventory—finalsales ratioTotalNonfarm3Fourth quarter:19471948194919501951195219531954195519561957..195819591960196119621963196419651966196719681969197019711972..1973197419751976197719781979198019811982 p1980:11IMIV1981:NHIIV1982:ItIllIV116.11216117.2127.71414145.7147.2145.0152 8158.61601158.3165.3168.8171.8179.7187.2194.3206.1222.92351244.1255.1258 9267.0277 2294.4306.0299 2307 0320.3336 3343.6338 6347.6339.1342 9342.3340.2338 6339 2342.3346.4347.6343.7342 6343 5339.125.726 726.227.529130.430 231.131530.731432.432.432.833.234.535 735.136.236.036 837.037.337 739.239 842.141.843 041140.840 843.241143.243.343 042.441.741141241.742.443 243.343.143343.390.594 891.0100.2112 3115.4117.1114.01212127.8128.7125.9132.9136.1138.6145.2151.5159.2169.9186.8198 3207.0217.82212227.8237 4252.3264.2256 3265 9279.5295 5300.4297 5304.4295.7299.9299.9298.4297.5298 0300.6304.0304.4300.5299.5300.2295.747.448 846.249.360 062.764560.964369.168 766.169.169.971.775.678 282.087.097.21041108.4112.8112 9111.8114 41218130.912711309134.1139 8145.0145 9148.4141.0146.6147.4146.3145.9146 9147.5149.41484146.4144.6143.3141.01 End of quarter.2 Quarterly totals at monthly rates. Business final sales equals final sales less gross product of households and institutions,government, and rest of world, and includes a small amount of final sales by farms.3 Ratio based on total business final sales, which includes a small amount of final sales by farms.N Ote.—The industry classification of inventories is on an establishment basis and is based on the 1972 Standard IndustrialClassification {SIC) beginning 1948 and on the 1942 SIC prior to 1948.Source: Department of Commerce, Bureau of Economic Analysis.16.017 217.219.219 720.120320.622122.822 522.524.625.125.726.628429.931.635.337 838.941.244045.947 950.454.152 255559.763 564.765 066.565.764.664.965.065.064665.165.466 565.365.866.165.718.320319.823.023 023.023.623.726.526.827.827.528.730.329.831.633.034.537.440.040.043.045.946.151.254.658.858.355.858 863.167.366.163.066.165.464.263.763.563.062.864.665.966.165.165.467.265.48.7867.88.79.59.68.78.88.49.29.89.810.510.711.411.412.012.813.814.316.316.817.918.219.020.521.420.921.120.822.624.924.623.623.423.624.523.823.623.623.623.423.323.423.623.723.723.633.234 434.636.939 841.643.043.145 646.547.148.149.750.753.155.358 360.966.167.570173.874.775.278.984.787.285.088.192.297.6103.0105.4105.0104.6105.5105.8102.7103.7105.0106.4105.2105.5104.6105.0104.6104.3105.53.503 533.383.463 553.513423.363 353.413403.293.333.333.243.253 213.193.123.303 363.313.413443.383.273.383.603.403.333.283.273.263.223.323.213.243.333.283.223.193.253.283.323.273.283.293.212.732 762.632.722 822.782 722.642 662.752 732.622.682.682 612.622 602.612.572.772 832.812.922 942.892 802.893.112.912.882.862.872.852.832.912.802.842.922.882.832.802.862.882.912.862.862.882.80183

TABLE B-19.—Relation of gross national product, net national product, and national income, 1929-82[Billions of dollars; quarterly data at seasonally adjusted annual rates]Year or quarterGrossnationalproductLess:CapitalconsumptionallowanceswithcapitalconsumptionadjustmentEquals:NetnationalproductIndirectbusinesstax andnontaxliabilityLess:BusinesstransferpaymentsStatisticaldiscrepancyPIUS:SubsidieslesscurrentsurplusofgovernmententerprisesEquals:Nationalincome1929103.49.793.77.10.61.1-0.284.8193355.87.448.47.1.7.7--.039.9193990.98.782.29.4.51.4.471.4194019411942194319441945 . . . . .19461947 ,19481949100.0125.0158.5192.1210.6212.4209.8233.1259 5258.39.110.011.211.511.712.214.017.320.221.891.0115.0147.3180.7198.9200.2195.8215.7239.3236.510.111.311.812.814.215.517.118.420.121.3.4.5.55.5.5.5.6.7.81.1.6=.8-=1.82.74.1.51.5=1.6.6.4.1.1.6.7.9-.2-.1= .379.7102.7135.9169.3182.1180.7178.6194.9219.9213.619501951195219531954 „„1955195S ...195719581959286.53308348.0366.8366.8400.0421.7444.0449.7487.923.527.229.331.032.734.838.741.743.544.9263.0303.6318.7335.8334.1365.3383.0402.3406.2443.023.425.311129.729.632.235.137.538.741.8.8.91.01.21.11.2141.51.61.81.33.21.72.32.01.3= 2.1= 1.2.2= 1.3.1= .1-.3-.5-,0.71.1237.6274.1287.9302.1301.1330.5349.4365.2366.9400.81960196119621963196419651966196719681969506 5524.6565 0596.7637.7691.1756 0799.6873 4944.046 347.549 050.652.956.060 765.972.180.0460 2477.05161546.1584.8635.06953733.7801.3864.045 448.051654.658.862.665 370.278986.6202.0212.42.72.8303.1343.9-2.4• = . 12.11.7.1= 1.21.4= .3-2.1=3.9.41.71.81.11.71.62.51.61.41.9415.7428.8462.0488.5524.9572.4628.1662.2722.5779.3197019711972197319741975 . .1976197719781979992 71,077.61185.91,326.41,434.21 549.21,718.01,918.32,163.92,417.888196.5106.4116.5136.0159.3175.0195.2222.5256.0904 7981.11 079.51,209.91,298.21 389.91,543.01,723.21,941.42,161.794 3103.7111.5120.9129.1140.1151.7165.7178.2189.6414.44.95.55.87.47.98.69.310.3•-1.54.13.3.83.75.55.11.4= 2.6-1.52.92.63.83.41.12.41.03.13.73.4810.7871.5963.61,086.21,160.71,239.41,379.21,550.51,760.31,966.7198019811982 p2 633.12,937.73,057.5293.2330.1356.82 339 92,607.62,700.8213.0251.3258.811412.413.73.9-1.9.15.56.68.32,117.12,352.52,436.51980:IIIllIV2,575.92 573 42*643 72J39.4278.4289,2298 6306.62,297.52 284 32 345 02,432.9200.1206.7216 3228.911.011311511.810.53.82.2-1.03.84.77.46.02,079.72,067.22,122.32,199.21981:ItIIIIV2 864.92 901.82,980.93,003.2315.4325 0335.2344.82 549.52 576 82,645.82,658.4244.6252 0253.3255.312 012 212.512.85.14.6-.8=7.25.87.26.57.02,293.72 324.42[387.32,404.51982:IIIIllIV "2,995.53,045.23 088.23J01.3348.7353.9359.4365.02,646.72,691.22,728.92,736.3250.2256.7261.7266.513.113.513.814.3-7.5.83.66.04.95.816.52,396.92,425.22,455.6Source: Department of Commerce, Bureau of Economic Analysis.184

TABLE B-20.—Relation of national income and personal income, 1929-82[Billions of dollars; quarterly data at seasonally adjusted annual rates]Year or quarterNationalincomeLess:CorporateprofitswithinventoryvaluationandcapitalconsumptionadjustmentsNetinterestContributionsforsocialinsuranceWageaccrualslessdisbursementsPlus:GovernmenttransferpaymentstopersonsPersonalinterestincomePersonaldividendincomeBusinesstransferpaymentsEquals:Personalincome1929193319391940194119421943194419451946194719481949195019511952195319541955195619571958195919601961196219631964196519661967196819691970197119721973197419751976197719781979198019811982 P1980:\\ZZIIIIV1981:IIIIV1982:IIIIllIV "...84.839.971.479.7102.7135.9169.3182.1180.7178.6194.9219.9213.6237.6274.1287.9302.1301.1330.5349.4365.2366.9400.8415.7428.8462.0488.5524.9572.4628.1662.2722.5779.3810.7871.5963.61,086.21,160.71,239.41,379.21,550.51,760.31,966.72,117.12,352.52,436.52,079.72,067.22,122.32,199.22,293.72,324.42,387.32,404.52,396.92,425.22,455.69.0-1.75.38.614.119.323.523.619.016.622.329.427.133.938.736.136.335.245.543.743.338.549.647.648.656.662.169.280.085.182.489.185.171.483.296.6108.394.9110.5138.1167.3192.4194.8181.6190.6161.1195.3172.2177.8181.2200.3185.1193.1183.9157.1155.4166.24.74.13.63.33.33.12.72.42.21.82.32.42.73.03.54.04.45.35.96.67.99.610.311.413.014.716.418.321.024.427.630.034.841.446.551.260.276.184.587.2102.5121.7153.8187.7235.7265.3175.7181.6190.4203.0217.6231.6244.0249.5258.7267.5268.1267.00.22.12.32.83.54.55.26.16.15.85.45.97.18.59.09.110.111.512.914.915.218.021.121.924.327.328.730.038.843.447.955.058.664.674.292.4104.3110.9126.0140.6161.8186.9204.0238.1253.7199.4200.5204.6211.3232.5236.2240.3243.5250.8253.0255.2255.80.0 0.91.52.52.72.62.72.53.15.610.811.210.611.714.411.612.112.915.116.217.320.124.325.227.030.831.633.434.837.641.649.556.462.876.190.099.8114.0135.4170.9186.4199.3214.6240.0285.8323.9360.8263.2271.9301.8306.5310.8314.8332.3337.9341.4351.7367.2382.96.95.55.45.35.35.25.15.25.96.67.68.18.79.710.511.212.513.714.916.718.820.322.525.026.429.032.235.639.744.448.353.461.169.474.880.993.9112.4123.2132.5152.8179.4218.7263.4329.0371.8249.1258.0266.4280.2304.7320.6339.6351.0359.7372.0378.2377.25.82.03.84.04.44.34.44.64.65.66.37.07.28.88.58.58.89.110.311.111.511.312.212.913.314.415.517.319.119.420.221.922.422.222.624.126.529.129.936.539.645.350.855.962.567.054.155.756.557.459.261.564.165.265.866.167.268.8.8.91.01.21.11.21.41.51.61.82.02.02.12.42.72.83.03.13.43.94.14.44.95.55.87.47.98.69.310.311.412.413.711.011.311.511.812.012.212.512.813.113.513.814.385.047.072.477.995.4122.6150.8164.5170.0177.6190.1209.0206.4227.2254.9271.8287.7289.6310.3332.6351.0361.1384,4402.3417.8443.6466.2499.25407588.2630.0690.6754.7811.1868.4951.41,065.21,168.61,265.01,391.21,540.41,732.71,951.22,160.42,415.82,569.72,086.82,109.62,185.32,260.02,330.02,380.62,458.22,494.62,510.52,55272,592.52.623.2Source: Department of Commerce, Bureau of Economic Analysis.185

TABLE B-21.—National income by type of income, 1929-82[Billions of dollars; quarterly data at seasonally adjusted annual rates]Compensationof employeesProprietors' income with inventory valuation and capital consumptionadjustmentsYear orquarterNationalincome 1TotalWagesandsalariesSupplementstowagesandsalaries2TotalTotalFarmProprietors'income3TotalCapitalconsumptionadjustmentProprietors'Income4NonfarmInventoryCapitalconsumptionvaluationadjustmentadjustment19291933193919401941.194219431944194519461947194819491950195119521953195419551956195719581959I960196119621963196419651966196719681969197019711972197319741975197619771978197984 839 971.479 7102.7135 9169.31821180 7178 6194 9219.9213.6237.6274.1287.93021301.1330.5349.4365 2366.9400.84157428.8462.0488.5524.9572.4628.1662.2722.5779.3810.7871.5963 61,086.21,160 71,239.41,379 21,550.51,76031,966751.129 548.152164.885 3109.51212123.11181129.2141.4141.3154.8181.0195.7209 6208.4224.9243.5256 5258.2279.6294 9303.6325.1342.9368.0396.5439.3471.4519.9572.9612.0652.2718 0801.3877 5931.41,036 31,152.11,30111,458.150.529 046.049962.182,1105.8116 7117.5112 0123.1135.5134.7147.0171.3185.3198.5196.82117228.3239 3240.5258.92719279.5298,0313.4336.1362.0398.4427.0469.65157548.7581.5635 2702.6765 2806.4889 9983.21106 51,237.40.652.12327323.8455.6606.15.96.67.89,710.411011.613.215.217 217.720.623 024.127129.531.834.540.944.450.357.263.270.782 8987112 3125.0146 4168.9194 6220715.05911.813 017.524.229.130431.836 735.940.936.438.743.243.441.841.242.943.945 347.747.647 248.649 950.552.556.960.561.264.067.066.269.476993.888,790.0941103.9118,5132.16.12.54.44.46.410.112.012.012.414.915.117.612.813.716.115.113.1n'i11.2n.i13.210.911712.112 312.010.813.114.112.612714.614.315.018732.826 524.619.119.126 331.96.32.64.54.56.510.312.212.212.715.215.718.213.514.416.916.013.913.312.212.112.114.111.912.612.913.012.811.513.814.913.513715.715.616.420434.629.028.022.823.331.337.80.2-.0-.1-.2-.2=.3-.3-.3=.5-.6-.7= 7-.8-.8-.8-.9-.9-.9= 1.0-.9-.8-.8-7-.7-.7-.9-1.0-1.2-1.3-1.4-1.6-1.8-2.5-3.4-3.7-4.3-5.0-5.98.9337.48.611.114.117.118.419.421.820.823.323.625.027.228.228628731.432.734.234.536735.536.537.638.541743.846.448.651.352.551.954.458.161.062.265.475.084.892.2100.28.8397.68611714.417.118.319.323.321.823.122.225.126.426.927 627.630.531.833.133.235.334.235.336.437.240.242.745.347.550.651.951754.558.162.365.867.477.186.894.9103.2015•= 2»0= .6= 4=.2= 1=.1-1.7-1.5-1.1-.3= 2=.0= 3=.1= .0.0.0= .0= .0=.1l!2-.2=.'5= .'6=2.0-37-1.2-1.2= 1.2=2.0= 2.9=01o-.0o.01.2,2.22.5.6.91.01.01.11,21.21.21.41.41.41.41.31.21.21.41.51.31.31.31.11.1.8.4.8.6,1= 8-.9-.7= .1198019811982 P1980:||IllIV1981:IIIllIV1982:1.IllIV2,117.12,352.52,436.52.079 72,067.22,122.32,199.22,293.72,324.42,387.32,404.52,396.92,425.22,455.61,598.61,767.61,855.91,555 21,571.71,604.91,662.81,718.01.750.01,789.11,813.41,830.81,850.71,868.31,873.71,356.11,494.01,560.11319 51,332.11,361.01,411.71,452.81,479.41,512.61,531.11,541.51,558.61,570.01,572.3242.5273.6295.8235 7239.6243.9251.0265.2270.6276.5282.3289.3294.1298.3301.4116.3124.7120.1122 7108.9115.5118.0123.4123.8127.5124.1116.4117.3118.4128.119.424.018.622.115.920.319.221.622.527.124.617.817.416.622.626.431.826.828.722.927.526.529.130.335.132.826.025.524730.8-7.0-7.9-8.1-6.6-7.0-7.2-7.3-7.5-7.8-8.0-8.2-8.2-8.1-8.1-8.296.91007101.4100.593.095.198.8101.8101.2100.499.598.699.9101.7105.599.9100.394.6104.995.198.2101.4103.2100.999.397.793.894.594.4957-=3.1-1.64.3=2.0-3.1=3.0-2.5-1.4-1.2-1.2.0= 1.0-A.17.3.0-.2.0.51.21.82,33.0476.47.910.31 National income is the total net income earned in production, ft differs from gross national product mainly in that it excludesdepreciation charges and other allowances for business and institutional consumption of durable capital goods and indirect businesstaxes. See Table B 19.2 Employer contributions for social insurance and to private pension, health, and welfare funds; workmen's compensation; directors'fees; and a few other minor items.See next page for continuation of table.186

TABLE B-21.—National income by type of income, 1929-82—Continued[Billions of dollars; quarterly data at seasonally adjusted annual rates]Year or quarterRental income of personswith capital consumptionadjustmentTotalRentalincomeofpersonsCorporate profits with inventory valuation and capital consumption adjustmentsTotalProfits with inventory valuation adjustment and withoutcapital consumption adjustmentTotalProfitsbeforetaxesProfitstaxliabilityProfitsTotalProfits after taxCapitalconsumptionadjustmentDividendsUndistributedprofitsInventoryvaluationadjustmentCapitalconsumptionadjustmentNetinterest1929193319394.92.22.65.72.33.1-0.8-.1-.69.0175.310.5-1.26.510.01.07.21.4U8.6575.82.03.82.8-1.62.00.5-2.1-.7-1.4-.6-1.1474.13.619401941194219431944194519461947194819492.73.1404.4454.65.55.35.76.1333.9505.6596.2737.7858.9-.6-.8-1.0-1.2-1.4-1.6-1.8-2.5-2.8-2.88614.119 323.523 619.016 622.329427.19.815.420.524.524.019.319.625.933.431.110 017.921725.324.219.824.831.835 629.22.87.611.414.112.910.79.111.312.410.27.210.310.311.211.39.115.720.523 219.04.04.44.34.44.64.65.66.37.07.2325.8606.7674.510 214.216211.8-.2-2.5-12-.8-.6-5.3-5.9-2.21.9-12-1.312-1.0- 3-.2-30-3.640-3.9333.3312.7242.2182.3242.71950195119521953195419551956195719581959..7.17.78.810.011.011.311.612.212.913.610.011012.213414.414 815.215916.717.4-2.9-3 3-3.4-3 4-3.3-3 5-3.6-3.6-3.8-3.833.938 736.136 335.245 543.743 338.549.637.943.340.640.238.447.546.946.641.652.342.944 539.641238.749.249.648.141.952.617.922.619.420.317.622.022.021.419.023.625.021.920.220 921.127.227.626.722.928.98.88.58.58.89.110.311.111.511.312.216.213.411.812.111.916.916.615.211.616.7-5.0-1.21.0-1.0-17-2.7-1.5-.340-4 6-4.5-39-3.2-20-3.2-3.4-3.2-2.73.03.54.04.45.35.96.67.99.610.3I9601961196219631964196519661967 *.'.'."1968196914.515.015.816.517.118.018.719.719 519.618.018.419119.720.221.222.323.624 025.2-3.5-3.4-3 4-3.2-3.2-3.3-3.6-3.9-4 5-5.647.648 656 662.169.280.085.182.489185.149.750.055159.766.076.080.978.184 980.849.849.755 059.666.577.283.079.788 586.722.722.824 026.228.030.933.732.539.239.527.126.931133.438.546.349.447.249447.212.913.314.415.517.319.119.420.222.022.514.313.616 617.921.227.229.927.027.324.7-.2.0.1~\2-2.1-1.6-3.7-5.9-2.0-1.41.52.53.14.04.24.34.34.311.413.014.716.418.321.024.427.630.034.819701971197219731974 ..v1975197619771978197919.720.221022.623.523.023.524.826.627.925.827129 032.135.336 839.244.050.056 2-6.1-6.9-8 0-9.5-11.8-13 8-15.6-19.1-23.4-28 371.483 296 6108.394.9110 5138.1167.3192.4194 868.982.094 0105.696.7120.6151.6178.5205.1209.675.486.6100 6125.6136.71321166.3194.7229.1252.734.237.541.649.051.650.663.872.783.287.641.349.058 976.685.181.5102.5122.0145.9165.122.522.924.427.029.930.837.440.847.052.718.826.134.549.655.250.765.181.298.9112.4-6.6-4.6-6.6-20.0-40.0-11.6-147-16.2-24.0-43.12.51.32.72.7-1.8-10.1-13.5-11.3-12.7-14.841.446.551.260.276.184.587.2102.51217153.8198019811982"32.933.934.165.369.470.8-32.4-35.5-36.7181.6190.6161.1199.4207.5166.0242.4232.1175.484.781.258.8157.8150.9116.658.165.170.399.785.846.3-43.0-24.6-9.4-17.8-16.8-4.9187.72357265.31980:||IIIIV30.832.733.834.261.864.866.967.5-31.0-32.1-33.1-33.3195.3172.2177.8181.2211.0189.4197.0200.4268.2217.6238.1245.995.373.382.287.8172.9144.3155.9158.156757.858,759.6116.786.497.398.5-57.2-28.2-41.1-45.5-15.7-17.2-19.3-19.2175.7181.6190.4203.01981:IIIll(V34 434.033.633.668 768.969.570 5-34.3-34.9-35.9-36.9200 3185.1193.1183.9217.6202.6210.3199.4253.1225.4233.3216.591.579.282.471.6161.6146.2150.8144.961.564.066.868.1100.182.284.076.9-35.5-22.8-23.0-17.1-17.3-17.5-17.1-15.5217.6231.6244.C249.51982:I||IllIV*33.934.234.633.971.070.770.970.9-37.1-36.4-36.3-37.0157.1155.4166.2167.2162.2170.0171.6171.7180.356.755.360.9115.0116.3119.468.869.370.572.446.147.048.8-4.4-9.4-10.3-13.4-10.1-6.9-3.81.22587267.5268.1267.03 With inventory valuation adjustment and without capital consumption adjustment.4 Without inventory valuation and capital consumption adjustments.Source: Department of Commerce, Bureau of Economic Analysis.187

TABLE B-22.~$ourees of personal income, 1929-82[Billions of dollars; quarterly data at seasonally adjusted annual rates]Year or quarterPersonalincomeTotalWage and salary disbursements 1CommodityproducingindustriesTotalManufacturingDistributiveindustriesServiceindustriesGovernmentandgovernmententerprisesOtherlaborincome 1Proprietors' incomewith invaluati sn andcap talconsurnptionadjustmpntcFarm Nonfarm192985.050.521.516.115.68.45.00.56.18.9193347.029.09.87.88.85.25.2.42,'53.3193972.446.017.413.613.37.18.2.64.47.4194019411942194319441945194619471948194977.995.4122.6150.8164.5170.0177.6190.1209.0206.449 962.1821105.6116.9117.5112.0123.1135.5134.819.727.539.149.050.445.946.054.261.157.815 621.730.940.942.938.236.542.547.144.614.216.318.020.122.724.831.035.237.537.77.58.19.09.910.911.914.316.117.918.58510.216.026.633.034.920.717.519.020.8.6.91.11.51.82.02.42.72.94.46.410.112.012.012.414.915.117.612.88.611.114.117.118.419.421.820.823.323.61950195119521953195419551956195719581959227.2254.9271.8287.7289.6310.3332.6351.0361.1384.4147.01713185.41986196.82117228.3239 3240.5258.964.876.382.089.685.793.1100.6104.2100.0109.650.359 364.171267.573 879.482 478.686.839.844.346.949.750.153.457.760.560.864.819.821.523.124.926.128.631.3.33.635.638.522.629.233.334.434.936.638.841.044.146.03.74.65.25.96.17.08.09.09.410.613.716.115.113.112.511.511.211.113.210.925.027.228.228.628.731.432.734.234.536.71960 . .. .196119621963196419651966196719681969402.3417.8443.6466.2499.2540.7588 2630.0690.6754.72719279.5298 0313 4336.1362 0398 4427.0469 6515.71131113.7121.8126 9135.4146.01610168.3183.4199.689 789.896 7100 6107.1115 5128 0134.1145 8157.568.269.372.876 381.487.294 4100.9110.0120.841.444.147.250.254.458.964.771.379.689.749.252.456.360064.969.978 386.496.6105.511.211.813.014.015.717.819.921.725.228.511.712.112.312.010.813.114.112.612.714.635.536.537.638.541.743.846.448.651.352.519701971 .. .19721973197419751976197719781979811.1868.4951.41,065.21168 61,265.01,391.21,540.41,732,71,951.2548.7580 9635.2702 7765 7806.48899983.21,106 31,237.6203.0208.3227.3254.3274 7275.0307.3343.6389.4438.4158.2160 3175.4196 22114211.0237 4266.0299.2333.9130.3139.4152.1168.3184 6195.6216.6239.5270.7303.498.3106.7118.2131.3145.6159.7177.4197.7226.6259.7117.1126.5137.5148.7160.9176.1188.7202.4219.5236.232.536.743.048.855.864.575.989.4102.5114.914.315.018.732.826.524.619.119.126.331.951.954.458.161.062.265.475.084.892.2100.2198019811982"2,160.42,415.82,569.71,356.11,493.91,560.1468.0510.8509.9354.4386.4382.6330.5361.4375.7297.4338.6372.3260.2283.1302.3127.2140.4153.819.424.018.696.9100.7101.41980:IIIHIIV2 086 82]lO9.62,185.32,260.01319 71,332.11,360.51,412.2462 7458.6465.6485.1350 3347.0352.8367.7323 2324.9331.9341.92834292.0301.4313.1250 4256.6261.6272.2123 2125.9128.4131.522.115.920.319.2100.593.095.198.81981:1||IIIIV2,330.02,380.62,458.22,494.61452 81479 41,512.31,531.2499.2507 2519.3517.7377 0386 9392.9388.7352.1358 7366.5368.3325.2333.7342.8352.8276 2279 8283.8292.4135.3138.4142.2145.821.622.527.124.6101.8101.2100.499.51982:1||IIIIV P2 510.52*552 72^592.52,623.2154161556 61,570.01,572.3514.3513 6510.2501.43851385 6383.8375.8371.4375 4378.4377.4359.5367.6377.8384.3296.5300 0303.5309.1149.1152 5155.5157.917.817.416.622.698.699.9101J105.51 The total of wage and salary disbursements and other labor income differs from compensation of employees in Tabfe 8-21 in that itexcludes employer contributions for social insurance and the excess of wage accruals over wage disbursements.See next page for continuation of table.188

TABLE B-22.—Sources of personal income, 1929-82—Continued[Billions of dollars; quarterly data at seasonally adjusted annual rates]RentalTransfer paymentsYear or quarterofpersonswithcapitalconsumptionadjustmentPersonaldividendincomePersonalinterestincomeTotalOld-age,survivors,disability,andhealthinsurancebenefitsGovernmentunemploymentinsurancebenefitsVeteransbenefitsGovernmentemployeeretirementbenefitsAid tofamilieswithdependentchildren(AFDC)OtherLess:PersonalcontributionsforsocialinsuranceNonfarmpersonalincome 219294.95.86.91.50.60.10.80.119332.22.05.52.1.6.21.4.219391940194119421943194419451946 ..1947194819492.6273.14.0444.54.6555.3576.13.8404.44.34.44.64.65.66.37.07.25.4535.35.25.15.25.96.67.68.18.73.0313.13.13.03.66.211311.711312.50.00.1.2.3.4.5.60.45.4.4.1.1.41.1.8.91.9.55.51.03.0707.0595.3.33.3'AA.5.7.7.91.7171.81.81.82.02.021.34.52.52.93.3.67.81.21.82.22.3202.12.22.215991719188 2190.419501951195219531954195519561957195819597.1778.810.011.011311612.212 913.68.88.58.58.89.110.311111.511.312.29.710.511.212.513.714.916 718.820 322.515.212.613.114.116.217.518 721.625 927.01.01.92.23.03.64.9577.38510.21.5.91.11.02.21.5151.9412.87.74.64.34.14.24.4444.5474.61.01.11.21.41.51.7192.22.52.8.6.6.5.5.6.66.78.93.53.63.84.14.14.34.54.95.35.82.93.43.84.04.65.2586.76.97.9210.2235 4253.12713273.9295 5318 0336.6344 4369.8I9601961196219631964196519661967196819691970197119721973197419751976197719781979198019811982 '14.515015.816.517.118.018 719.719 519.619 720 221.022 623 523.023.524 826 627.932.933.934112.913.314.415.517.319.119.420.221.922.422.222 624.126.529.129.936.539.645.350.855.962.567.025.026429.032.235.639.744 448.353.461.169 474 880.993 9112.4123.2132.5152.81794218.7263.4329.0371.828.932 833.835.837.440.444 752.659 866.780194 4104.7119 5141.2178.3194.3207.9223 8250.3297.2336.3374.511.112.614.315.216.018.120 825.530.232.938.544.549.660.470.181.492.9104.9116.2131.8154.2182.0204.53.04.33.13.02.72.3192.22.12.24.0585.74.46.817.615.812.79.79.816.115.424.94.6504.74.84.74.9495.6596.77.7889.710.411.814.514.413.813.914.415.016.116.33.13.43.74.24.75.26.16.97.68.710.211.813.816.019.011126.129.032.736.943.049.254.01.01.11.31.41.51.7192.32.83.54.86.26.97.27.99.210.110.610.711.012.413.413.16.26.46.77.37.88.39.210.211.112.515.017.419.021.125.632.835.136.940.746.356.660.361.69.39.710.311.812.613.317.820.622.926.227.930.734.542.647.950.455.561.169.881.188.7104.9111.7386.7401.6427.1449.7483.7522.6568.9611.9672.1733.9790.0846.5925.31,023.71,131.81,229.11,359.31,506.51,689.71,899.32,117.32,364.12,518.91980:I||HIIV30.832.733 834 254.155.756.557.4249.1258.0266.4280.2274.2283.2313.4318.2142.1144.7163.4166.411.815.918.718.014.814.614.915.740.142.343.446.011.712.112.813.053.653.560.259.186.986.989.1.91.82,042.22,070.32,140.92.216.C1981:IIIllIV1982:|||IllIV P34.434.033.633.633 934.234.633.959.261.564.165.265.866.167.268.8304.7320.6339.6351.0359 7372.0378.2377.2322.8327.0344.8350.7354.6365.2381.0397.2171.0173.7190.6192.8194.7197.5209.2216.615.715.114.116.718.723.525.531.816.015.916.016.416.316.116.316.647.249.149.650.851.554.454.955.313.113.413.513.413.213.213.013.159.859.861.060.660.160.662.163.8102.5104.1106.1107.0110.6111.4112.4112.42,282.52,330.92,402.62,440.32,461.62,503.22,543.32,567.62 Personal income exclusive of farm proprietors' income, farm wages, farm other labor income, and farm net interestNote.—The industry classification of wage and salary disbursements and proprietors' income is on an establishment basis and isbased on the 1972 Standard Industrial Classification (SIC) beginning 1948 and on the 1942 SIC prior to 1948.Source: Department of Commerce, Bureau of Economic Analysis.189

TABLE B-23.—Disposition of personal income, 1929-82[Billions of dollars, except as noted; quarterly data at seasonally adjusted annual rates]Year or quarter192919331939194019411942194319441945 ,.,1946194719481949195019511952 ....'.'.....'.* .*1953 . ..195419551956195719581959I9601961196219631964196519661967196819691970197119721973197419751976197719781979198019811982 p1980:IItHIIV1981:|||HIIV1982:1||III\M PPersonalincome85.047.072.477.9954122.6150 8164.5170.0177 6190.1209 0206.4227.2254.9271.8287 7289.6310 3332.6351.0361.1384.4402.3417 8443.6466 2499.2540.7588.2630.0690.6754.7811.1868.4951.41,065.21,168.61,265.01,391.21,540.41,732.71,951.22,160.42,415.82,569.72,086.82,109.62,185.32,260.02,330.02,380.62,458.22,494.62,510.52,552.72,592.52,623.2Less:Personaltax andnontaxpayments2614242.6335.917 818.920 818 721421018.520.628.934.035 532.535439.742 442.146.050 452156860 358.664.974.582197.2115.7115.8116 7141.0150.7170.2168.9196.82264258.7301.0336.3386.7397.2319.9328 6339.7357.1371.2384.23981393.2393.4401.2394.4399.7Equals:Disposablepersonalincome82.445.670.075.392 2116.6133 0145.61491158 9168.7188 0187.9206.6226.0237.7252 2257.1275 0292.9308 6319.0338.4352 0365838684059440.6475.8513.7547 9593.4638.9695.37518810.3914.5998.31,096.11,194.41,314 01,474.01,650.21,824.12,029.12,172.51,766.91,78101,845.51,902.91,958.71,996.52,060 02,101.42,117.12,151.52,198.12,223.5Total79.146.567.872.081.889.4100.1109.0120.4145 2163.51769180.4194.7210.0220.4233 7240.1258 5271.6286 4295.4317.3332.3342 7363.5384 0411.0442.1477.7503 6551.5598.3639.56911757.7835.5913.21,001.81,111.91,236 01,384.61,553.51,717.91,898.92,031.41,669.11,672 41,732.51,797.61,852.81,874.51,925.71,942.71,977.92,007.22,046.12,094.6Source: Department of Commerce, Bureau of Economic Analysis.Less: Personal outlaysPersonalconsumptionexpenditures77.345.867.071.080.888.699.4108.2119.5143.8161.7174.7178.1192.0207.1217.1229.7235.8253.7266.0280.4289.5310.8324.93350355.2374 6400.5430.4465.1490.3536.9581.8621.7672 2737.1812.0888.1976.41,084.31 204.41,346.51,507.21,667.21,843.21,972.01,618.71622 21,682.21,745.81,799.91,819.41,868.81,884.51,919.41,947.81,986.32,034.61.5.5.7.8.9ij.71.01.41.72.32.52.93.63.84.45.15.55.66.17.0737.8889.9U.I12.012.513.815.616.717.719.522.324.124.426.730.737.445.549.955.158.649.649.449.750.852.454.456.257.557.858.459.059.1Interestpaid byconsumerstobusinessPersonaltransferpaymentstoforeigners(net)Equals:Personalsaving0.3 3.3.2 -0.9.2 2.2.2 3.410.3.1 27.2.2 32.9.4 36.6.5 28.7.7 13 7J 5.2,7 11.1.5 7.5.4 11.9.4 16.1.4 17.4.5 18.5.5 17.0,4 16.4.5 21.3.5 22.3.4 23.6.4 21.1.4 19.7.4 23 0.5 23.3.6 219.6 29.6.7 33.7.7 36.0.9 44.3.8 41.9.9 40.61.1 55.81.1 60.71.1 52.61.3 79.01.0 85.1.9 94.3.9 82.5.9 78 0.8 89.4.8 96.7.8 106.2.6 130.2.9 141.1.7 97 9.7 108 6.8 113.1.9 105.3,5 105 9.8 122.0134 4.7 158.6.8 139.1.9 144.3.8 152.0.9 128.9Percent of disposablepersonal incorPersonal outlaysTotal96.0102.096.995.588.876.775.374.880.891.496.994.196.094.292.992.792.793.494.092.792.892.693.894.493.794.094.693.392.993.091.992.993.692.091.993.591.491.591.493.194.193.994194.293.693.594 593993.994.594.693.993 592.593.493.393.194.2PersonalConsumptionexpenditures93.8100.595.694.287.676.074.774.380.190.595.993.094.892.991.691.391.191.792.390.890.990.791.892.391.691.892.390.990.590.589.590.591.189.489.491.088.889.089.190.891.791.391.391.490.890.891691191.191.791991.190 789.790.790.590.491.5Personalsaving4.0=2.03.14.511.223.324.725.219.28.63.15.94.05.87.17.37.36.66.07.37.27.46.25.66.36.05.46.77.17.08.17.16.48.08.16.58.68.58.66.95.96.15.95.86.46.55.5616.15.5546.1657.56.66.76.95.8190

TABLE B-24.—Total and per capita disposable personal income and personal consumption expenditures incurrent and 1972 dollars, 1929-82[Quarterly data at seasonally adjusted annual rates, except as noted]Disposable personal incomePersonal consumption expendituresYear or quarterTotal (billions ofdollars)Currentdollars1972dollarsCurrentdollarsPer capita(dollars)1972dollarsTotal (billions ofdollars)Currentdollars1972dollarsCurrentdollarsPer capita(dollars)1972dollarsPopulation(thousands)l1929...,1933...,1939....1940....1941...,1942....1943...1944....1945....1946....1947....1948....1949...,1950...,1951...,1952...,1953....1954...,1955...,1956...,1957...,1958....1959...,I960...,1961...,1962...,1963....1964....1965...,1966....1967...,1968...1969....1970...1971...1972...1973...1974...1975...,1976...1977...1978...1979...82.445.670.075.392.2116.6133.0145.6149.1158.9168.7188.0187.9206.6226.0237.7252.2257.1275.0292.9308.6319.0338.4352.0365.8386.8405.9440.6475.8513.7547.9593.4638.9695.3751.8810.3914.5998.31,096.11,194.41,314.01,474.01,650.2229.5169.6229.8244.0277.9317.5332.1343.6338.1332.7318.8335.8336.8362.8372.6383.2399.1403.2426.8446.2455.5460.7479.7489.7503.8524.9542.3580.8616.3646.8673.5701.3722.5751.6779.2810.3864.7857.5874.9906.8942.9988.81,015.76763635345706918659731,0521,0661,1241,1701,2821,2591,3621,4651,5151,5811,5831,6641,7411,8021,8321,9111,9471,9912,0732,1442,2962,4482,6132,7572,9563,1523,3903,6203,8604,3154,6675,0755,4775,9656,6217,3311,8831,3491,7541,8472,0832,3542,4292,4832,4162,3532,2122,2902,2572,3922,4152,4412,5012,4832,5822,6532,6602,6452,7092,7092,7422,8132,8653,0263,1713,2903,3893,4933,5643,6653,7523,8604,0804,0094,0514,1584,2804,4414,51277.345.867.071.080.888.699.4108.2119.5143.8161.7174.7178.1192.0207.1217.1229.7235.8253.7266.0280.4289.5310.8324.9335.0355.2374.6400.5430.4465.1490.3536.9581.8621.7672.2737.1812.0888.1976.41,084.31,204.41,346.51,507.2215.1170.5219.8229.9243.6241.1248.2255.2270.9301.0305.8312.2319.3337.3341.6350.1363.4370.0394.1405.4413.8418.0440.4452.0461.4482.0500.5528.0557.5585.7602.7634.4657.9672.1696.8737.1767.9762.8779.4823.1864.3903.2927.66343645115376056577277818541,0171,1221,1921,1941,2661,3421,3831,4391,4521,5351,5811,6371,6621,7551,7971,8231,9041,9792,0872,2142,3662,4672,6742,8703,0313,2373,5113,8314,1524,5214,9725,4686,0486,6951,7651,3561,6781,7401,8261,7881,8151,8441,9362,1292,1222,1292,1402,2242,2142,2302,2772,2782,3842,4102,4162,4002,4872,5012,5112,5832,6442,7512,8682,9793,0323,1603,2453,2773,3553,5113,6233,5663,6093,7743,9244,0574,121121,878125,690131,028132,122133,402134,860136,739138,397139,928141,389144,126146,631149,188151,684154,287156,954159,565162,391165,275168,221171,274174,141177,073180,760183,742186,590189,300191,927194,347196,599198,752200,745202,736205,089207,692209,924211,939213,898215,981218,086220,289222,629225,1061980...,1981...,1982 ",1,824.12,029.12,172.51,018.01,043.11,054.58,0128,8279,3624,4724,5384,5441,667.21,843.21,972.0930.5947.6957.17,3238,0188,4984,0874,1234,125227,654229,872232,0501980:IIIIII ....IV1981:IIIIll...,IV1982:Ii!Z1,766.91,781.01,845.51,902.91,958.71,996.52,060.02,101.42,117.12,151.52,198.12,223.51,022.81,005.51,018.21,025.71,035.01,036.61,048.81,051.91,046.91,054.81,058.31,057.97,7937,8348,0958,3258,5518,6988,9519,1079,1559,2859,4619,5464,5114,4234,4664,4874,5194,5164,5574,5594,5274,5524,5554,5421,618.71,622.21,682.01,745.81,799.91,819.41,868.81,884.51,919.41,947.81,986.32,034.6937.0915.8928.0941.0951.1944.6951.4943.4949.1955.0956.3968.07,1407,1367,3787,6387,8587,9268,1208,1678,3008,4068,5508,7354,1334,0294,0714,1174,1524,1154,1344,0884,1044,1214,1164,156226,727227,332227,978228,579229,053229,539230,145230,751231,246231,724232,320232,9101 Population of the United States including Armed Forces overseas; includes Alaska and Hawaii beginning 1960. Annual data are forJuly 1 through 1958 and are averages of quarterly data beginning 1960. Quarterly data are average for the period. Data beginning 1970reflect results of the 1980 census of population.Source: Department of Commerce (Bureau of Economic Analysis and Bureau of the Census).191

TABLE B-25.—Gross saving and investment, 1929-82[Billions of dollars; quarterly data at seasonally adjusted annual rates]Gross savingGross investmentYear orquarterTotalGross private savingTotalPersonalsavingGrossbusinesssaving'Governrnent surplus or), national incomeand pr3duct accountsTotalFederalStateandtocalCapita)grantsreceivedby theunitedStates(net) 2TotalGrossprivatedomesticinvestmentNetforeigninvestment*Statisticaldiscrepancy19291933193919401941194219431944194519461947194819491950195119521953...1954195519561957195819591960196119621963196419651966196719681969197019711972197319741975197619771978197919801981...1982 p ,1980:|||IIIIV1981:(IIllIV1982:I||IllIV P15.9.98.813.518.610 7542.45.235.141.749.835.650 756.951.049.850.967.575.975.262.678.381.178.786.793.6104.0120.2127.3125 7136.0153.6148.9161.6186.6235.5227 8218.9257.9309.1374.8422.7406.2477.5413.9410.8395.8404.4414.0461.4482.4490.0476.3428.8441.5422.414.92.211.014.222.442.049 654.344.729.627.341.439.042 750.854.856.758.164.470.774.375.379.978.083.090.592.9106.3119.7128.6139 9142.0143.6158.6180.3189.2227.7234 5282.7294 4326.9374.0407.3438.3504.7529.9420.2438.8449.2445.1468.7488.9513.4547.7519.4529.0546.133-.92.23.410.327 232936.628.713.75.211.17.511916.117 418.517.016.421.322.323.621.119.723.023.321.929 633.736.044 341.940.655.860 752,679.085194.382 578.089 496.7106 2130.2141.197.9108.6113.1105.3105.9122.0134.4158.61391144 3152.0128.91163.18.810.812.114 816 717.616.015.922.130 231.530 734.837.438.241147.949.452.051758.758.360.067.271.076 786.092.795 6100.0103.0102.8119 7136.6148.71494188.42119248.9284 6310.63321374.5388.8322.3330.2336.1339.8362.8367.0379.0389.1380 3384 7394.110-1.4=2.27=3.8=314—44 1-51.8-39.55414.484-3.4806.1-38-6.9-713.152.9= 12 6-1.63.1-4.3-3.8-2 3.5-1.3— 142-6.09.9= 10.6= 19 4-3.37.8-4 7-63.8-36 5-17.8814.3-33 2=28.2= 116.1-10.6-44.2-45.9= 32.2-8.3-7.6-24.5-72.5=90 7—87 5= 123.71.2-1.3-2.2-1.3=5.1=33.1=46.6-54.5=42.13.513.48.3-2.69.26.5-3.7-7.1-6.04.46.12.3= 10.3-1.13.0= 3.9=4.2-13-l!8= 132-6.08.4"12.4-?2.0= 16.8= 5.6115-69.3-531-45.9-29.5-16.1-614=60.0= 147.9-39.7=67.5-73.1-65.2-39.7-40.5= 58.0= 101.7— 1184= 1196-156.0— 2= .1.0.61.31.8252.72.61.91.0,1-1.2= .4-.0-1.113-.9-1.4-2.4-.4.1= .4.510= .011.11.51.92613.513.4685.516 628.030 330.428231.731.929.123.327.133.031.332.933.529.121132132.3ZZZ40.9 .7.7.020.00.001.1121.1.01.21.21.21.21.11.11.11.100.0.017 01.610.314.719.298375.29.335.643.248.336.252.060.152.752.152.968.873.874.062.877.078.778.688.895.3104 2119.0128.7125 4133.9149.7147.4165 7189.9236.32315224.4263 0310.4372 3421.2410 2475.6414.0421.3399.6406.6413.0466.5477.8489.1469.04213442 3426.0366.316.21.49.313.117.99.9587.210.630.734.045.935.353.859.252.153.352.768.471.069.261.978.175.974.885.490.997.4113.5125.7122.8133.3149.3144.2166.4195.0229.8228.7206.1257.9324.1386.6423.0402.3471.5421.9424.0391.0384.1410.3455.7475.5486.0468.9414 84315443.3397.90.8.21.01.51.3=.121-2.0-1.34.99.32.4.9-1.8.9.6=1.3.42.84.8.9-1.22.83.83.44.46.85.43.02.6.6.43.2= 7516.52.918.35.1= 13.6= 14.3-1.87.84.1=7.9=2.68.622.52.810.82.33.16510 8= 17.3=31.71.1\A1.1 .6=.8182,74.1.51.5-1.6.61.33.21.72.32.01.3-2.1-1.2.2-1.3=2.4l.'l1.71 Undistributed corporate profits with inventory valuation and capital consumption adjustments, corporate and noncorporate capitalconsumption allowances with capital consumption adjustment, and private wage accruals less disbursements.2 Allocations of special drawing rights (SDRs), except as noted in footnote 4.3 Net exports of goods and services less net transfers to foreigners and interest paid by government to foreigners plus capital grantsreceived by the United States, net.4 In February 1974, the U.S. Government paid to India $2,010 million in rupees under provisions of the Agricultural TradeDevelopment and Assistance Act. This transaction is being treated as capital grants paid to foreigners, i.e., a $2.0 billion entry incapital grants received by the United States, net.Source: Department of Commerce, Bureau of Economic Analysis.121.4=2.1= 3.9-1.54.13.3.8375.55.11.4=2.6= 1.53.9-1.910.53.82.2-1.05.1=4.6 g7 275 83.6192

Year or quarterTotalTotalTABLE B-26.—Saving by individuals, 1946-82 1[Billions of dollars; quarterly data at seasonally adjusted annual rates]CheckabledepositsandcurrencyTimeandsavingsdepositsIncrease in financial assetsMoneymarketfundsharesGovernmentsecurities2SecuritiesCorporateequities3Othersecurities*Insuranceandpensionreserves5Otherfinancialassets6Net investment 7OwneroccupiedhomesConsumerdurablesNoncor-poratebusinessassets8Less: tJet increase indebtMortgagedebt ConsumeronOthernonfarmcreditdebt 8 8homes1946194719481949195019511952195319541955 .195619571958195919601961196219631964196519661967196819691970197119721973.197419751976197719781979198019811980:IIllIV1981:1 II..IllIV1982:II..Ill24.620.124.320.930 634.731.332.528.234.137.236.534.138.036 735 942.046.756.865 072.877.080.571.586.495 6109.3132 0128.3153 0165.1167 2200.6208.1250.5283.1242.9237.0263 62584256 0257.0320 4299.1300.5290.2335.918.813.29.19.913 719.123.222.822.228 030.228,631.637.432 135 440.146.655.758 857.969.875.665.281.51021131.5148 5147.3174 3210.5233 8274 4296.1337.5355.2347.9 8.1 96.8 61.3270 5 -11.1 81.83614 41 1 120 0 5.13701 -119 203 7 -11.9328 7365 4387 6339.0333 7357 7393.35.6-2.9-2.0264.61.61.02.21.21.8-.43.81.010_9-1.24.25.3762.49.911.1-2.58.912 213.914.17.469 83 415.7 107.5201 107 522.6 100 322,4 78.56.525.855 05942.732.8-3.91.76.33.42.22.6244.77.88.19.1869.411.913.911.012 018 326.126.226.127 819.035.331.19.143.667 774.463 655.7125.665.625 2 148 492 8 59.984 3 137.360.1 84.3131.4102 494.72.413-.0 26934.429.2107.541?86.5-1.51.61.31.8_ 1-.62.52.51.05.83.92.3-2.510.12.21.41.3.64.83.711.3-1.25.225.9-5.4= 12 22.724.228.325 011.718 233.655.540.557.365.7-6.640.162.751103.283.737.042.6105.268.91.11.11.0.7.71.81.61.0.81.02.01.51.5-.6.3-2.1-2.6—2-2.17-4.775-2.8-1.7-5.5-5.1-.6-3.8-4.63.5-15.92.1-31.6.6R91.515 529.0-55.0-26.8n n44-12.5-0.9-.8.0-.4-.7.3.0.3— 9.81.21.01.1— 32.4 ,1.11.4.41.32.45.27.910.06.9654.911.16.8448.64712.518.47.0-6.4.42.413.312.1-113-7.4-21.914.9-19.9-30.73.05.35.45.35.66.96.37.77.97.88.59.59.510.411.911.512.112.713.916.116.919.218.619.821.523.927.429.433.036.243 552.467.473.868.289.698.780.795.8100.181.984.6103.5113.393.690.6112.0104.42.82.42.21.6191.92.02.12.1212.52.83.53.33.6433.22.93.23.74.46.78.14.05.45811.48311.113 619.219229.834.636.938.334.342.2V\37 24?fi40133.2?9fi46.63.66.79.18.411.811.711.312.312.716.715.613.212.316.314.812.713.514.315.014.513.511.715.716.313.620.728.031.025.223 536.152.363.967.948.743.859.849.340.845.649.048.442.435.727.129.629.56.19.09.810.614 811.38.610.17.112 28.57.73.67.37.0438.511.815.020 223.121.127.026.320.026 634.640.428.426 540.049 652.532.438.246.4185VO45 74? 829.035 737 735.22.31.86.91.8684.52.31.01.9291.22.72.65.03.64.77.59.89.213.310.810.210.012.711.517.520.626.610.65.83.315.226.38.727.914.76013925.33? 9?9fi5,9783.64.74.64.4676.66.27.68.712 211.28.99.512.811.712 214.116.217.517 013.812.516.918.614.126 241.446.538.040661.4911111 ^121.31 Saving by households, personal trust funds, nonprofit institutions, farms, and other noncorporate business.2 Consists of U.S. savings bonds, other U.S. Treasury securities, U.S. Government agency securities and sponsored agency securities,mortgage pool securities, and State and local obligations.3 Includes mutual fund shares.4 Corporate and foreign bonds and open market paper.s 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, and nonlife insurance claims for households and ofconsumer credit, equity in sponsored agencies, and nonlife insurance claims for noncorporate business.7 Purchases of physical assets less depreciation.8 Includes data for corporate farms.9 Other debt consists of security credit, policy loans, and noncorporate business debt.Source: Board of Governors of the Federal Reserve System.98.381.4123.783 794 491491.699 577 866 8SIR51.13.13.73.23.2481.65.34.21.5723.92.9.58.04.42.56.38.99.810 66.55.711.510.85.414.719.89.99.625.440.248 845.44.925.321.814126.53??34?8.3fi.68.2-0.42.22.82.2503.72.71.95.5643.23.86.07.24.9657.210.710.814 312.217.619.219.420.730 344.243 835.426 937.952 459.368.073.775.280.445.763.9104.774.793.270.162.828.565.462.8193

TABLE B-27.—Number and median income (in 1981 dollars) of families and persons, and poverty status,by race, selected years, 1947-81YearMedianincomeFamilies >TotalNumber(millions)NumhprDel Rate(millions)Below poverty levelFemale householderRatePersonsbelowpoverty levelNumber(millions)Number/millions)RateMedian income of persons 14 yearsold and over with income *AllpersonsMalesYearroundfull-timeworkersFerralesAllpersonsYearroundfulltimeworkersALL RACES1947195019551960196119621963196419651966 319671968196919701971197219731974 »19751976197719781979*19801981WHITE19701971197219731974 319751976197719781979*19801981BLACK19701971197219731974 •19751976197719781979*1980198137 239.942 945.546 447147.548 048.549.250.150 851652 253.354.455.155 756.256 757.257.859 660.361046 547.648 548949 449 950150 550952.252 753.34.95.25.35.45.55.65.85.85.96.26.36.4$12,34112,53915,00617,25917,43517,90718,56319,26220,05421,10821,60922,56623,40223,11123,09724,16624,66323,79523,18323,89824,02724,59124,54223,20422,38823,97523,96625,10725,77724,72824,11024,82325,12425,60625,61024,17623,51714,70714,46214,92214,87714,76514,83514,76614,35215,16614,50213,98913,2668.28.48.17.67.26.75.85.75.05.05.35.35.14.84.95.55.35.35.35.56.26.93.73.83.43.23.43.83.63.53.53.64.24.71.51.51.51.51.51.51.61.61.61.71.82.018.118.117.215.915.013.911.811.410.09.710.110.09.38.88.89.79.49.39.19.210.311.28.07.97.16.66.87.77.17.06.96.98.08.829.528.829.028.126.927.127.928.227.527.828.930.82.02.02.02.01.81.91.71.81.81.82.02.12.22.22.32.42.52.62.72.63.03.31.11.21.11.21.31.41.41.41.41.41.61.8.8.91.01.01.01.01.11.21.21.21.31.442.442.142.940.436.438.433.133.332.332.732.533.932.732.232.132.533.031.731.430.432.734.625.026.524.324.524.825.925.224.023.522.325.727.454.353.553.352.752.250.152.251.050.649.449.452.939.939.638.636.436.133.228.527.825.424.125.425.624.523.023.425.925.024.724.526.129.331.817.517.816.215.115.717.816.716.416.317.219.721.67.57.47.77.47.27.57.67.77.68.18.69.222.221.921.019.519.017.314.714.212.812.112.612.511.911.111.212.311.811.611.411.713.014.09.99.99.08.48.69.79.18.98.719.010.211.133.532.533.331.430.331.331.131.330.631.032.534.2$9,0809,71011,40512,53012,73513,14513,40013,62614,47914,87015,12615,63315,95015,62315,50216,19616,48715,58814,96015,05915,19315,24414,75913,83013,47316,42116,25216,98717,30016,32915,71515,87615,91315,96615,41814,71014,2969,7379,69210,28910,46410,1189,3959,5599,4439,5659,5448,8408,501$14,40516,68817,21717,51718,03118,42619,01919,49119,85520,42721,50421,51121,62822,90923,47022,43021,85622,14222,61722,39121,90121,16220,69222,12722,23723,73624,15022,86722,36122,80223,08022,80722,53421,76621,17815,07215,20516,02916,27616,38316,64116,33115,91217,46816,24015,31414,98454,1413,6013,8043,8733,8884,0354,0764,2494,3844,5904,9065,2785,2895,2405,4085,6505,7225,6845,7205,7135,9155,6715,4535,4305,4585,3075,4975,6875,7775,7495,7795,7616,0055,7395,5045,4605,5194,8324,8175,3135,2155,1905,2505,4295,1855,1685,0095,0554,903(9,28910,12210,15710,39410,56310,87811,00011,28311,43511,94212,59512,74212,80313,15913,27813,23113,04413,28013,22813,44013,19512,79312,45712,96712,95113,41813,50313,34313,07413,38213,31213,56713,31112,91712,6650,6241,4351,4791,4512,3142,4912,5112,4422,5742,1972,0471,4381 The term "family" refers to a group of two or more persons related by blood, marriage, or adoption and residing together; all suchpersons are considered members 01 the same family. Beginning 1979 based on householder concept and restricted to primary families.3 Beginning 1979, data are for persons 15 years and over.'Based on revised methodology; comparable with succeeding years.* Based on 1980 census population controls; comparable with succeeding years.Note.—The poverty level is based on the poverty index adopted by a Federal interagency committee in 1969. That index reflecteddifferent consumption requirements for families based on size and composition, sex and age of family householder, and farm-nonfarmresidence. Minor revisions implemented in 1981 eliminated variations in the poverty thresholds based on two of these variables, farmnonfarmresidence and sex of householder. The poverty thresholds are updated every year to reflect changes in the consumer price indexFor further details see "Current Population Reports," Series P 60, No. 133.Source: Department of Commerce, Bureau of the Census.194

POPULATION, EMPLOYMENT, WAGES, AND PRODUCTIVITYTABLE B-28.—Population by age groups, 1929-82[Thousands of persons]July lTotalAge (years)Under 5 5-15 16-19 20-24 25-44 45-6465 andover1929193319391940194119421943194419451946194719481949195019511952195319541955195619571958195919601961196219631964196519661967196819691970197119721973197419751976197719781979198019811982121,767125,579130,880132,122133,402134,860136,739138,397139,928141,389144,126146,631149,188152,271154,878157,553160,184163,026165,931168,903171,984174,882177,830180,671183,691186,538189,242191,889194,303196,560198,712200,706202,677205,052207,661209,896211,909213,854215,973218,035220,239222,585225,055227,658229,807231,99011,73410,61210,41816,41017,33317,31217,63818,05718,56619,00319,49419,88720,17520,34120,52220,46920,34220,16519,82419,20818,56317,91317,37617,16617,24417,10116,85116;48716,12115,61715,56415,73516,06316,44816,93926,80026,89725,17910,57910,85011,30112,01612,52412,97913,24414,40614,91915,60724,81124,51624,23124,09323,94923,90724,10324,46825,20925,85226,72127,27928,89430,22731,48032,68233,99435,27236,44537,36838,49439,76541,20541,62642,29742,93843,70244,24444,62244,84044,81644,59144,20343,58242,98942,50842,09941,29840,42839,55238,81438,0409,1279,3029,8229,8959,8409,7309,6079,5619,3619,1199,0978,9528,7888,5428,4468,4148,4608,6378,7448,9169,1959,54310,21510,68311,02511,18012,00712,73613,51614,31114,20014,45214,80015,28915,68816,03916,44616,76917,01717,19417,27617,28817,24217,13116,67910,69411,15211,51911,68011,55211,35011,06210,83210,71410,61610,60310,75610,96911,13411,48311,95912,71413,26913,74614,05015,24815,78616,48017,20218,15918,15318,52118,97519,52719,98620,49920,94621,29721,60521,93835,86237,31939,35411,69011,80711,95512,06412,06212,03612,00411,81411,79411,70039,86840,38340,86141,42042,01642,52143,02743,65744,28844,91645,67246,10346,49546,78647,00147,19447,37947,44047,33747,19247,14047,08447,01346,99446,95846,91247,00147,19447,72148,06448,47348,93650,48251,74953,05154,30255,85257,56159,40061,37963,46565,48721,07622,93325,82326,24926,71827,19627,67128,13828,63029,06429,49829,93130,40530,84931,36231,88432,39432,94233,50634,05734,59135,10935,66336,20336,72237,25537,78238,33838,91639,53440,19340,84641,43741,99942,48242,89843,23543,52243,80144,00844,15044,28644,39044,48744,4716,4747,3638,7649,0319,2889,5849,86710,14710,49410,82811,18511,53811,92112,39712,80313,20313,61714,07614,52514,93815,38815,80616,24816,67517,08917,45717,77818,12718,45118,75519,07119,36519,68020,10720,56121,02021,52522,06122,69623,27823,89224,50225,13425,70826,2531 Not available.Note.—Includes Armed Forces overseas beginning 1940. Includes Alaska and Hawaii beginning 1950.Source: Department of Commerce, Bureau of the Census.195

TABLE B-29-—Noninstitutional population and the labor force, 1929-82[Monthly data seasonally adjusted, except as noted]Year or monthNoninstitutionalpopulation»ArmedForces lTotalTotalCivilian labor forceEmploymentAgriculturalNonagriculturalUnemploymentment rate(percentof civilianlaborforce)Civilian labor forceparticipation rate 2Total Males FemalesThousands of persons 14 years of age and overPercent1929..26049,18047,63010,45037,1801,5503.21933..25051,59038,76010,09028,67012,83024.91939,.1940..1941..1942..1943..1944..100,380101,520102,610103,660104,6303705401,6203,9709,02011,41055,23055,64055,91056,41055,54054,63045,75047,52050,35053,75054,47053,9609,6109,5409,1009,2509,0808,95036,14037,98041,25044,50045,39045,0109,4808,1205,5602,6601,07067017.214.69.94.71.91.255.756.057.258.758.683.784.385.686.487.01945..1946..1947..105,530106,520107,60811,4403,4501,59053,86057,52060,16852,82055,25057,8128,5808,3208,25644,24046,93049,5571,0402,2702,3561.93.93.957.255.856.884.882.684.0Thousands of persons 16 years of age and over1947....1948....1949....103,418104,527105,6111,5911,4561,61659,35060,62161,28657,03858,34357,6517,8907,6297,65849,14850,71449,9932,3112,2763,6373.93.85.958.358.858.986.486.686.41950....1951....1952....19533..1954....106,645107,721108,823110,601111,6711,6493,0983,5933,5473,35062,20862,01762,13863,01563,64358,91859,96160,25061,17960,1097,1606,7266,5006,2606,20551,75853,23553,74954,91953,9043,2882,0551,8831,8343,5325.33.33.02.95.559.259.359.058.958.886.586.386.085.51955....1956....1957....1958....1959....112,732113,811115,065116,363117,8813,0482,8562,7992,6362,55165,02366,55266,92967,63968,36962,17063,79964,07163,03664,6306,4506,2835,9475,5865,56555,72257,51458,12357,45059,0652,8522,7502,8594,6023,7404.44.14.36.85.559.360.059.659.559.385.385.584.884.283.7I960 3196119628196319641965...1966...1967...1968...1969...119,759121,343122,981125,154127,224129,236131,180133,319135,562137,8412,5142,5722,8272,7372,7382,7223,1223,4463,5343,50669,62870,45970,61471,83373,09174,45575,77077,34778,73780,73465,77865,74666,70267,76269,30571,08872,89574,37275,92077,9025,4585,2004,9444,6874,5234,3613,9793,8443,8173,60660,31860,54661,75963,07664,78266,72668,91570,52772,10374,2963,8524,7143,9114,0703,7863,3662,8752,9752,8172,8325.56.75.55.75.24.53.83.83.63.559.459.358.858.758.758.959.259.659.660.183.382.982.081.481.080.780.480.480.179.81970197119723....1973 3 ....19741975197619771978 3 ....1979140,272143,033146,574149,423152,349153.333158,294161,166164,027166,9513,1882,8162 t4492,3262,2292,1802,1442,1332,1172,08882,77184,38287,03489,42991,94993,77596,15899,009102,251104,96278,67879,36782,15385,06486,79485,84688,75292,01796,04898,8243,4633,3943,4843,4703,5153,4083,3313,2833,3873,34775,21575,97278,66981,59483,27982,43885,42188,73492,66195,4774,0935,0164,8824,3655,1567,9297,4066,9916,2026,1374.95.95.64.95.68.57.77.16.15.860.460.260.460.861.361.261.662.363.263.779.779.178.978.878.777.977.577.777.977.81980..1981..1982..169,848172,272174,4512,1022,1422,179106,940108,670110,20499,303100,39799,5263,3643,3683,40195,93897,03096,1257,6378,27310,6787.17.69.763.863.964.077.477.076.6See next page for continuation of table.196

TABLE B-29.—Noninstitutional population and the labor force, 1929-82—Continued[Monthly data seasonally adjusted, except as noted]Year or monthNoninstitutionalpopulation1ArmedForces lTotalTotalCivilian labor forceEmploymentAgriculturalNonagriculturalUnemploymentUnemploymentrate(percentof civilianlaborforce)Civilian labor forceparticipation rate 2Total Males FemalesThousands of persons 16 years of age and overPercent1980:JanFebMarMay".'.".'.'"".".'.JuneJulyAugSeptOctNovDec1981:JanFebMarAprMayJuneJulyAugSeptOctNovDec1982:JanFebMarAprMayJuneMyAugSeptOctNovDec168,625168,846169,073169,289169,494169,735170,030170,217170,419170,624170,814171,007171,229171,400171,581171,770171,956172,172172,385172,559172,758172,966173,155173,330173,495173,657173,843174,020174,201174,364174,544174,707174,889175,069175,238175,3802,0812,0862,0902,0922,0882,0922,0992,1142,1212,1212,1192,1242,1252,1212,1282,1292,1272,1312,1392,1602,1652,1582,1582,1642,1592,1682,1752,1762,1752,1732,1802,1962,1982,1882,1802,182106,546106,637106,394106,552106,892106,832107,169107,116107,148107,438107,596107,446108,012108,175108,471108,866109,101108,440108,602108,762108,375109,028109,254109,066109,034109,364109,478109,740110,378110,147110,416110,614110,858110,752111,042111,12999,87299,96399,67799,20498,92298,76998,81698,82999,10499,32799,56799,65099,964100,143100,504101,006100,968100,393100,748100,709100,104100,355100,22999,67799,68899,69599,59799,48499,99499,68199,58899,68399,54399,17699,13699,0933,3133,3873,4123,3183,3853,3093,3313,2473,4483,3623,3873,4863,4203,3403,3563,5193,3713,3603,3203,3963,3583,3743,3893,2193,3793,3673,3673,3563,4463,3713,4453,4293,3633,4133,4663,41196,55996,57696,26595,88695,53795,46095,48595,58295,65695,96596,18096,16496,54496,80397,14897,48797,59797,03397,42897,31396,74696,98196,84096,45896,30996,32896,23096,12896,54896,31096,14396,25496,18095,76395,67095,6826,6746,6746,7177,3487,9708,0638,3538,2878,0448,1118,0297,7968,0488,0327,9677.8608,1338,0477,8548,0538,2718,6739,0259,3899,3469,6699,88110,25610,38410,46610,82810,93111,31511,57011,90612,0361 Not seasonally adjusted.2 Civilian labor force as percent of civilian noninstitutional population.3 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 about 350,000 to labor force, total employment, and agricultural employment. Beginning1960, inclusion of Alaska and Hawaii added about 500,000 to population, about 300,000 to labor force, and about 240,000 tononagricultural employment. Beginning 1962, introduction of 1960 census data reduced population by about 50,000 and labor force andemployment by about 200,000. Beginning 1972, introduction of 1970 census data added about 800,000 to civilian noninstitutionalpopulation ana about 333,000 to labor force and employment. A subsequent adjustment based on 1970 census in March 1973 added60,000 to labor force and to employment. Beginning 1978, changes in sampling and estimation procedures introduced into thehousehold survey added about 250,000 to labor force and to employment. Unemployment levels and rates were not significantlyaffected.Note.—Labor force data in Tables B-29 through B-35 are based on household interviews and relate to the calendar week includingthe 12th Of the month. For definitions of terms, area samples used, historic comparability of the data, comparability with other series,etc., see "Employment and Earnings."Source: Department of Labor, Bureau of Labor Statistics.6.36.36.36.97.57.57.87.77.57.57.57.37.57.47.37.27.57.47.27.47.68.08.38.68.68.89.09.39.49.59.89.910.210.510.710.864.063.963.763.763.963.763.863.763.763.863.863.663.963.964.064.264.263.863.863.863.563.863.963.763.663.863.863.964.264.064.164.164.264.164.264.277.777.877.577.477.677.577.577.377.377.377.377.077.377.277.377.477.476.776.876.976.776.776.876.776.576.676.576.677.076.576.576.676.876.776.876.651.651.551.351.451.551.451.551.551.451.651.651.651.852.052.152.352.452152.152.151.752.252.352.052.152.352.352.452.752.752.952.952.852.752.853.0197

TABLE B-30.—Civilian employment and unemployment by sex and age, 1947-82[Thousands of persons 16 years of age and over; monthly data seasonally adjusted]Year ormonthCivilian employmentTotalMalesTotal16-19years20yearsandoverFemalesTotal16-19years20yearsandoverUnemploymentTotalMalesTotal16-19years20yearsandoverFemalesTotal16-1920yearsandover1947194819491950195119521953K..195419551956195719581959I960 1 .,.,19611962»....1963196419651966196719681969197019711972»...1973 >...19741975197619771978 »....19791980198119821981:JanFebMar...,May...,June..,July....Aug....fSzNov...,Dec...,1982:JanFebMar....fcJune..,July....Aug..Sept.Oct...Nov..Dec..57,03858,34357,65158,91859,96160,25061,17960,10962,17063,79964,07163,03664,63065,77865,74666,70267,76269,30571,08872,89574,37275,92077,90278,67879,36782,15385,06486,79485,84688,75292,01796,04898,82499,303100,39799,52699,964100,143100,504101,006100,968100,393100,748100,709100,104100,355100,22999,67799,68899,69599,59799,48499,99499,68199,58899,68399,54399,17699,13699,09340,99541,72540,92541,57841,78041,68242,43041,61942,62143,37943,35742,42343,46643,90443,65644,17744,65745,47446,34046,91947,47948,11448,81848,99049,39050,89652,34953,02451,85753,13854,72856,47957,60757,18657,39756,27157,35757,33757,55757,83757,73957,31457,61457,54057,40457,25757,06256,74656,66756,67056,49956,44456,72456,24956,12756,15956,07255,93255,89255,8092,2182,3442,1242,1862,1562,1072,1361,9852,0952,1642,1152,0122,1982,3612,3152,3622,4062,5872,9183,2533,1863,2553,4303,4093,4783,7654,0394,1033,8393,9474,1744,3364,3004,0853,8153,3793,9683,9333,9163,9813,8923,7363,7863,7963,7583,7503,6833,5783,5683,5403,4733,4203,5343,3063,2223,3273,2963,2833,3033,27538,77639,38238,80339,39439,62639,57840,29639,63440,52641,21641,23940,41141,26741,54341,34241,81542,25142,88643,42243,66844,29444,85945,38845,58145,91247,13048,31048,92248,01849,19050,55552,14353,30853,10153,58252,89153,38953,40453,64153,85653,84753,57853,82853,74453,64653!50753,37953,16853,09953,13053,02653,02453,19052,94352,90552,83252,77652,64952,58952,53416,04516,61716,72317,34018,18118,56818,74918,49019,55120,41920,71420,61321,16421,87422,09022,52523,10523,83124,74825,97626,89327,80729,08429,68829,97631,25732,71533,76933,98935,61537,28939,56941,21742,11743,00043,25642,60742,80642,94743,16943,22943,07943,13443,16942,70043,09843,16742,93143,02143,02543,09843,04043,27043,43243,46143,52443,47143,24443,24443,2841,6911,6821,5881,5171,6111,6121,5841,4901,5471,6541,6631,5701,6401,7681,7931,8331,8491,9292,1182,4682,4962,5262,6872,7352,7302,9803,2313,3453,2633,3893,5143,7343,7833,6253,4113,1703,5583,5383,5143,5453,5043,3833,4133,4433.3443,2633,2473,1943,2043,2003,2153,2133,2063,1783,1503,1563,1853,1323,1213,06914,35414,93615,13715,82416,57016,95817,16417,00018,00218,76719,05219,04319,52420,10520,29620,69321,25721,90322,63023,51024,39725,28126,39726,95227,24628,27629,48430,42430,72632,22633,77535,83637,43438,49239,59040,08639,04939,26839,43339,62439,72539,69639,72139,72639,35639,83539,92039,73739,81739,82539,88339,82740,06440,25440,31140,36840,28640,11240,12340,2152,3112,2763,6373,2882,0551,8831,8343,5322,8522,7502,8594,6023,7403,8524,7143,9114,0703,7863,3662,8752,9752,8172,8324,0935,0164,8824,3655,1567,9297,4066,9916,2026,1377,6378,27310,6788,0488,0327,9677,8608,1338,0477,8548,0538,2718,6739,0259,3899,3469,6699,88110,25610,38410,46610,82810,93111,31511,57611,90612,0361,6921,5592,5722,2391,2211,1851,2022,3441,8541,7111,8413,0982,4202,4862,9972,4232,4722,2051,9141,5511,5081,4191,4032,2382,7892,6592,2752>144,4424,0363,6673,1423,1204,2674^776,1794,4774,4484,3974,30044954,4394,2264,4444,4994,7645,0525,3965,3815,4865,6625,8565,9216,0766,2346,3456,7036,8447,0067,0462702563533181912051843102742693004163984264794085014874794324484264405996937116537579669398748138119139621,090958947955947883$9491,0261,0291,019L0861,1031,0601,0841,1131,1251,1301,1411,1371,4221,3052,2191,9221,0299801,0192,0351,5801,4421,5412,6812,0222,0602,5182,0161,9711,7181,4351,1201,0609939631,6382,0971,9481,6241,9573,4763,0982,7942,3282,3083,3533,6155,0893,4793,5003,4393,3533.5403,4923,3433.5133,5593,8154,0264,3674,3624,4514,6074,7704,8185,0165,1505,2325,5785,7145,8655,9096197171,0651,0498346986321,1889981,0391,0181,5041,3201,3661,7171,4881,5981.5811,4521,3241,4681,3971.4291,8552,2272,2222,0892,4413,4863,3693,3243,0613,0183,3703,6964,4993,5713,5443,5703,5603,6383:6083,6283,6093,7723,9093,9733,9933,9654,1834,2194,4004,4634,3904,5944,5864,6124,7324,9004,9901441532231951451401231911762091972622562863493133833853954053914124135065685985836658027807897697437558007627788058007927787617608198668688198568978178728958259229159029089119194755648418546895595109978238328211,2421,0631,0801,3681,1751,2161,1951,0569211,0789851,0151,3491,6581,6251,5071,7772,6842,5882,53522922,2762,6152,8953,6132,8092,7662,7652,7602,8462,8302,8672,8492,9533,0433,1053,1743,1093,2863,4023,5283,5683,5653,6723,6713,7103,8243,9894,0711 See footnote 3, Table B-29.Note.—See Note, Table B-29.Source: Department of Labor, Bureau of Labor Statistics.198

TABLE B-31.—Selected employment and unemployment data, 1948-82[Percent; monthly data seasonally adjusted]Civilian employment as percent of population 1Unemployment rate 2Year ormonthTotalBothsexes16-19yearsMales20yearsandoverFemales20yearsandoverWhiteBlackandotherAllworkersBothsexes18-19yearsBy sex and ageMales20yearsandoverFemales20yearsandoverBy selected groupsExperiencedwageandsalaryworkersMarriedmen,spousepresent»WomenwhomaintainfamiliesFulltimeworkers*Bluecollarworkers51948194955854.645543.083 981.630.730.63.85.99213.43.25.43.65.3436.83.55.4428.019501951....1952195319541955 "".19561957 .1958195955 255.755.455.353 855.156.155 754.254.843 844.944.143.940141.342.741137.638.181.981.680.880.678.880.080.880278.079.031.632.633.032.932 333.834.935.034.635.15.33.33.02.95.54.44.14.36.85.512.28.28.57.612.611.011.111615.914.64.72.52.42.5493.83.43.66.24.7514.03.22.955444.24.16.15.26.03.73.43.26.2484.44.67.35.7461.51.41.7402.62.32.85.13.6502.62.5523.83.7407.27.23.93.634 7.25.85.16.210.27.61960 .19611962196319641965196619671968196954 954.254 254.154 555.055 655.856.056.539.037.537 635.835 837.740740.440.642.178.777.677 477.377 777.977 677.477.176.935.735.535836.236937.638 639^340.041.154.054354.855 455.755.956.555.256156.857 256.956.656.75.56.7555.7524.5383.83.63.514 716.814 717.216 214.812 812.912.712.24.75.74.64.5393.2252!32.22.15.16.3545'.4524.5384.23.83.75.76.8565.6504.3353.63.43.33.74.6363.4282.4191.81.61.54.94.44.46.75.5494.235343.13.17.89.2747.3635.3424.44.13.9197019711972197319741975197619771978197956.155.556.056.957.055.356.157.158.659.241.240.442.644.845.042.343.245.147.447.776.175.375.876.375.772.973.273.774.574.741.240.841.342.242.742.343.544.746.547.656.255.756.457.357.555.956.857.959.360.055.553.853.254.053.350.451.051.553.754.04.95.95.64.95.68.57.77.16.15.815.316.916.214.516.019.919.017.816.416.13.54.44.03.33.86.85.95.24.34.24.85.75.44.95.58.07.47.06.05.74.85.75.34.55.38.27.36.65.65.52.63.22.82.32.75.14.23.62.82.85.47.37.27.17.010.010.19.48.58.34.55.55.14.45.18.17.36.65.65.36.27.46.55.46.711.79.48.16.97.019801981198258.558.357.145.843.740.872.972.370.248.048.548.359.459.358.252.451.449.87.17.69.717.819.623.25.96.38.86.46.88.36.97.39.34.24.36.59.210.411.76.97.39.610.010.34.21981:Jan....Feb....Mar...June..July...Aug...Sept..Oct....Nov...Dec...58.458.458.658.858.758.358.458.457.958.057.957.545.044.844.645.344.643.043.644.043.242.842.441.572.672.672.873.072.872.472.672.472.171.871.571.248.248.448.648.748.848.748.648.648.048.548.648.359.359.559.559.859.759.459.559.559.059.158.958.652.151.652.052.552.051.251.350.951.151.051.050.67.57.47.37.27.57.47.27.47.68.08.38.619.019.119.218.819.119.518.618.919.920.621.521.46.16.26.05.96.26.15.86.16.26.77.07.66.76.66.66.56.76.76.76.77.07.17.27.47.17.17.06.87.27.06.97.07.37.67.98.44.24.24.23.84.04.24.04.04.34.75.05.610.39.99.89.910.410.511.210.210.610.710.810.37.27.27.16.97.17.16.97.07.37.78.08.510.110.210.09.69.99.89.69.710.210.911.612.61982:Jan....Feb....Mar...May!"June..July...Aug...Sept..Oct....Nov...Dec...57.557.457.357.257.457.257.157.156.956.656.656.541.641.541.341.141.840.439.840.640.740.440.640.171.070.970.770.670.770.370.169.969.869.569.369.148.348.348.348.148.348.548.548.548.448.148.048.158.558.558.458.358.558.358.258.258.157.757.757.650.550.350.149.750.149.749.849.749.649.549.349.38.68.89.09.39.49.59.89.910.210.510.710.821.722.321.922.822.922.523.923.823.824.124.224.57.67.78.08.38.38.78.99.09.69.810.010.17.27.67.98.18.28.18.38.38.48.79.09.28.28.58.79.19.29.29.49.49.810.110.510.75.35.45.66.06.16.46.66.87.27.57.67.810.410.410.811.511.912.112.011.712.411.312.513.28.48.58.99.19.29.49.69.710.210.510.610.812.412.513.013.513.614.014.414.415.515.816.216.31 Civilian employment as percent of total noninstitutional population.2 Unemployment as percent of civilian labor force in group specified.3 Data for 1949 and 1951-54 are for April; 1950, for March.* Data for 1949-61 are for May.8 Includes craft and kindred workers, operatives, and nonfarm laborers. Data for 1948-57 are based on data for January, April, July,and October.Note—Data relate to persons 16 years of age and over. See footnote 3 and Note, Table B-29.Source: Department of Labor, Bureau of Labor Statistics.199

TABLE B-32.—Civilian labor force participation rate by demographic characteristic, 1954-82[Percent; 1 monthly data seasonally adjusted]Year or monthAllcivilianworkersTotalTotalMales16-19yearsWhite20yearsandoverTotalFemales16-19years20yearsandoverTotalTotalMales16-19yearsBlack and other20yearsandoverTotalFemales16-19years20yearsandover195419551956195719581959I960196119621963196419651966196719681969 ,19701971197219731974197519761977197819791980198119821981:JanFebMarApr!&:::::::JuneJulyAug ........SeptOctNovDec1982:JanFebMarJune ft :*:"Auc .....Sept

TABLE B-33.—Civilian unemployment rate by demographic characteristic, 1948-82[Percent; 1monthly data seasonally adjusted]Year or month194819491950195119521953195419551956195719581959I96019611962196319641965196619671968196919701971197219731974197519761977197819791980198119821981:JanMarAprMayJuneJulyAugSeptOctNovDec1982:JanFebMarAprMayJuneJulyAugSepto5 :NovDecAllcivilianworkers3.859533330295.54.4414.3685.55.56755575.24.5383.8363.54.9595.64.95.6857.7716.15.87.1769.77.5747372757.47274768.08.38.686889.09.394959.89910 210 510 710.8WhiteTotal3.556493.1282.75.03.9363.8614.85.0604.9504.64.13.43.43.23.14.5545.14.35.0787.0625.25.16.3678.66.66,56.464666.46.36366fi97.37.676777.98.384848.78.79.193969.7MalesTotal3.456472.625254.83.7343.6614.6485746474.13.6282.7262.54.0494.5384.4726.4554.64.561658.86464636 1656.35962646.87.27.876778.08.485868.99.1959810 010.116-19years13.411.310 511.515 714.014.015 713.715 914.712.910.510.710110.013.715114.212.313.518 317.315 013.513.916.217 921.717.418 017 917 017 617.816.716 717 817.919.720.220 620 420.421.920.921222.522.522.223.022 622.820yearsandover4.43.33.03.25.54.14.25.14.03.93.42.92.22.12.01.93.24.03.63.03.56.25.44.73.73.65.3567.85.55.45.45.25.55.35.15.35.45.96.26.86.66.77.07.37.57.77.98.08.68.89.19.2FemalesTotal3.857534.2333.15.54.3424.3625.35.3655.5585.55.04.34.64.34.25.46.35.95.36.1867.9736.25.96.5698.36.96.76.6676.96.76.86.5707.17.47.47.5777.88.18.28.18.38.38.58.79.09.216-19years10.49.19.79.512 712.012.714.812.815.114.914.012.111.512.111.513.415.114.213.014.517.416.415.914.414.014.816 619.015.516.015.916.216.616.316.315.717.217.518.317.718.119.017.918.818.718.019.118.919.119.919.820.420yearsandover5.13.9373.8564.74.6574.7484.64.03.33.83.43.44.45.34.94.35.1756.8625.25.05.6597.36.05.7565.65.95.75.85.66.06.16.36.46.4666.87.17.27.17.37.27.57.68.08.1Black and otherTotal5.989905.3544.59.98.78.37.912 610.710.212.410.910.89.68.17.37.46.76.48.29.910.09.09.913.813.113.111.911.313.114.217.313.113.213.613.213.614.213714814.615?15?15.715.516.016.61fi817117117.417718118418*)18.8MalesTotal5.89.69.44.95.24.810.38.87.98.313.711.510.712.810.910 58.97.46.36.05.65.37.39.18.97.79.213.612.712.311.010.413.214.118.213.213.012.712.913.614.413.814.914.214 815.516.216.116.417.317.317.618.218.018.519.519.919.720.316-19years14.413.415.018.426 825.224.026 822.027 324.323.321.323.922.121.425.028.829.726.931.535.235.136.634.031.334.437.544.039.636.332.936.834.138.137.044.535.739.138.437.734.939.044.042.844.148.145.345.445.843.848.046.720yearsandover9.98.47.47.612 710.59.611.710.09.27.76.04.94.33.93.75.67.36.95.86.911.610.610.08.78.511.312.116.210.711.011.010.711.712.411.912.412.513.614.414.614.615.115.315.516.015.916.317.318.017.418.2FemalesTotal6179846.1574.19.28.5897.31089.49.411911.011210.79.2879.18.37.89.310.911.410.610.813.913.613.913.012.313.114.316.413.013.414.513.613.514.013 fi14 715 614815.114911S15.8lfi?16416016.7169Ififi18817?17.216=19years20.619.222 820.228 427.724.829 230.234 731.631.731.329.628.727.634.535.438.434.434.538.338.839.638.135.636.538.343.833.134.842.235.533.337.433.241.238.846.141.441.442.641.841.042.045.743.147.749.743.342.343.142.720yearsandover8.47.77864958.38310 694907.56671635.86.9878.88?8.511 511 311710.610.211 114 311411.81171??1??13313,013.113414.014414 314?14.414 314414915?15.31 Unemployment as percent of civilian labor force in group specified.Note.—See footnote 3 and Note, Table B-29.Source: Department of Labor, Bureau of Labor Statistics.201

TABLE B-34.—Unemployment by duration, 1947-82[Monthly data seasonally adjusted 1 ]Year or monthTotalunemploymentLess than5 weeksDuration of unemployment5-14weeks15=26weeks27 weeksand over1947194819491950195119521953195419551956195719581959196019611962196319641965196619671968196919701971197219731974197519761977197819791980198119821981:JanFebMarAprMayJuneJulyAugSeptOclNovDec1982:JanFebMarfcJuneJulyAugIt.:::NovDec2,3112,2763,6373,2882,0551,8831,8343,5322,8522,7502,8594,6023,7403,8524,7143,9114,0703,7863,3662,8752,9752,8172,8324,0935,0164,8824,3655,1567,9297,4066,9916,2026,1377,6378,27310,6788,0488,0327,9677,8608,1338,0477,8548,0538,2718,6739,0259,3899,3469,6699,88110,25610,38410,46610,82810,93111,31511,57611,90612,036Thousands of persons 16 years of age and over1,2101,3001>561,4501,1771,1351,1421,6051,3351,4121,4081,7531,5851,7191,8061,6631,7511,6971,6281,5731,6341,5941,6292,1392,2452,2422,2242,6042,9402,8442,9192,8652,9503,2953,44938833,2783,2843,2783,1673,3823,3423,3173,3413,5153,6963,8204,0403,8303,8073,8313,9303,8713,6053,9593,9334,0043,9303,9634,0197046691,1941,0555745164821,1168158058911,3961,1141,1761,3761,1341,2311,1179837798938108271,2901,5851,4721,3141,5972,4842,1962,1321,9231,9462,4702,5393,3112,3322,3902,4222,4452,5792,3902,3712,4932,5442,6772,8473,0283,0793,0683,0983,2553,2813,3983,2493,3463,5493,5113,5493,4601 Because of independent seasonal adjustment of the various series, detail will not add to totals.Note.=See footnote 3 and Note, Table B-29.Source: Department of Labor, Bureau of Labor Statistics.2341934284251661481324953663013217854695037285345354914042872712562424286686014835741,3031,0189137667061,0521,1221,7081,1231,0961,0561,0951,0631,1461,0851,0651,1301,1691,2181,2241,2091,4791,6051,5821,6331,6831,7801,8081,8301,9512,1912,12516411625635713784783173362322396675714548045855534823512391771561332355195663433811,2031,3481,0286485358201,1621,7761,2721,2431,2181,1331,1581,1311,0761,1481,1111,1231,1401,1831,1931,2711,3571,4981,6341,8341,7891,8292,0262,2162,3332,607202

TABLE B-35.—Unemployment by reason, 1967-82[Monthly data seasonally adjusted 1 ]Year or monthTotalunemploymentJob losers Job leavers ReentrantsNewentrantsThousands of persons1967....19681969....1970....1971197219731974....1975....19761977....19781979....1980....198119821982:Jan..Feb..Mar..May".June.July..Aug..Sept.Oct..Nov..Dec.2,9752,8172,8324,0935,0164,8824,3655,1567,9297,4066,9916,2026,1377,6378,27310,6789,3469,6699,88110,25610,38410,46610,82810,93111,31511,57611,90612,0361,2291,0701,0171,8112,3232,1081,6942,2424,3863,6793,1662,5852,6353,9474,2676,2685,2435,2465,6285,8895,9386,1816,3236,4466,9797,3257,3697,2954384314365505906416837688279039098748808919238408429428859018648268198147868037948269459099651,2281,4721,4561,3401,4631,8921,9281,9631,8571,8061,9272,1022,3842,1332,2722,2612,3422,3932,3782,4782,4402,4372,3222,5462,6293964074135046306776496818238959538858178729811,1851,0551,0961,0611,0961,1591,0911,2301,3041,3031,2961,2441,288Percent of civilian tabor force1967....1968....1969....3.83.63.51.61.31.20.6.5.51.21.21.20.5.5.519701971....197219731974....1975....1976....19771978....1979....4.95.95.64.95.68.57.77.16.15.82.22.82.41.92.44.73.83.22.52.5.7.7.7.8.8.9.9.9.9.81.51.71.71.51.62.02.02.01.81.7.6.7.8.7.7.9.91.0.9.81980....198119827.17.69.73.73.95.71.81.92.2.91.11982:Jan..Feb..Mar..Apr..May.June.July..Aug..Sept.Oct..Nov..Dec.8.68.89.09.39.49.59.89.910.210.510.710.84.84.85.15.45.45.65.75.86.36.66.66.62.02.12.12.12.22.22.22.22.22.12.32.41.01.01.01.01.11.01.11.21.21.21.11.21 Because of independent seasonal adjustment of the various series, detail will not add to totals.Note.—Data relate to persons 16 years of age and over.See footnote 3 and Note, Table B-29.Source: Department of Labor, Bureau of Labor Statistics.203

TABLB B-36.—Unemployment insurance programs, selected data, 1946-82Year or month194619471948194919501951195219531954195519561957195819591960196119621963196419651966196719681969197019711972197319741975197619771978197919801981 •>...1981:JanFebMar...,flfay"..June..July...Aug...NovDec1982:Jan,.Feb..Mar..fcJune..JulyAugSeptOcfNovDecCoveredemployment1Thousands31,85633,87634,64633,09834,30836,33437,00638,07236,62240,01842,75143,43644,41145,72846,33446,26647,77648,43449,63751,58054,73956,34257,97759,99959,52659,37566,45869,89772,45171,03773,45976,41992,06292,65993,300All programsInsuredunemployment(weeklyaverage)••2,8041,7931,4462,4741,6051,0001,0691,0672,0511,3991,3231.5712,7731,8602,0712,9941,9467 1,9731,7531,4501,1291,2701,1871,1772,0702,6082,1921,7932,5584,9373,8463,3082,6452,5923,8373,4104,6214,2643,9483,4533,1112,9493,0122,8742,6802,7533,2283,9354,6814,7234,8924,7604,3874,3284,4954,3984,2824,3914,635Totalbenefitspaid(millionsofdollars) 2 *2,878.51,785.51,328.72,269.81,467.6862.91,043.51,050.62,291.61,560.21,540.61,913.04,290.62,854.33,022.84,358.13,145.13,025.92,749.22,360.41,890.92,221.52,191.02,298.64,209.36,154.05,491.14,517.36,933.916,802.412,344.810,998.99,006.99,401.316,175.415,283.51,740.91,567.81,663.71,453.31,192.71,191.31,187.71,098.41,088.21,064.41,146.21,666.91,835.11,904.52,295.22,141.11,871.92,003.91,929.22,033.02,003.71,927.32,044.5InitialclaimsState programsInsuredunemploymentExhaustions5Weekly average; thousands1,2959979801,9731,5139691,0449901,8701,2651,2151,4462,5101,6841,9082,2901,7837 1,8061,6051,3281,0611,2051,1111,1011,8052,1501,8481,6322,2623,9862,9912,6552,3592,4343,3503,048**3,0692,9882,9762,9262,8822,8242,8012,8672,9413,1273,4003,6133,5773,5823,7753,9823,9724,0113,9884,1364,3794,6154,6354,4281891872003402362082152183042262272703692773313503027 298268232203226201200296295261247363478386375346388488460425424420402401413411436472511542560563529574573579560539617654659618546Insuredunemploymentaspercentofcoveredemployment4.33.13.06.24.62.82.92.85.23.53.23.66.44.44.85.64.44.33.83.02.32.52.22.13.44.13.52.73.56.04.63.93.32.93,93.5**3.53.43.43.43.33.23.23.33.43.63.94.14.14.14.34.64.54.64.64.75.05.35.35.1Benefits paidTotal(millionsofdollars)*1,094.9775.1789.91,736.01,373.1840.4998.2962.22,026.91,350.31,380.71,733.93,512.72,279.02,726.73,422.72,675.42,774.72,522.12,166.01,771.32,092.32,031.62,127.93,848.54,957.04,471.04,007.65,974.911,754.78,974.58,357.27,717.28,612.913,761.113,257.81,419.61,315.31,394.71,226.71,006.21,009.81,062.01,006.61,001.2997.81,080.81,592.51,764.21,783.42,072.61,849.91,573.41,692.21,679.41,746.21,710.61,646.61,810.3Averageweeklycheck(dollars) s18.5017.8319.0320.4820.7621.0922.7923.5824.9325.0427.0228.1730.5830.4132.8733.8034.5635.2735.9237.1939.7541.2543.4346.1750.3454.0256.7659.0064.2570.2375.1678.7983.6789.6798.95106.54103.67104.48105.74105.98105.47104.59103.56106.02107.39108.92110.51112.89114.83117.05117.10117.61118.08118.64"117.28118.97120.78122.75123.22"Monthly data are seasonally adjusted.1 Includes persons under the State, UCFE (Federal employee, effective January 1955). and RRB (Railroad Retirement Board) programs.Beginning October 1958, also includes the UCX program (unemployment compensation for ex-servicemen).'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), SLlA (special unemployment assistance), and Federal supplementalcompensation programs.9 Covered workers who have completed at least 1 week of unemployment.4 Annual data are net amounts and monthly data are gross amounts.* 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.H Latest data available for all programs combined. Workers covered by State programs account for about 97 percent of wage andsalary earners.Source: Department of Labor, Employment and Training Administration.204

TABLE B-37.— Wage and salary workers in nonagricultural establishments, 1929-82[Thousands of persons; monthly data seasonally adjusted]Year ormonthTotalwageandsalaryworkersTotalManufacturingIDurablegoodsNondurablegoodsMiningConstructionTransportationandpublicutilitiesWholesaleandretailtradefinance,insurance,andrealestateServicesGovernmentFederalStateandlocaf1929193319391940194119421943194419451946194719481949195019511952195319541955195619571958195919601961196219631964196519661967196819691970197119721973197419751976197719781979198019811982*31,32423,69930,60332,36136,53940,10642,43441,86440,37441,65243,85744,86643,75445,19747,81948,79350,20248,99050,64152,36952,85351,32453,26854,18953,99955,54956,65358,28360,76563,90165,80367,89770,38470,88071,21473,67576,79078,26576,94579,38282,47186,69789,82390,40691,10589,61910 7027,39710,27810,98513,19215,28017,60217,32815,52414,70315,54515,58214,44115,24116,39316,63217,54916,31416,88217,24317,17415,94516,67516,79616,32616,85316,99517,27418,06219,21419,44719,78120,16719,36718,62319,15120,15420,07718,32318,99719,68220,50521,04020,28520,17318,8494,7155,3636,9688,82311,08410,8569,0747,7428,3858,3267,4898,0949,0899,34910,1109,1299,5419,8339,8558,8299,3739,4599,0709,4809,6169,81610,40511,28211,43911,62611,89511,20810,63611,04911,89111,92510,68811,07711,59712,27412,76012.18712,11711,1145.5645,6226,2256,4586,5186,4726,4506,9627,1597,2566,9537,1477,3047,2847,4387,1857,3417,4117,3217,1167,3037,3377,2567,3737,3807,4587,6567,9308,0078,1558,2728,1587,9878,1028,2628,1527,6357,9208,0868,2318,2808,0988,0567,73510877448549259579929258928368629559949309019298988667917928228287517327126726506356346326276136066196236096286426977527798138519581,0271,1321,1221,5128241,1651,3111,8142,1981,5871,1081,1471,6832,0092,1982,1942,3642,6372,6682,6592,6462,8393,0392,9622,8173,0042,9262,8592,9483,0103,0973,2323,3173,2483,3503,5753,5883,7043,8894,0974,0203,5253,5763,8514,2294,4634,3464,1763,9123 9162,6722,9363,0383,2743,4603,6473,8293,9064,0614,1664,1894,0014,0344,2264,2484,2904,0844,1414,2444,2413,9764,0114,0043,9033,9063,9033,9514,0364,1584,2684,3184,4424,5154,4764,5414,6564,7254,5424,5824,7134,9235,1365,1465,1575,0576,1234,7556,4266,7507,2107,1186,9827,0587,3148,3768,9559,2729,2649,3869,74210,00410,24710,23510,53510,85810,88610,75011,12711,39111,33711,56611,77812,16012,71613,24513,60614,09914,70515,04015,35215,94916,60716,98717,06017,75518,51619,54220,19220,31020,55120,547149412801,4471,4851,5251,5091,4811,4611,4811,6751,7281,8001,8281,8881,9562,0352,1112,2002,2982,3892,4382,4812,5492,6292,6882,7542,8302,9112,9773,0583,1853,3373,5123,6453,7723,9084,0464,1484,1654,2714,4674,7244,9755,1605,3015,3503 4252,8613,5023,6653,9054,0664,1304,1454,2224,6975,0255,1815,2405,3575,5475,6995,8355,9696,2406,4976,7086,7657,0877,3787,6207,9828,2778,6609,0369,49810,04510,56711,16911,54811,79712,27612,85713,44113,89214,55115,30316,25217,11217,89018,59219,0005335659059961,3402,2132,9052,9282,8082,2541,8921,8631,9081,9282,3022,4202,3052,1882,1872,2092,2172,1912,2332,2702,2792,3402,3582,3482,3782,5642,7192,7372,7582,7312,6962,6842,6632,7242,7482,7332,7272,7532,7732,8662,7722,7332,5322 6013,0903,2063,3203,2703,1753,1163,1373,3413,5823,7873,9484,0984,0874,1884,3404,5634,7275,0695,3995,6485,8506,0836,3156,5506,8687,2487,6968,2208,6729,1029,4379,82310,18510,64911,06811,44611,93712,13812,39912,91913,17413,37513,25313,0511981:JanFebMarAprMayJuneJulyAugSeptOctNovDec90,90990,91391,01491,09991,13191,28691,39691,32291.36391,22490,99690,64220,17120,14820,19720,27520,33220,33420,37920,31120,26720,09719,90319,67612,12012,09712,14312,20112,23712,24612,26612,22812,18412,05911,90111,7248,0518,0518,0548,0748,0958,0888,1138,0838,0838,0388,0027,9521,1021,1131,1249789851,1371,1641,1801,1921,1951,2021,2064,3154,2404,2674,2814,2234,1854,1754,1464,1244,1014,0714,0265,1395,1455,1535,1635,1585,1625,1685,1685,1815,1625,1505,12820,38020,42220,43820,50820,54320,59020,62020,65020,66020,65420,62320,5245,2525,2645,2705,2865,2955,3025,3115,3195,3285,3255,3245,33118,35218,38218,41418,48018,51718,55618,61518,65418,70718,77318,81518,8342,7982,7892,7802,7742,7762,7772,7752,7692,7642,7572,7492,75613,40013,41013,37113,35413,30213,24313,18913,12513,14013,16013,15913,1611982:JanFebMarfc:JuneJulyAugSeptOctNov*Dec"90,46090,45990,30490,08390,16689,83989,53589,31289,26788,86088,68488,51819,51719,45419,31919,16919,11518,93018,81318,67218,57218,32518,18318,13411,62211,57511,49011,37511,33211,20311,13310,99310.90010,66610,55510,5337,8957,8797,8297,7947,7837,7277,6807,6797,6727,6597,6287,6011,2011,2031,1971,1821,1521,1241,1001,0861,0751,0581,0511,0363,9663,9743,9343,9383,9883,9403,9273,8993,8833,8563,8483,8185,1255,1155,1005,0945,1015,0785,0445,0255,0315,0074,9944,97920,63020,67020,65520,58420,65220,59520,61520,55020,49220,44120,39020,2975,3265,3265,3365,3355,3425,3525,3595,3605,3675,3575,3625,37618,83118,86718,90418,92918,96318,98819,04219,04819,08419,07419,12519,1432,7412,7372,7362,7302,7282,7392,7372,7392,7342,7232,7262,72813,12313,11313,12313,12213,12513,09312,89812,93313,02913,01913,00513,007Note.—Data in Tables B-37 through B-39 are baser! on reports from employing establishments and relate to full* and part-time wageand salary workers in nonagricultural establishments who worked during or received pay for any part of the pay period which includesthe 12th of the month. Not comparable with labor force data {Tables B-29 through B-35), which include proprietors, self-employedpersons, domestic servants, and unpaid family workers; which count persons as employed when they are not at work because ofindustrial disputes, bad weather, etc., even if they are not paid for the time off; and which are based on a sample of the working-agepopulation. For description and details of the various establishment data, see "Employment and Earnings."Source: Department of Labor, Bureau of Labor Statistics.205

TABLE B-38.—Average weekly hours and hourly earnings in selected private nonagrieulturalYear ormonth194719481949195019511952195319541955195619571958195919601961196219631964196519661967196819691970197119721973197419751976197719781979198019811982"....1981:JanFebMartz.June....JulyAugNov."!.'.'Dec1982:JanFebMarMay'."."June....JulyAugSept....OctNov...Dec "...Totalprivatenonagricultural>40.340.039.439.839.939.939.639.139.639.338.838.539.038.638.638.738.838.738.838.638.037.837.737.136.937.036.936.536.136.136.035.835.735.335.234.835.635.235.335.435.435.235.335.235.035.135.135.034.435.034.934.935.034.934.934.834.834.734.734.61947-82[For production or nonsupervisory workers; monthly data seasonally adjusted, except as noted]Average weekly hours40.440.039.140.540.640.740.539.640.740.439.839.240.339.739.840.440.540.741.241.440.640.740.639.839.940.540.740.039.540.140.340.440.239.739.838.940.439.739.940.140.240.140.039.939.439.539.339.137.639.439.039.039.139.239.239.038.838.838.938.938.238.137.737.438.138.937.937.237.137.537.036.837.036.736.937.037.337.237.437.637.737.337.937.337.236.536.836.636.436.836.536.837.037.036.936.738.636.337.237.237.036.537.036.835.336.837.437.035.237.136.936.937.536.837.237.036.436.336.436.5ManufacturingConstructionWholesaleandretailtrade40.540.440.540.540.540.039.539.539.439.138.738.638.838.638.338.238.137.937.737.136.636.135.735.335.134.934.634.233.933.733.332.932.632.232.231.932.332.232.232.332.232.132.232.232.132.032.132.031.732.031.931.832.031.931.931.932.131.931.831.8Totalprivatenonagriculturalx$1,1311.2251.2751.3351.451.521.611.651.711.801.891.952.022.092.142.222.282.362.462.562.682.853.043.233.453.703.944.244.534.865.255.696.166.667.257.677.007.057.107.147.197.237.277.347.377.407.457.467.527.537.547.597.657.677.717.747.727.777.787.83Average gross hourly earnings,current dollars$1,2161.3271.3761.4391.561.641.741.781.851.952.042.102.192.262.322.392.452.532.612.712.823.013.193.353.573.824.094.424.835.225.686.176.707.277.998.507.697.757.817.907.947.998.038.098.148.168.208.208.388.348.378.448.488.528.568.578.568.568.618.62$1,5401.7121.7921.8632.022.132.282.382.452.572.712.822.933.073.203.313.413.553.703.894.114.414.795.245.696.066.416.817.317.718.108.669.279.9410.8011.5510.4010.4710.5310.5710.6410.7310.8210.9010.9511.0611.1411.2211.5211.3411.3911.4311.5411.5111.5611.5811.5611.7111.6011.82ManufacturingConstructionWholesaleandretailtrade$0,9401.0101.0601.1001.181.231.301.351.401.471.541.601.661.711.761.831.891.972.042.142.252.412.562.722.883.053.233.483.733.974.284.675.065.485.936.225.725.785.825.855.895.915.945.986.036.036.066.086.096.106.126.166.206.226.236.266.256.326.346.35industries,Adjusted hourly earnings, totalprivate nonagricultura! 2Index,1977^100Currentdollars21.623.424.525.427.328.730.331.332.434.035.737.238.539.841.042.443.644.846.448.450.853.957.561.365.769.874.180.086.792.9100.0108.1116.8127.3138.9148.4133.7134.8135.7136.6137.6138.4139.1140.5141.4142.0143.0143.5144.9145.0145.4146.3147.7148.1148.9149.9150.1150.8151.1151.91977dollars 358.558.962.364.063.665.568.770.573.375.976.978.080.081.483.085.086.387.589.090.392.294.095.095.798.3101.2101.198.397.699.0100.0100.597.493.592.693.392.892.792.793.093.092.992.292.592.192.192.392.392.992.893.393.793.793.193.093.293.293.293.394.0Percent changefrom a yearearlier 4Currentdollars1 Also includes other private industry groups shown in Table B-37.2 Adjusted for overtime (in manufacturing only) and for interindustry employment shifts.3 Current-dollar earnings index divided by the consumer price index for urban wage earners and clerical workers on a 1977=100base.4 Monthly data are computed from indexes to two decimal places and are based on data not seasonally adjusted.Note.—See Note, Table B-37.Source: Department of Labor, Bureau of Labor Statistics.8.34.73.77.55.15.63.33.54.95.04.23.53.43.03.42.82.83.64.35.06.16.76.67.26.26.28.08.47.27.68.18.09.09.16.89.99.99.49.59.48.93.89.39.38.68.48.28.37.57.27.27.37.17.16.66.16.25.65.9206

TABLE B-39.—Average weekly earnings in selected private nonagricultural industries, 1947-82[For production or nonsupervisory workers; monthly data seasonally adjusted, except as noted]Year or monthTotal privatenonagricultural *Currentdollars1977dollars 2Average gross weekly earningsManufacturing(currentdollars)Construction(currentdollars)Wholesaleand retailtrade(currentdollars)Percent change froma year earlier, totalprivatenonagricultural 3Currentdollars1977dollars194719481949195019511952195319541955.195619571958195919601961196219631964196519661967196819691970197119721973. .. .197419751976197719781979198019811982 p1981:JanFebMarAprMayJuneJulyAugSeptOctNovDec1982:JanFebMarAprMay .. ..June;. '. ZJulyAugSeptoct :Nov.DecII..$45 5849 0050.2453.1357.8660 6563.7664.5267 7270.7473 3375.0878.78806782.6085.9188 4691.3395 4598.82101.84107.73114.61119.83127 31136.90145 39154.76163 53175 45189.00203 70219.9123510255.20266.92249 20248.1625063252 76254.53254.5025663258 37257.95259.74261.50261.10258 69263 55263.15264.89267.75267.68269 08269 35268.66269.62269.97270.92$123 52123.43127.84133.83134.87138 47144.58145.32153.21157.90158.04157.40163.78164.97167.21172.16175.17178.38183.21184.37184.83187.68189.44186.94190 58198.41198.35190.12184.16186 85189.00189.31183.41172.74170.13167.87172.94170.56171.3117218171.98170.92170.18170 09168.05168.44168.82167.91165.93168 62168.90169.69169.89168.14167.97167.61166.87166.53166.75167.75$491353 0853.8058.2863.3466 7570.4770.4975 3078.78811982.3288.2689 7292.3496.5699.23102.97107.53112.19114.49122.51129.51133.33142 44154.71166 46176.80190 79209 32228.90249 27269.34288 62318.00330.65310 68307.68311.62316 79319.19320.4032120322 79320.72322.32322.26320.62315 09328 60326.43329.16331.57333.98335.55334.23332.13332.13334.93335.32$58 83652367.5669.6876.96828686.4188.5490.9096.38100 27103.78108.41112 67118.08122.47127.19132.06138.38146.26154.95164.49181.54195.4521167221.19235 89249.25266.08283 73295.65318.69342.99367 78398.52423.89401.44380.06391.72393 20393.68391.65400.34401 12386.54407.01416.64415.14405.50420.71420.29421.77432.75423.57430.03428.46420.78425.07422.24431.43$38 0740 8042.9344.5547.7949 2051.3553.33551657.4859 6061.7664.4166 0167.4169.91720174.6676 9179.3982.3587.0091.3996.0210109106.4511176119.02126 45133 79142.52153 64164.96176 46190.95198.42184 76186.12187.40188 96189.66189.71191.27192 56193.56192.96194.53194.56193.05195.20195.23195.89198.40198.42198.74199.69200.63201.61201.61201.93752.55.88.9485.11.2504.5372.44.9242.44.0303.2453.53.15.86.44.6627.56.26.45.7737.77.88.06.98.54.69.59.19.29.59.99.210.09.68.47.97.36.13.76.24.84.55.24.94.74.34.03.53.23.8013.64.7.8274.4.5543.1 1__ £,U7143.0171.827.6.21.5.9-1.3194.1- 0-4.1= 3 1151.2.2-3.1= 58-1.5-1.3-2.0-2.1-1.2- 4 .1-.3-.7-1.1-2.2-2.0-1.8-2.4=4.1-1.1-1.6-1.7-1.2-1.9-1.4-1.4-.9-1.4-1.2-.11 Also includes other private industry groups shown in Table B-37.2 Earnings in current dollars divided by the consumer price index on a 1977=100 base.3 Based on data not seasonally adjusted.Note.-See Note, Table B-37.Source: Department of Labor, Bureau of Labor Statistics.207

TABLE B-40.—Productivity and related data, business sector, 1947-82[1977=100; quarterly data seasonally adjusted]Year orquarterOutput per hourof all personsBusinesssectorNonfarmbusinesssectornesssectorOutput 1NonfarmbusinesssectorHours of allpersons 2BusinesssectorNonfarmbusinesssectorCompensation perhour 3nesssectorNonfarmbusinesssectorReal compensationper hour 4BusinesssectorNonfarmbusinesssectorUnit labor costnesssectorNonfarmbusinesssectorImplicit pricedeflator*nesssectorNonfarmbusinesssector1947.1948194943.746.046.749.952.053.135.037.236.534.036.035.380.280.778.168.169.266.617.018.418.718.520.120.646.146.447.650.150.552.538.940.040.137.038.638.938.140.840.336.639.139.41950195119521953195450.451.853.555.256.156.357.258.659.560.439.842.143.545.444.638.641.142.544.343.478.981.381.482.279.568.771.972.674.571.920.022.023.424.925.721.823.825.126.527.350.551.353.456.458.055.055.457.259.961.639.742.543.845.145.938.841.542.844.445.241.044.044.544.945.340.142.843.544.445.019551956.19571958195958.358.960,462.364.362.862.964.065.567.748.149.349.849.052.647.048.348.948.051.882.583.782.578.881.974.976.876.473.276.526.428.129.931.232.628.330.031.732.934.259.662.664.465.567.764.066.868.268.971.145.247.749.550.250.745.047.649.550.250.546.047.549.249.850.846.047.649.349.750.91960196119621963196465.267.369.972.575.668.370.372.875.178.153.554.457.459.963.552.553.556.659.162.882.080.882.182.683.977.076.177.878.780.533.935.236.838.240.235.736.838.339.641.469.571.373.775.578.473.074.676.778.480.952.052.352.752.653.152.252.452.652.753.051.651.852.653.253.751.651.952.753.353.91965196619671968.196978.380.782.585.385.580.582.584.086.886.567.871.573.176.879.067.271.272.776.678.886.688.688.690.192.583.586.386.588.291.141.744.647.050.754.242.845.447.951.554.880.183.385.388.389.682.284.786.989.690.653.355.356.959.463.453.255.057.059.363.454.756.457.960.263.254.856.358.160.463.31970197119721973197486.289.292.494.792.586.889.793.095.392.978.480.786.191.878.080.385.891.789.891.090.593.296.897.389.889.592.396.296.758.262.066.171.378.058.762.566.771.778.590.892.895.797.395.991.593.596.697.896.467.569.571.575.384.467.669.771.775.384.566.069.071.375.382.466.369.371.374.081.619751976.19771978197994.597.6100.0100.699.694.797.8100.0100.699.388.293.8100.0105.5107.887.893.7100.0105.7108.093.396.0100.0104.9108.292.795.8100.0105.0108.785.592.9100.0108.6119.186.093.0100.0108.6118.896.398.9100.0100.999.496.899.0100.0100.999.290.595.1100.0108.0119.590.895.1100.0108.0119.690.594.7100.0107.5117.290.094.6100.0107.1116.519801981198298.9100.7101.098.599.9100.0106.2108.9106.4106.3108.6105.9107.4108.2105.3108.0108.7105.9131.4144.1154.6130.9143.6154.096.796.097.096.395.796.7132.9143.1153.0133.0143.8153.9128.3140.4148.2128.3140.8149.01980:IIIIllIV99.398.238.999.398.797.698.49C.2107.9104.7105.3107.0107.9104.6105.3107.3108.7106.6106.5107.7109.3107.2107.0108.2126.7130.0133.1136.1126.2129.3132.6135.797.096.496.996.296.696.096.595.9127.6132.3134.7137.0127.8132.5134.7136.8123.7126.9129.9132.8123.6127.2129.9132.71981:II.'.""IllIV1982:I100.7100.7101.0100.2100.0100.3101.2102,2100.4100.0100.099.199.299.4100.3100.9109.1109.1109.6107.8106.3106.4106.7106.0109.2109.0109.1107.1106.0106.1106.3105.3108.3108.3108.5107.5106.3106.1105.4103.7108.8109.0109.1108.1106.8106.7106.0104.3140.0142.5145.6148.2150.9153.4155.7158.0139.5142.0145.1147.7150.4152.7155.1157.496.296.495.795.696.597.196.897.596.096.095.495.396.396.696.497.2139.0141.5144.2147.9150.9152.9153.8154.5139.0141.9145.1149.0151.6153.5154.7155.9136.5138.8141.9144.6146.0147.5149.1150.4136.5138.9142.3145.5146.6148.1149.8151.71 Output refers to gross domestic product originating in the sector in 1972 dollars.2 Hours of all persons engaged in the sector, including hours of proprietors and unpaid family workers. Estimates based primarily onestablishment data.3 Wages and salaries of employees plus employers' contributions for social insurance and private benefit plans. Also includes anestimate of wages, salaries, ana supplemental payments for the self-employed.4 Hourly compensation divided by the consumer price index.8 Current dollar gross domestic product divided by constant dollar gross domestic product.Source: Department of Labor, Bureau of Labor Statistics.208

TABLE B-41.—Changes in productivity and related data, business sector, 1948-82[Percent change from preceding period; quarterly data at seasonally adjusted annual rates]YearOutput per houro1 all personssectorKonfarmbusinesssectorsectorOutput 1NonfarmlusirtesssectorHours of allsectorNonfarmbusinesssectorCompensation persectorNofifarmbusinesssectorReal compensationper hour*sectorNonfarmbusinessUnit labor costNonfarmbusinesssectorImplicit pricedeflator^BusinesssectorNonfarmbusinesssector194819495.31.54.32.06.1-1.96.0-1.90.7-3.31.6-3.88.51.68.62.90.72.60.83.93.0.14.1.97.0-1.06.8.9195019511952195319547.92.83.23.21.66.01.72.31.71.49.15.83.34.3-1.89.46.53.44.2-2.01.12.9.11.0-3.33.14.61.02.5-3.47.19.86.46.43.25.88.85.55.63.26.01.74.15.72.84.8.73.24.82.7-.86.93.03.11.6-.26.93.13.91.71.67.41.1.91.01.76.61.82.01.4195519561957195819594.01.02.53.13.23.9.31.72.43.47.92.61.0-1.67.38.22.81.2-1.97.93.81.5-1.5-4.53.94.12.5-.5-4.24.42.56.56.54.44.33.66.05.73.84.02.84.92.91.63.53.94.42.21.03.21.45.53.91.31.0-.35.73.91.4.61.63.33.51.32.02.23.53.6.92.3196019611962196319641.53.33.83.74.3.82.93.63.23.91.61.75.54.36.01.51.85.84.46.4.2-1.51.6.61.6.6-1.12.21.12.44.23.84.63.75.24.33.24.03.54.52.62.73.42.53.82.72.12.82.23.22.7.5.7.03.5.3.4.21.4.61.51.11.01.5.61.51.21.2196519661967196819693.53.12.23.3.23.12.51.93.3-.36.85.52.25.12.96.95.92.15.32.93.22.3.01.72.63.73.4.32.03.23.97.05.37.87.03.46.05.57.56.52.24.02.43.51.51.73.02.63.21.1.33.83.04.46.7.33.53.54.16.81.93.02.74.04.91.62.83.24.04.719701971197219731974.83.63.52.6-2.4.33.33.72.4-2.5-.83.06.66.6-2.0-1.02.96.96.8-2.1-1.6-.53.03.9.4-1.3-.43.14.3.57.36.66.58.09.47.06.66.77.69.41.32.23.11.6-1.41.02.23.31.3-1.46.42.92.95.312,16.63.22.95.012.24.54.43.45.59.54.84.53.03.810.2197519761977197819792.23.32.4.6-.92.03.22.2.6-1.3-2.06.46.65.52.3-2.26.76.75.72.2-4.13.04.14.93.2-4.13.44.45.03.59.68.67.78.69.79.68.17.58.69.3.52.61.2.9=1.4.42.21.0.9-1.77.35.15.18.010.77.54.75.28.010.79.84.75.67.59.010.35.05.77.18.8198019811982 P-.71.8.4-.91.4.2-1.52.5-2.3-1.52.2-2.5-.7.7-2.6-.7.7-2.610.49.67.310.29.77.3-2.8— 71.1-2.9-.71.111.27.76.911.28.17.19.49.55.510.29.75.91980:Iin"'."'.'.";;;;iV.6-4.32.62.0-.4-4.63.43.1-11.42.16.8-.2-11.62.77.8-.4-7.4—54.7.2-7.4-.74.612.510.710.19.411.910.210.49.8-3.9-2.62.5-2.811.815.77.37.212.415.56.86.511.210.810.09.313.212.28.68.91981:itintiv5.6.01.1-2.94.9-1.3-.3-3.57.9-.11.9-6.47.2-.8.3-7.12.1-.1-3.62.2.5.6-3.711.77.59.07.411.87.19.07.3.2.5-2.6-.4.4.1-2.6-.55.77.57.810.66.69.311.211.66.69.38.012.17.110.29.21982:IIIllIV-1.01.43.64.1.6.83.42.7-5.5.61.1-2.5-4.2.6.7-3.8-4.5-.8-2.4-6.4-4.7-.1-2.7-6.37.36.96.16.07.76.16.66.03.92.2-1.43.34.31.4-.93.38.45.52.41.87.15.23.13.23.84.34.43.53.34.04.95.11 Output refers to gross domestic product originating in the sector in 1972 dollars.2 Hours of all persons engaged in the sector, including hours of proprietors and unpaid family workers. Estimates based primarily onestablishment data.3 Wages and salaries of employees plus employers' contributions for social insurance and private benefit plans. Also includes anestimate of wages, salaries, and supplemental payments for the self-employed.* Hourly compensation divided by the consumer price index.5 Current dollar gross domestic product divided by constant dollar gross domestic product.Note.—Data relate to all persons engaged in the sector. Percent changes are based on original data and therefore may differ slightlyfrom percent changes based on indexes in Table B-40.Source: Department of Labor, Bureau of Labor Statistics.209

PRODUCTION AND BUSINESS ACTIVITYTABLE B-42.—Industrial production indexes, major industry divisions, 1929-82[1967-100; monthly data seasonally adjusted]Year or monthTotalindustrialproductionTotalManufacturingDurableNondurableMiningiitilities1967 proportion100.0087.9551.9835.976.365.6919291933193919401941 ,„„194219431944194519461947194819491950195119521953 ,19541955195619571958195919601961196219631964196519661967196819691970197119721973197419751976197719781979198019811982 *1981:JanFebMarAprMayJune....JulyAm; ,Sept"mZZZZZZZZZZZZZZZZ.NovDec1982:JanFebMarAprMayJune ..JulyAugseptOct: ::.: ::: :::::..Nov"Dec "21.613.721.725.031.636.344.047.440.735.039.441.138.844.948.750.654.851.958.561.161.957.964.866 266.772.276.581.789.897.8100.0106.3111.1107.8109 6119.7129 8129.3117 8130.5138 2146.1152.5147.0151.0138.61514151.81521151.9152.7152.9153.9153 61516149.1146.3143.4140.7142.9141.7140.2139.2138.7138 8138.4137.3135.8134.8134.722.814.021.525.432.437.847.050.942.635.339.440.938.745.048.650.655.251.558.260.561.257.064.265.465.671.575.881.089.797.9100.0106.4111.0106.4108 2118.9129.8129.41163130.3138.4146.8153.6146.7150.4137.61511151.21516152.0152.8152.4153.2153.21511148.0145.0142.0138.5140.9140.1138.7137.9137.71381138.0137.1135.0134.0133.922 59.117.723 531.439954.259.945.231.637.739.335.743.548.951.958751.859.261.161.653.961.962 961.868673.178 389.0N 989100.0106.5110.6102.3102 4113.71271125.7109 3122.3130 0139.7146.4136.7140.5124.71410140.81421142.5143.5143.2143 6143 4140 9137.8134.4131.3127.1129.3128.2126 71261125.5125 9124.9123.5120.5119.3119.323 219.926.127 533.334 637.138.638.539.741.342.742.046.748.349.251,251.657.260.161.161.667.769.371.575.880.085.290.996.7100.0106.2111.5112.31166126.5133.8134.6126.4141.8150.5156.9164.0161.2164.8156.1165 6166.2165 3165.9166.4165.8167.1167 31659162.8160.3157.4155.1157.8157.3156.1155 0155.3155 7156.9156.7156.0155.2155.143.130.642.146.849.751.352.556.255.154.261.364.457.163.870 069.471269.977.982.082.175.378.780.380.883.186.489.993.298.2100.0104.2108.3112.2109 8113.1114.7115,3112.8114.2118.2124.0125.5132.7142.2126.1140 4143.1143 2135.2135.4141.7146.5146 01450145.3143.3142.6144.5142.4138.1134.1128.9123.5120.1116.9114.7116.4115.9118.0746.710.711.813.314.916.517.517.818.620.122.423.927.231033.736 539.343.948.251.553.959.363.467.072.077.083.688.795.5100.0108.4117.3124.5130 5139.4145.4143.7146.0151.7156.5161.4166.0168.3169.1169.0167 6166.4167 8167.6170,7172.7173.1171.9167 8168.1168.9168.2171.8170.4170.0171.0170.9169.4167 7168.5167.5167.8167.1165.5Source: Board of Governors of the Federal Reserve System.210

TABLE B-43-—Industrial production indexes, market groupings, 1947-82[1967=100; monthly data seasonally adjusted]Final productsMaterials 3Year or monthTotalindustrialproductionTotalTotalConsumer goods 1AutomotiveproductsHomegoodsEquipment •TotalBusinessIntermediateproductsTotalDurablegoodsNondurablegoods1967 proportion194719481949195019511952195319541955195619571958195919601961196219631964196519661967196819691970197119721973197419751976197719781979198019811982 P1981:JanFebMarAprMayJuneJulyAugSeptOctNovDec'"•1982:JanFebMarAprSTayJune .:.::....JulyAugSeptoc?.:::::::::::::::::::::::Nov.Deep100.0039.441.138.844.948.750.654.851.958.561.161.957.964.866 266.772 276.581.789.897.81000106.3111.1107 8109.6119.7129 8129.3117.8130.5138 2146.1152.5147 0151.0138.6151.41518152.1151.9152 7152.9153.9153.6151.6149 1146.3143.4140 7142 9141.7140.2139.2138.7138.8138 4137 3135.8134.8134.747.8238.640.038.843.747 250.754151.355.458.660.357.663.265 365.871475.579.787 695.91000106.2109.61053106.3115.7124 4125.1118.2127.6135 9142.2147.2145 3149.5141.3147 8148 2149.0149.91513151.4152.1151.5150.01489147.2146.3142 81441143.3142.6142.2142.1142.51412140 0138.6137.7138.127.6842.443.743.449.649.150.253.252.959.061.262.662.168.170 772.277181.385.992.697.3100.0105.9109.8109.0114.7124.4131.5128.9124.0137.1145 3149.1150.8145 4147.9142.6146 9147 8148.3148.9150.7150.3150.7149.6147.8146.5144.0142.0139.6141.8141.5142.1143.6144.8145.8144.1143.4142.2141.1141.42.8345.347.447.059.152347.159 555.473.660.663.550.563.372 566.180187.791.9113 3112.81000119.4118.198.8124.4141.4153 0132.8125.8155.7175 6179.9167.7132 8137.9129.6130 4133 9139.2142.91518153.1147.6137.6139.1132 8121.7119.2109 2117 5125.0129.9138.9143.0149J135.5135 5124.0121.4129.85.0637.539.136.249.943.043.048.644.953.055.754.551.459.059.461.366.571.878.488.997.9100.0106.4113.2110.2115.6129.5142.5136.8118.8134.1141.9147.7149.2138 9142.0129.3145.6145 2146.1145.0144.8145.0145.8145.3141.1138.2134.1125.4126.3130.6129.9131.1129.1129.9130.413141289128.6126.9125.920.1430.632.228.731.143 351.956349.350.455.357.551.556.558157.363 767.571.480 794.0100 0106.5109.3100194.7103.8114 5120.0110.2114.6123 0132.8142.2145 2151.8139.41491148 7150.0151.41521153.0154.1154.0152.91521151.5152.1147.2147.3145.9143.4140.4138.4138.0137.3135.2133.5133.0133.612.6338.039.534.537.045.251.253.346.850.858.861.151.557.959.457.762.765.873.784.497.7100.0105.5112.5107.0104.1118.0134.2142.4128.2135.4147.8160.3171.3173 2181.1157.3177.7177.5179.3181.0182.0183.6184.8184.4182.7180.5179.0179.0172.2171.6169.0164.9159.9156.7154.9153.9150.5146.4144.6144.112.8941.944.342.048.851350.954 554.361.764.464.463.069.570 071.475 779.985.290.696.2100.0106.3112.9112.9116.7126.5137.2135.3123.1137.2145.1154.1160.51519154.4143.4157.5157 7157.1156.3156.1154.9156.2156.8154.6151.4148.7145.9143.4146.3145.2143.7142.6141.9142.8144.7143.7142.4141.9141.039.2939.541.237.645.049 850.556151.861.362.862.856.565.266.166.272176.782.992.4100.7100.0106.5112.5109.2111.3122.3133.9132.4115.5131.71386148.3156.4147 6151.6133.8153 8154 3154.4152.9153.4154.0155.3155.2152.5148.5144.6139.0137.2140.4138.5136.2134.3133.5133.0132.8132.0130.3128.9128.420.3538.339.435.344.450 551.660 352.063.763 963.853 764.064 863.370475181.993 8103.3100 0106 2112.1103 8104.9117 7134 6132.7109.1128.01361149.0157.8143 0149.1125.31500150 6152.2151.8152.8152.4153.6154.3150.4145.6141.0134.0129.7132.4130.7128.1126.6126.6126.0125.1123.0119.3118.0117.310.47Z'.'Z45.952.554 954.754.462.163 265.871375.682.290 397.51000108.8115.71154120.2132.9142 2142.6126.6147.8155.6165.6175.91715174.6157.3180.2179.9177.5179.3179.0176.9176.5175.4175.5170.6164.7158.3156.8164.2162.0160.3156.6153.5152.3154.5158.5157.7155.5155.51 Also includes clothing and consumer staples, not shown separately.2 Also includes defense and space equipment, not shown separately.3 Also includes energy materials, not shown separately.Source: Board of Governors of the Federal Reserve System.211

TABLE B-44.—Industrial production indexes, selected manufactures, 1947-82[1967; -100; monthly data seasonally adjusted]Durable manufacturesNondurable manufacturesYear or monthTotalPrimarymetalsIronandsteelFabricatedmetalproductsNonelectricalmachineryElectricalmachineryTransportationequipmentTotalMotorVe arfd eSpartsLumberandproductsApparelproductsPrintingandpublishingChemicalsandproductsFoods1967 proportion1947194819491950195119521953195419551956195719581959I9601961196219631964196519661967196819691970197119721973197419751976197719781979198019811982 p .1981:JanFebMarAprMayJuneJulyAugSeptOct.NovDec1982:JanFebMarAprMayJuneJulyAucSeptOct..;;:::::Nov " ....Dec*6.5763.365.855.469.775 869.278 563.582.582.078 562.372.772 471.176 382.392.81021108.41000104.3113.8106.6100.2112.1126.7123.196.4109.7111 1119.9121.3102.3107.975.8114.1114 5114.9110.61119107.4109.4113.1108.6102.396.689.689.788 583.076.475.272.872.972.973 270 067165.94.2170.193.291.588 266.576.511174.277 384.395.9105 2108.4100 0103.2112.6104 796.11071122.3119.895.8104.8103 8113.2113.292.499.8108 71084108.0103.4105 698.599.7105.199.292.287.279.279 678 573.065.162.458.058.157 456 45415145.9349.950.845.856.159958.566 059.467.868.870 663.371.071169.475477.882.690897.2100 0105.6107.9102 4103.51121124.7124.2109.9123.91310141.6148.5134.1136.4114.8135 8137 6139.2139.5138 4139.3140.11400136.8133.8130.2126.1120 71214121.1119.1115.8115.0115 5114 3112 3108 5107 4106.59.1539.039.233.437.547 751.954 046.150.658.057 948.656.756955.462166.375.685 098.8100 0101.8109.3104 4100.2116 0133.7140.1125.1134.51436153.6163.7162.8171.2148.6167 3168 3169.2169.71721174.1176.71764173.9169.7167.9167.4160 9160 0157.3153.7150.0147.41471147 2144 9140 5138 0135.88.0522.223.021.629.629.834.039.034.739.943.142.839.247.651.654.862.964.768.481.797.9100.0105.5111.9108.1107.7122.2143.1143.8116.5134.8145 4159.4175.0172.8178.4169.2177.6174 9177.4178.8179.9180.1180.9182.6180.0179.6175.7170.7168.2172 9172.6172.2170.9170.8170.3169.7167.0165.7164 9164.59.2731.834.834.941.846.654.268.059.268.066.070.755.863.265.461.571.178.080.095.1102.0100.0111.1108.489.597.9108.2118.3108.797.4111.1122 2132.5135.4116.9116.1104.9117.41161119.5121.3123.7123.4119.8115.4114.2110.6106.1103.796 6102 0104.4105.9110.0111.6112.7107 0105.3100 8100 0103.74.5060.581.265.869.051.066.274.765.579.888.390.7115.9113.9100.0120.3116.592.3118.6135.8148.8128.2111.1142.01611169.9159.9119.0122.3109.8120.0119 9127.1130.7136 4137.5130.5123.1120.4113.8105.5100.490 498 6105.6110.7119.8124.0127.2116.7113.5103 01017108.81.6458.961.354.165.765.564.768.468.075.975.068869.979.374778.282.586.392.796.3100.0100.0105.5107.9105.6113.8120.8126.0116.2107.6123.2131.2136.3136.9119.3119.1127.4126 2125.6126.3126 2122.5122.9119.1113.2109.6104.7104.899 2104 9103.5106.2110.6112.2116.9120 31199117 2119 43.3157.860.359.764.363.166.367.266.473.375.074.972.880.181.782.285.589.192.297.499.9100.0102.9106.7101.4104.7109.4117.3114.3107.6125.7134.2134.2134.4127.0120.4123.81216120.2121.6122 6121.1122.6122.6122.5117.8113.8114.14.7243.345.446.648.949.749.752.054.159.563.265 463.968.271.071.373.977.882.687.994.6100.0103.2107.4107.0107.1112.7118.2118.2113.3122.5127 6131.5136.9139.6144.2144.3143.9144 8142.7141.61413143.1144.4146.1145.9145.6143.4145.3145 6146 4145.9144.2143.8142.6143 9145 3144 3142 61426144 07.7419.721.321.026.229 731.133.634,139.842.745246.654.356.459.265.771.878.887 895.71000109.5118.4120.4125.9143.6154.5159.4147.2170.9185 7197.4211.8207.1215.62189219 8218.5219.8220 6218.4221.5219.2216.3208.8204.6199.8196 72013200.3198.6193.6193.21941195 6196 4193 7192 88.7555.855.255.957.959 060.261462.766.370.171172.976.578.680.983486.490.492496.01000102.6106.1108.9112.8116,8120.9124.0123.4133.0138 8142,7147.5149.6152.11519152 5152.4151.9152 2151.3151.6151.9150.7151.4153.0152.815111517150.8149.7150.5151.01510150 7149 0150 6Source.* Board of Governors of the Federal Reserve System.212

TABLE B-45.—Capacity utilization rate in manufacturing, 1948-82FRB series >Year or quarterTotal Primarymanufacturiningprocess-194882.5 87.2194974.2 76.21950..82.8 88.5195185 8 90 2195285.4 84.91953892 89 41954 ..80.3 80.6195587.1 92.1195686.4 89.71957. ..83 7 84 7195875.2 75.4195981.9 83.4I96080.2 79.81961..77 4 77 9196281.6 81.61963 .83.5 83.8196485.6 87.8196589.6 91.1196691.1 91.4196786.9 85.71968.. . .87.1 87.7196986.2 88.51970 .. ..79.3 82 9197178.4 82.3197283.5 88.2197387.6 92.5197483.8 87.8197572.9 73.7197679.5 81.91977 ..819 84 0197884.4 86.9197985.7 88.1198079.1 78.5198178.5 78.41982"69.8 66.41978:j82.0 84.0II83 9 86 3III85 2 87 9IV86.4 89.51979:86.9 89.0||859 88 2III85 3 88 3IV84.4 86.91980:83.4 85.511 77.9 76.4HI75.9 73.1IV . .79.1 79.31981:I79.9 81.379.8 80.3HI ...79.3 79.4IV ..74.8 72.71982:71.6 69.1II 70.3 66.3III ..69.7 66.1IV p 67.6 64.3[Percent; quarterly data seasonally adjusted]Advancedprocessing80 073.379 883 485 989 380.184.384.583175.181.180.411181783.484.688.991.287.686 885.077 476.381.085.081.572.578.280883.084.379.478.571.680.982 783 784.685.784783 783.082.578.777.478 879.179.679.275.973.272.571.669.2Totalmanufacturing868684858581808386837781838483787684848384848382818076767878787672727169DurablegoodsCommerce series 2Nondurablegoods888783848478788285827681848483777584858385858482808074757877777470706865858685868683838586847982828382797883828283838282828178787879807875757674PrimaryprocesseprocessedAdvanced-goods goods89 8588 8587 8386 8487 8483 7982 8085 8289 8485 8276 7782 8183 8384 8484 8277 7876 7683 8484 8484 8285 8485 8484 8383 8183 8081 8075 7674 7778 7878 7878 7876 7671 7370 7366 7466 711 For description of the series, see "Federal Reserve Measures of Capacity and Capacity Utilization," February 1978.2 Quarterly data are for last month in quarter. Annual data are averages of the four indexes, except for 1965 (December index) and1966-67 (averages of June and December indexes). For description of the series, see "Survey of Current Business," July 1974.Sources: Board of Governors of the Federal Reserve System and Department of Commerce (Bureau of Economic Analysis).213

TABLE B-46.—Neiv construction activity, 1929-82[Value put in place, billions of dollars; monthly data at seasonally adjusted annual rates]Private constructionPublic constructionYear or monthTotalResidentialbuildings'Total 2housingunitsNonresidential buildings and otherconstruction 1TotalTotalnewconstructionCommercial3IndustrialOther*TotalFederal192910.88.33.63.04.71.10.92.62.50.2State andlocal 5 2.319332.91.2.5.3.8.1.2.51.6.51.119398.24.42.72.31.7.3.31.23.8.83.1194019411942194319448.712 014.1835.35.16.23.42.02.23.0351.79.82.63.01.4,7.62.12.71.71.11.4.3.4.2.0.1.4.8.32.21.31.51.2.91.13.65.810.76.33.11.2389.3562.52.42.01.3.7.6194519465.814.33.412.11.36.2.74.82.15.8.21.2.61.71.33.02.42.21.7.9.71.4New series19471948194920.026126.716.721420.59.913112.47.810.510.06.9828.01.0141.21.7141.04.2555.93.3476.38121.52.5354.81950195119521953195433.635.436.839141.426.726.226.027 929.718.115.915.816 618.215.613.212.913.414.98.610.310.211311.51.41.51.1182.21.12.12.3222.06.16.76.8737.26.99.310.811211.71.63.042413.45.26.36.6718.31955195619571958195946.547.649150,055.434.834.935134.639.321.920.219 019.824.318.216.114.715.419.212.914.716114.815.13.23.6363.63.92.43.1362.42.17.38.0908.89.011.712.714115.516.12.82.7303.43.78.910.011.112.112.31960196119621963196454.756 460.264 868.038.939.342.345.547.723.023125.227 928.017.317.119.421.721.815.916 217.217 619.74.2475.15.05.42.9282.82S3.68.98.79.29.710.715.917117.919.420.43.6393.9403.912.213.314.015.416.51965196619671968196974 176.878.587 594.352.052.852.959 966.327 925.725.630633.221.719.419.024 025.924 127.127.329 333.1789.4606.815 516.922124.025.527 628.0404.035343.318 020.022.124 224.61970197119721973197495.2110.3124.4138 4139.267.180.494.2105 9100.931.943.354.359 750.424.335.144.950 140.635.337.240.046 250.59.811.613.515 515.96.55.44.7627.919.020.121.824 526.728.129.930.232 538.33.34.04.4495.324.825.925.827 633.019751976197719781979135 9151.1173.8205.6230.4951112.0135.7159.7181.646 560.581.093.499.034 447.365.775.878.648 651.454.766.282.612 812.814.818.624.9807.27.711.015.027 831.532.236.742.740 939.138.245.948.8637.07.38.48.634 632.130.937.540.219801981230.7238.2175.7185.287.386.663.162.788.498.729.934.213.817.044.747.455.153.019.710.045.442.9See next page for continuation of table.214

TABLE B-46.—New construction activity, 1929-82—Continued[Value put in place, billions of dollars; monthly data at seasonally adjusted annual rates]Year or monthTotalResidentialbuildings 1Total 2NewhousingunitsPrivate constructionNonresidential buildings and otherconstruction >TotalTotalnewconstructionCommercial3IndustrialOther*TotalPublic constructionFederalState andlocal 61981:JanFeb....Mar....Apr....May....June...July....Aug...,Sept...OctNov....Dec...,1982:JanFeb....Mar...,Apr...May...June...July...,Aug...Sept..,OctNov.255.4250.7249.4247.6240.9237.5238.1235.9233.5230.8230.0228.8225.1222.6224.6226.1228.7231.6227.6228.1228.1229.1237.2193.7191.7190.6192.1189.3185.9186.9185.2182.4180.0178.1176.6175.5173.0173.6175.1179.9182.7178.7176.6177.0177.7184.499.596.995.895.192.389.187.084.180.478.276.275.873.769.270.072.375.575.373.472.171.574.178.473.972.472.172.269.566.864.160.857.153.450.449.451.049.251.049.651.049.851.552.353.152.354.294.294.894.897.097.096.899.9101.1102.0101.8102.0100.7101.8103.9103.6102.8104.5107.4105.3104.5105.6103.6106.01 Beginning I960, farm residential buildings included in residential buildings; prior to 1960, included in nonresidential buildings andother construction.2 Total includes additions and alterations and nonhousekeeping units, not shown separately.3 Office buildings, warehouses, stores, restaurants, garages, etc.4 Religious, educational, hospital and institutional, miscellaneous nonresidential, farm (see also footnote 1), public utilities, and allother private.6 Includes Federal grants-in-aid for State and local projects.Source: Department of Commerce, Bureau of the Census.32.833.033.634.333.533.634.234.334.934.635.736.436.236.838.438.436.838.037.536.137.135.737.115.814.915.316.415.916.717.818.718.518.518.416.617.117.216.615.917.118.416.416.716.617.117.245.546.945.946.447.646.547.948.248.648.647.947.748.549.848.648.550.650.951.451.751.850.951.761.759.058.955.451.751.751.250.751.150.851.952.249.649.651.051.048.848.948.951.451.151.352.810.710.99.810.310.110.110.19.210.19.89.69.89.29.610.09.89.69.59.910.210.510.410.651.048.149,145.141.541.641.041.441.041.042.342.440.440.041.041.139.239.439.041.240.640.942.2215

TABLE B-47.—New bousing units started and authorized, 1959-82[Thousands of units]Year or monthPrivate and public 1Total(farm andnonfarm)NonfarmNew housing units startedTotalPrivate (farm and nonfarm)»1 unitType of structure2 to 4units5 unitsor moreNew private housing units authorized 2Total1 unitType of structure2 to 4units5 unitsor more1959196019611962..,.1963..,.1964....1965....1966....1967....1968....1969....1970....1971....1972197319741975....197619771978....197919801981....1982"..1981:JanFebMarAprMayJuneJulyAugSeptOctNovDec1982:JanFebMarAprMayJuneJulyAugSeptOctNovDec P.....1,553.71,296.11,365.01,492.51,634.91,561.01,509.71,195.81,321.91,545.41,499.51,469.02,084.52,378.52,057.51,352.51,171.41,547.62,001.72,036.11,760.01,312.61,100.31,070.485,272.5108.9124.0110.6107.0101.087.390.988.264.959.747.652.078.785.199.291.8107.297.2108.3111.7111.981.71,531.31,274.01,336.81,468.71,614.81,534.01,487.51,172.81,298.81,521.41,482.31,517.01,252.21,313.01,462.91,603.21,528.81,472.81,164.91,291.61,507.61,466.81,433.62,052.22,356.62,045.31,337.71,160.41,537.51,987.12,020.31,745.11,292.21,084.21,060.61,5851,2941,3181,3011,1721,0461,0409468998548608828859459318821,0669081,1931,0331,1291,1261,4041,2221,234.0994.7974.3991.41,012.4970.5963.7778.6843.9899.4810.6812.91,151.01,309.21,132.0892.21,162.41,450.91,433.31,194.1852.2705.4661.0974835863868776705696614623507554550592568621566631621628645677701883800283.0257.4338.7471.5590.8108.4 450.086.661.171.680.985.084.8120.3141.3118.368.164.085.9121.7125.0122.0109.591.180.7422.5325.1376.1527.3571.2535.9780.9906.2795.0381.6204.3289.2414.4462.0429.0330.5287.7319.01,208.3998.01,064.21,186.61,334.71,285.81,239.8971.91,141.01,353.41,323.71,351.51,924.62,218.91,819.51,074.4939.21,296.21,690.01,800.51,551.81,190.6985.5992.5Seasonally adjusted annual rates139114108971058988766278817470846764868310288926479864723453473362912522562562142692252582232932432523492044633003603614423361,2361,1961,1721,1861,1789869418788357387437978037928518799449291,0628881,0031,1721,1921,291938.3746.1722.8716.2750.2720.1709.9563.2650.6694.7625.9646.8906.11,033.1882.1643.8675.5893.61,126.11,182.6981.5710.4564.3540.071269968668265957354350545640041345445043646045048851650049756165172973277.164.667.687.1118.9100.884.861.073.084.385.288.1132.9148.6117.064.363.993.1121.3130.6125.4114.5101.888.613911511312311210998918185788868758176102918583968696111192.9187,4273.8383.3465.6464.9445.1347.7417.5574.4612.7616.7885.71,037.2820.5366.2199.8309.5442.7487.3444.8365.7319.4363.91 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 16,000 permit-issuing places beginning 1978; in 14,000 places for 1972 77; in13,000 places for 1967=71; in 12,000 places for 1963-66; and < in 10,000 places prior to 1963.» Not available separately beginning January 1970.Source: Department of Commerce, Bureau of the Census.385382373381407304300282298253252255285281310353354322477308346435367448216

TABLE B-48.—Nonfarm business expenditures for new plant and equipment, 1947-83[Billions of dollars; quarterly data at seasonally adjusted annual rates]Plant and equipmentYear or quarterTotalPlantTotalManufacturingPnuintquipmentDurablegoodsNondurablegoodsTotalNonmanufacturingMiningTransportationPublicutilitiesTradeandservices1Communicationandother 2194719481949..195019511952...1953195419551956195719581959218025.4623.5425.3230.83315933.5833.1336 5844.7648.1242.1744.788.4510.3510.2010.9413.0813.1413.8214.0915 9719.3420.9419.4119.89133515.1113.3414 3717.74184519.7619.0320 6025.4227.1922.7624.898.739.257.327.7311.0712.1212.4312.0012 5016.3317.5012.9813.763393.542.673 225.125 755.715.495 878.198.596.216.725345.714.644.515.956376.726.516 628.158.916.777.0413.0716.2116.2217.5919.7619.4721.1621.1324.0828.4330.6229.1931.020 69.93.88841.111211.251.291311.641.691.431.352 212.662.302 383.052 992.972.422 603.073.352.343.171.642.673.283.423.753.964.614.234 264.785.955.745.466136.927.138 378.838058.949.59114913.6413.6814.1115.402 403.042.632 583.033 253.383.604 425 305.965.585.63I960196119S219631964..1965196619671968196948 6347.82512853.2561.6670 4382.2283 4288.4599.5220.9421.1222.1222.2324.9627 2432.2132 2235.5140.5427 7026.70291631.0336.70431950.01512052.9458.9916.3615.5316.0317.2721.23254131.3732 2532.3436.278 287.437 818.6410.9813 4917.2317 8317.9319.978.088.108.228.6310.25119214.1514 4214.4016.3132.2832.2935.2535.9940.4345.0250.8451.1856.1163.251.291.261411.261.331361.421381.441.773.192.823.263.364.465 466.436346.797.045.405.205.125.335.806.497.829.3310.5211.70161516.53182718.5720.38221324.6923 0225.3128.316 256.487197.478.469 5810.49111112.0614.431970197119721973197419751976197719781979105 61108.53120 25137.70156.98157.7117145198.0823124270.4644 2446.6049 3556.6664.2965.21712080.3192 70105.736136619370 8981.0492.6992 50100 25117.77138 54164.7336 9933.6035 4242.3753.2154.9259 9569.2279 7298.6819 8016 7818 2222.7527.4426 3328 4734.04404351.07171916.8217 2019.6225.7628.59314735.1839 2947.6168 6274.9384 8295.33103.78102.79111.50128.87151.52171.772 022.672 883.314.626.107449.24102111.386955.936 727.418.238.688.899.4010.6812.3513.0314.7016.2617.9719.8319.9822.3726.7929.9533.9629 7734.20400045.5347.7946.2349.3056.5468.6679.2616 8517.43189621.1223.3021.8023.5126.9032.0234.83198019811982 31983 3295.63321.49319.99315.69117.55133.46178.08188 04115.81126.79122.67119.5258.91618457.9557.3556.9064.9564.7262.18179.81194.70197.32196.1613.5116.8616.0516.4512.0912.0511.8011.9235.4438.4041.6239.9881.7986.3386.4286.8636.9941.0641.4340.961981:||IIV312 24316 73328 25327.83128.5713105136 40136.67183 67185 6819185191.17124 50125 4913011126.916124631062 5860.7863 2762 4067 5366.14187.74191.24198.13200.9216 20168017 5516.8111.7411.7011.6113.1236.0537.8439.5539.7483.4385.8887.5588.3340.3239.0241.8942.921982:IIII327 72323.22315.79315.21139 49137.95135.14188 23185.28180.6512832123.77119.46120.5060 8459.0357.1455.8067 4864.7462.3264.70199.40199.46196.33194.7117.6016.5614.6315.5611.9912.3211.2811.8240.1241.4043.3841.6687.8088.8587.3182.0141.8940.3339.7343.651983:I sII 331640320.0012143123.4257 9058.3063 5465.12194.97196.5816.1817.3310.6311.6640.7640.3085.8785.8741.5341.431 Wholesale and retail trade; finance, insurance, and real estate; and personal, business, and professional services.2 "Other" consists of construction; social services and membership organizations; and forestry, fisheries, and agricultural services.3 Planned capital expenditures reported by business in late October-December 1982, corrected for biases.Source: Department of Commerce, Bureau of Economic Analysis.217

TABLE B-49.—Sales and inventories in manufacturing and trade 1947-82[Amounts in millions of dollars; monthly data seasonally adjusted]Year or monthTotal manufacturing andtradeSales 1Ratio 3Sales 1ManufacturingInventories*Merchant wholesalersRetail tradetories Inven-2 Ratio3 Sales 1tories Inven-2 Ratio3 Sales 1tories Inven-21947...1948...1949...1950...1951...1952...1953...1954...1955...1956...1957...1958...1959...1960...1961...1962...1963...1964...1965...1966...1967...1968...1969...1970...1971...1972...1973...1974...19751976197719781979198019811981:Jan..Feb..Mar..ftay...June....JulyAugSeptOcfNovDec1982:JanFebMar....June...July..Aug..SfcNov...35,26033,78838,59643,35644,84047,98746,44351,69454,06355,87954,20159,72960,82761,15965,66268,99573,68280,28387,18790,34898,104105,003107,448116,017130,030153,412177,625182,230204,277229,623259,046294,573321,504350,622347,858348,653350,281352,855353,698356,524355,236354,520353,725346,605344,943341,330334,579340,571342,121339,835349,096346,126344,603339,464339,470332,537335,93852,50749,49759,82270,24272,37776,12273,17579,51687,30489,05287,09392,12994,71395,594101,063105,480111,503120,907136,790144,796155,697169,343177,556187,766201,950233,237285,807288,375318,544351,176397,090444,132482,570519,394485,396490,291492,399494,177497,812501,531504,744510,099515,349518,241521,574519,394516,256513,906513,054515,074510,517512,981513,387514,554515,399514,224508,5531.421.531.361.551.581.581.601.471.551.591.601.501.561.541.501.491.471.451.471.561.541.551.621.581.491.411.451.571.481.461.441.431.451.431.401.411.411.401.411.411.421.441.461.501.511.521.541.511.501.521.461.481.491.521.521.551.5115,51317,31616,12618,63421,71422,52924,84323,35526,48027,74028,73627,24730,28630,87930,92333,35735,05837,33140,99544,87046,48750,22853,50152,80555,90663,02372,93784,79486,59598,802113,201126,953143,935154,249166,217163,902164,676165,936167,649168,073170,951170,333169,274168,156163,957161,442159,614155,023158,142157,517156,114160,828161,519161,382158,619159,278152,473152,34325,89728,54326,32131,07839,30641,13643,94841,61245,06950,64251,87150,24152,94553,78054,88558,18660,04663,40968,18577,95284,66490,61898,202101,651102,658108,238124,628157,792159,934175,193189,334210,679241,034264,016283,152266,798269,146271,062272,060274,196274,616276,983279,102282,209284,386285,784283,152281,155281,688280,065278,985276,449275,115274,914274,302272,474271,710269,2971.581.571.751.481.661.781.761.811.621.731.801.841.701.751.741.701.691.641.601.621.761.741.771.901.831.671.581.651.841.691.611.571.571.661.661.631.631.631.621.631.611.631.651.681.731.771.771.811.781.781.791.721.701.701.731.711.781.776,5147,6958,5978,7829,0528,9939,89310,51310,47510,25711,49111,65611,98812,67413,38214,52915,61116,98719,44820,84622,60923,94326,25729,58438,01447,74846,62350,69455,98765,03676,10987,93197,83999,85298,77698,21798,94499,26498,27497,61197,28597,74696,23596,76895,14494,23695,01097,36195,42797,42796,56593,77692,34390,86689,77490,9827,9577,7069,2849,88610,21010,68610,63711,67813,26012,73012,73913,87914,12014,48814,93616,04817,00018,31720,76524,83326,13428,62432,03835,04538,63345,37256,94856,69764,07872,31183,89193,870104,441110,549104,233105,027105,189105,149105,425106,904105,768107,656108,764108,491110,173110,549110,971108,823109,657112,913111,701113,515113,534113,101113,852113,886112,6691.131.191.071.161.121.171.181.131.191.231.241.151.221.201.161.151.141.151.151.241.231.221.271.271.241.111.071.211.191.211.211.181.131.091.041.061.071.061.061.091.081.111.111.131.141.161.181.151.131.181.151.181.211.221.251.271.2410,20011,13511,14912,26813,04613,52914,09114,09515,32115,81116,66716,69617,95118,29418,24919,63020,55621,82323,67725,33024,41327,03028,89330,70033,85337,42242,46245,08249,01254,78160,43567,05774,52979,32586,56684,10485,20186,12886,26386,36187,29987,29287,96187,82386,41386,73386,57285,32087,41887,24288,29490,84188,04289,44588,50289,32690,29092,61314,24116,00715,47019,46021,05021,03121,48820,92622,76923,40224,45124,11325,30526,81326,22127,94129,38631,09434,40538,07335,29938,94542,51743,86750,06355,07963,23771,06771,74479,27389,530102,520109,228114,114125,693114,365116,118116,148116,968118,191120,010121,993123,341124,376125,364125,618125,693124,131123,395123,332123,175122,367124,351124,939127,151129,073128,628126,5871 Monthly average for year and total for month.2 Seasonally adjusted, end of period.3 Inventory/sales ratio. For annual periods, ratio of weighted average inventories to average monthly sales; for monthly data, ratio* ofinventories at end of month to sales for month.Note.—Earlier data are not strictly comparable with data beginning 1958 for manufacturing and beginning 1967 for wholesale andretail trade.The inventory figures in this table do not agree with the estimates of change in business inventories included in the gross nationalproduct since these figures cover only manufacturing and trade rather than all business, and show inventories in terms of current bookvalue without adjustment for revaluation.Source: Department of Commerce (Bureau of Economic Analysis and Bureau of the Census).218

TABLE B-50.—Manufacturers' shipments and inventories, 1947-82[Millions of dollars; monthly data seasonally adjusted]Year ormonthShipments 1TotalDurablegoodsindustriesNondurableindustriesInventories 2TotalDurable goods industriesTotalMaterialsandsuppliesWorkinproc-FinishedgoodsNondurable goods industriesTotalMaterialsandsuppliesWorkinprocessFinishedgoods194719481949195019511952195319541955195619571958195919601961196219631964196519661967196819691970197119721.973197419751976197719781979198019811981:JanFebMarMay!'"!June....JulyAugSept....OctNovDec1982:JanFebMarMay!!"!June....JulyAugSept...,OctNov...15,51317,31616,12618,63421,71422,52924,84323,35526,48027,74028,73627,24730,28630,87930,92333,35735,05837,33140,99544,87046,48750,22853,50152,80555,90663,02372,93784,79486,59598,802113,201126,953143,935154,249166,217163,902164,676165,936167,649168,073170,951170,333169,274168,156163,957161,442159,614155,023158,142157,517156,114160,828161,519161,382158,619159,278152,473152,3436,6947,5797,1918,84510,49311,31313,34911,82814,07114,71515,23713,56315,60915,88315,61617,26218,28019,63722,22124,64925,26727,65929,43728,18829,95434,02439,68644,22843,65650,68959,26767,84876,06077,54083,41781,43682,17683,51084,78485,43986,89185,73985,22384,67181,26580,27979,13375,55177,97678,12477,13679,51878,88879,03677,24876,56272,34272,7088,8199,7388,9359,78911,22111,21611,49411,52712,40913,02513,49913,68414,67714,99615,30716,09516,77817,69418,77420,22021,22022,57024,06424,61725,95229,00033,25040,56742,93948,11353,93459,10467,87576,70882,80082,46682,50082,42682,86482,63484,06084,59484,05183,48582,69281,16380,48179,47280,16779,39478,97881,31082,63182,34681,37182,71680,13179,63525,89728,54326,32131,07839,30641,13643,94841,61245,06950,64251,87150,24152,94553,78054,88558,18660,04663,40968,18577,95284,66490,61898,202101,651102,658108,238124,628157,792159,934175,193189,334210,679241,034264,016283,152266,798269,146271,062272,060274,196274,616276,983279,102282,209284,386285,784283,152281,155281,688280,065278,985276,449275,115274,914274,302272,474271,710269,29713,06114,66213,06015,53920,99123,73125,87823,71026,40530,44731,72830,25832,07732,37132,54434,63235,86638,50642,25749,92055,00558,87564,73966,78066,28970,25081,398101,739102,874112,581121,737138,045160,601174,674188,429176,632177,725178,374179,301180,010181,125183,229185,022187,686189,461190,222188,429187,054187,121186,063185,916184,870184,289183,798183,550182,793181,843179,3248,9667,8949,19410,41710,60810,03210,77610,35310,27910,81011,06811,97013,32515,48916,45517,37618,69319,18219,75920,86026,02835,15133,92037,54840,35045,33452,80555,31058,46156,40956,75456,38256,75756,39457,01758,01658,12158,90859,11759,21658,46158,18457,99956,89756,94755,99655,64355,78155,19154,70354,27953,62410,7209,72110,75612,31712,83712,38713,06312,77213,20314,15914,87116,19118,07521,93925,00527,33630,40829,84828,65030,78835,54542,60343,36946,34550,62558,69469,21276,85182,81478,33778,66279,15979,73380,43580,36281,04181,63582,62183,58884,05882,81482,21182,09781,72981,56281,28481,30480,21680,45880,37980,56779,9956,2066,0406,3487,5658,1257,8398,2399,2459,0639,6629,92510,34410,85412,49113,54714,16315,63917,75117,88018,60119,82323,98525,58628,69030,76334,01838,58542,51347,15341,88742,30942,83542,81243,18043,74444,17245,26646,15846,75646,94647,15346,65947,02647,43547,40847,59047,34247,80147,90147,71146,99745,70512,83613,88113,26115,53918,31517,40518,07017,90218,66420,19520,14319,98320,86821,40922,34123,55424,18024,90325,92828,03229,65931,74333,46334,87136,36837,98843,23056,05357,06062,61267,59872,63480,43389,34194,72390,16691,42192,68892,75994,18693,49293,75494,08094,52394,92595,56194,72394,10094,56794,00293,07091,57990,82691,11690,75289,68189,86789,9738,3178,1678,5568,9718,7758,6629,0809,0829,4939,8139,97810,13110,44811,15511,71512,28912,72413,15013,68314,67618,13223,69923,54225,83327,39729,35432,47936,20838,01536,82037,05036,97437,20637,30537,07437,53137,44737,60637,72037,83438,01537,96137,89937,31737,48637,17236,71436,78936,44835,80035,63735,8142,4722,4402,5712,7212,8642,8282,9442,9463,1103,2963,4063,5113,8064,2044,4214,8485,1225,2745,6655,9826,7078,1758,8379,93310,98911,91313,71015,65616,19615,81816,12616,19416,26316,50916,16116,17416,25116,21315,91216,17416,19615,95915,79215,62915,60115,43815,55515,51915,52915,19214,85714,7937,4097,4157,6668,6228,6248,4918,8459,3809,73810,44410,79611,26111,67412,67313,52314,60615,61716,44817,01917,33018,39124,17924,68126,84629,21231,36734,24437,47840,51137,52838,24539,52139,29040,37240,25740,04840,38240,70541,29341,55540,51140,17940,87741,05739,98338,96938,55738,80838,77538,68939,37339,3661 Monthly average for year and total for month.2 Book value, seasonally adjusted, end of period.Note.—Data beginning 1958 are not strictly comparable with earlier data.Source: Department of Commerce, Bureau of the Census.219

TABLE B-51.—Manufacturers' new and unfilled orders, 1947-82[Amounts in millions of dollars; monthly data seasonally adjusted]New orders 1Unfilled orders'Unfitted orders—shipmentsratio 3Year or monthTotalDurable goodsindustriesTotalCapitalgoodsindustries,nondefenseNondurablegoodsindustriesTotalDurablegoodsindustriesNondurablegoodsindustriesTotalDurablegoodsindustries194719481949195019511952195319541955195619571958195919601961196219631964196519661967196819691970197119721973197419751976197719781979198019811981:Jan....Feb....Mar...May...June..July...Aug...Sept..Oct....Nov...Dec...1982:Jan....Feb....Mar...fcJune..July...Aug...Sept..Oct....Nov.15,25617,69315,61420,11023,90723,20423,58622,33527,46528,36827,55927,00230,72430,23531,10433,43635,52438,35742,10046,40247,05650,68753,95052,03855,98364,16776,25987,26885,14999,543115,027131,664147,354155,738166,015164,976165,375166,240169,422170,281171,022172,089168,797167,728159,558159,460156,660154,519155,984157,198154,995156,791157,058158,588154,380156,166149,696150,3626,3888,1266,63310,16512,84112,06112,14710,76814,99615,36514,11113,29016,00315,30315,75917,37418,70920,65223,27826,17725,82528,11629,87127,38829,99835,06442,93046,85342,01951,39861,07672,41079,39479,06083,27282,52882,69983,86286,41087,39686,91187,58284,81984,45677,19378,59276,42175,06176,30977,85976,19475,71074,55076,44672,98273,26670,6076,9037,6606,7387,4448,62210,97112,67311,01112,79915,27619,44423,20323,44924,06125,06321,85724,45625,68724,48824,03924,65524,86724,31222,52824,36922,13021,71721,56022,17422,60820,33219,27820,32218,89320,27320,18320,1738,8689,5668,9819,94511,06611,14311,43911,56612,46913,00313,44813,71214,72014,93215,34516,06116,81517,70518,82320,22521,23122,57124,07924,65025,98629,10433,33040,41543,13048,14553,95159,25467,96076,67882,74382,44782,67782,37883,01382,88584,11184,50783,97983,27282,36580,86880,23979,45879,67679,33978,80381,08182,50882,14281,39882,90080,09879,75534,47330,73624,04541,45667,26675,85761,17848,26660,00467,37553,18347,37052,73245,08047,40748,57754,32766,88280,07198,401104,547109,926115,422106,158107,147121,061161,256, 191,102173,829182,499204,880261,941303,178320,977318,621322,053322,749323,054324,826327,033327,105328,861328,384327,955323,556321,574318,621318,114315,957315,639314,521310,482306,032303,235299,001295,883293,107291,12828,57926,61919,62235,43563,39472,68058,63745,25056,24163,88050,35244,55949,37342,51444,37545,96551,27063,69176,29894,575100,576105,950111,250101,566102,119114,725153,876185,560165,930174,211196,417251,663291,883310,051308,370311,146311,666312,018313,642315,597315,618317,462317,057316,841312,769311,082308,370307,877306,211305,947305,004301,194296,866294,272290,011286,706283,960281,8615,8944,1174,4236,0213,8723,1772,5413,0163,7633,4952,8312,8113,3592,5663,0322,6123,0573,1913,7733,8263,9713,9764,1724,5925,0276,3367,380515427,8988,2888,46310,27811,29510,92610,25110,90711,08411,03611,18411,43611,48711,39911,32711,11410,78710,49210,25110,2379,7469,6929,5189,2889,1668,9638,9909,1779,1479,2671 Monthly average for year and total for month.3 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.3.423.633.873.353.093.012.782.632.692.803.103.333.813.703.853.753.653.383.313.914.193.803.343.303.623.893.793.773.803.773.713.703.703.663.683.683.703.763.763.773.903.783.763.863.713.693.673.693.633.773.724.124.274.554.003.693.543.373.133.243.373.723.954.554.404.654.504.394,063.904.635.034.573.993.924.264.634.534.594.564.534.454.444.434.374.424.424.464.554.564.594.764.624.614.714.524.514.494.554.464.664.61220

Year or monthAllitemsPRICESTABLE B-52.—Consumer price indexes, major expenditure classes, 1929-82Food andbeveragesTotal*FoodTotal 2Rent,residentialHousing[1967^100]Fuel andotherutilities 3ApparelandupkeepMedicalcareOthergoodsandservicesHomeownershipTransportationEntertainmentEnergy419291933 ..19391940194119421943194419451946194719481949195019511952. .1953195419551956195719581959I96019611962196319641965196619671968... .19691970197119721973.,.197419751976197719781979...198019811982..!1981:JanFebMar ....AprMayJune 1ZJulvAugilZZSeptOctNov..Dec1982:JanFebMarJuneJulyAugSeptNovDec51.338.841.642.044148.851852.753.958.566.972.171.472.177.879.580.180.580.281484.386.687.388.789.690691.792 994.597 2100.0104.2109.8116.31213125.3133.1147.7161.2170.5181.5195.4217.4246.8272.4289.1260.5263.2265.1266.8269.0271.3274.4276.5279.3279.9280.7281.5282.5283.4283.1284.3287.1290.6292.2292.8293.3294.1293.6292.4100.0103 6108.8114.7118 3123.2139.5158.7172.1177.4188.0206 3228.5248.0267.3278.22614263.7265.0265.7265.4266.5268.9270.1270.7270.3269.9270.5273.6275.8275.6276.5278.1280.2280.8279.9280.1279.6279.1279.148.330.634.635.238 445.150349.650.758.170.676.673.574.582.884.383.082.881.682 284.988.587.188.089.189991.292 494.499.1100.0103.6108.9114.9118.4123.5141.4161.7175.4180.8192.22114234.5254.6274.6285.7268.6270.8272.2272.9272.5273.6276.2277.4278.0277.6277.1277.8281.0283.3283.0283.9285.5287.8288.5287.4287.6287.0286.4286.552.252.453 756.256 858.159.160.665.269.870.972.877.278.780.881.782.383 686.287.788.690.290.991792.793 894.997 2100.0104.0110.4118.2123 4128.1133.7148.8164.5174.6186.5202 8227.6263.3293.5314.7279.1280.9282.6284.8288.5292.2297.0299.7303.7303.5304.2305.2306.1307.3306.7309.4313.8317.5319.2320.1319.7320.7319.0316.376 054.156.056257 258.558 558.658859.261165.168 070473.276280.383 284.385987.589.190.491.792.994 095.095996.998 2100.0102 4105.7110.11152119.2124.3130.6137 3144.7153.5164 0176.0191.6208.2224.0200 9201.9203.0204.2205.9206.8207.8210.3211.9213.6215.0216.5217.8218.6219.6220.1221.8222.6224.8226.0226.9228.9230.2230.875.076.377.078381.783.584.486.386.987 989.090892.796.3100.0105.7116.0128.5133.7140.1146.7163.2181.7191.7204.9227,2262.4314.0352.7376.8335.8335.8336.8339.3345.0350.4358.0361.8367.8366.7367.2367.8367.5368.7365.7370.6377.4382.8384.5385.9383.0382.8379.5372.983.083.585.187.389.991.793.895.997.197 398.298.498.398.8100.0101.3103.6107.6115.0120.1126.9150.2167.8182.7202.2216.0239.3278.6319.2350.8296.7304.5308.4310.5314.9320.2325.1327.8331.1330.1329.8331.8336.2337.1339.3339.2345.4352.2354.7356.3359.5363.4362.2364.148 536.942.442 844852.354 658.561567.578.283.380179.086.185.384.684 584.185 887.387.588.289.690.490 991.992 793.7961100.0105.4111.5116.1119 8122.3126.8136.2142.3147.6154.2159 6166.6178.4186.9191.8181.1182.0185.1186.4186.4185.8184.7187.4190.7191.5191.3190.5187.3188.0191.1191.9191.5190.8189.7191.8194.9195.5195.4193.643.042.744 248.147 947.947.850.355.561.866.468.272.577.379.578.377.478.883.386.089.689.690.692.593.094.395.997.2100.0103.2107.2112.7118.6119.9123.8137.7150.6165.5177.2185.5212.0249.7280.0291.5264.7270.9273.5275.3277.8279.9282.6283.7285.2287.2289.1289.8289.9288.0285.1282.9285.6292.8296.1296.2295.3295.5295.8294.836.736.837 038.039 941.142144.448151.152 753 756.359 361.463464.867 269.973.276.479.181.483 585.687 389.593.4100.0106.1113.4120.6128.4132.5137.7150.5168.6184.7202.4219.4239.7265.9294.5328.7279.5282.6284.7287.0289.0291.5295.6299.3301.7304.8308.2310.2313.4316.2318.8321.7323.8326.4330.0333.3336.0338.7342.2344.3100.0105.7111.0116.7122.9126.5130.0139.8152.2159.8167.7176.6188.5205.3221.4235.8214.4216.7218.2219.2220.3220.8221.1222.3224.0225.5226.8227.3229.2231.2232.8233.9234.4235.6236,6237.4238.3240.3239.9240.1100.0105.2110.4116.8122.4127.5132.5142.0153.9162.7172.2183.3196.7214.5235.7259.9226.2227.4228.7229.9232.2233.4234.4235.6243.0245.2245.9246.7248.4250.3252.2253.8255.0255.8257.2258.3266.6271.2273.8276.690.190.391.894 294 494 795 094696 397.8100.0101.5104.2107.0111.2114.3123.5159.7176.6189.3207.3220.4275.9361.1410.0416.1381.7401.1409.3409.8411.3414.0415.7416.1417.1414.9414.1414.6416.4413.0406.1395.7402.1418.6424.5424.5424.2425.0422.6419.91 Includes alcoholic beverages, not shown separately.* Includes other items not shown separately. Series beginning 1967 not comparable with series for earlier years.• Fuel oil, coal, and bottled gas; gas (piped) and electricity; and other utilities and public services.4 Fuel oil, coal, and bottled gas; gas (piped) and electricity; and motor fuel, motor oil coolant, etc.Note.—Data beginning 1978 are for all urban consumers; earlier data are for urban wage earners and clerical workers.Source: Department of Labor, Bureau of Labor Statistics.221

TABLE B-53.—Consumer price indexes, selected expenditure classes, 1939-82[1967-100]Year or monthTotal 1Food and beverage >TotalFoodAthomeAwayfromhomeTotalHomeownersliipHomepurchaseFinancing,taxes,andinsuranceMaintenanceandrepairTotalFuel and other utilitiesTotalHousehold fuelsFuelcoal,andbottledgasGas(piped)andelectricityOtherutilitiesandpublicservices193919401941194219431944194519461947194819491950195119521953195419551956195719581959196019611962196319641965196619671968196919701971197219731974197519761977197819791980198119821981;JanFebMart :JuneJulyAugS5 1 :- :NovDec1982:JanFebMarApr«&.::JuneJulyAucSeptOctNov.....Dec100.01036108.8114 7118.3123.2139 5158.71721177 4188.0206 3228.52480267.3278.2273.6275.8275.6276.5278.1280.2280.8279.92801279 62791279.134 635 238445150349650 758170 676 673 574 582 884 383.082 881.682.284.988 587 188.089189.991.292 494 49911000103 6108.9114 9118.4123 51414161.71754180 8192 22114234.5254 6274.6285.7261.4 268.6263265.07 2708272 2265.7 272.9266.5265 4 272 5273.6268.9 276.2270.1 277.4270.7 278.0270 3 277 62699 2771270.5 277.8281.0283.3283.0283 9285.5287.8288.5287.4287 6287 0286 4286.573 579 876777 686387.886.285.884.184.487.291088 889.690 491.092.293 295.5100 3100.0103 2108.2113 7116.4121.61414162.4175.8179 5190.2210 2232.9251.5269.9279.2265.6267.3268.6268.7267 7268.7271.6272.8273.227212710271.7275.3278.0277.1277.9279.8282.6282.8280.8280.6279.4278 3277.868.970.170.872.274.977.279 381.483.285.487.388.990.995.1100.0105.2lll.G119.9126.1131.1141.4159.4174.3186.1200.3218.4242.9267.0291.0306.5280.9284.7286.1288.2289 3290.6292.4293.7294.82962297 2297.7299.8301.2302.4303 6304.8305.9307.6308.7309.8310 73114312.675.076.377.078.381.783.584486.386.987.989.090 892.796 3100.0105.7116.0128.5133.7140.1146 7163.2181.71917204.9227.2262.4314.0352.7376.8335.8335.8336.8339.3345 0350.4358.0361.8367.8366 7367 2367.8367.5368.7365.7370.6377.4382.8384.5385.9383.0382.8379.5372.986.587.187.387.690.091.391391.892.393.294.295 797.098 6100.0102 8109.5118 3124.8130.0132 7142.7160.3168 4179.5196.7223.1254.3267.7281.6266.2263.0261.1260.7263 0266.6271.4272.6274.5272 5270 2270.5269.3270.4269.2272.3279.3285.6287.7287.9286.8289.9290.4290.9100.01083123.7142 3143.5150.8160 6181.1201.9212 8227.2257.8308.9396.0472.5511.4435.2437.1441.1447.1458 3467.2480.0488.3501.85018505 6506.3506.0507.2500.9508.4516.2521.8524.3527.3519.9514.3504.8486.271.272.474.177.280.581.883.284.685.986.587.789.591.395.2100.0106.1115.0124.0133.7140.7151.0171.6187.6199.6214.7233.0256.4285.7314.4334.1296.8302.8306.1309.3312.9315.5319.3320.5321.6320.8322.8324.1326.7328.2327.2331.6334.5336.1334.7335.9338.4339.4339.0337.883.083.585.187.389.991.793.895.997.197.398.298.498.398.8100.0101.3103.6107.6115.0120.1126.9150.2167.8182.7202,2216.0239.3278.6319.2350.8296.7304.5308.4310.5314.9320.2325.1327.8331.1330.1329.8331.8336.2337.1339.3339.2345.4352.2354.7356.3359.5363.4362.2364.1100.0101.4103.4107.9115.3120.1128.4160.7183.8202.3228.6247.4286.4349,4407.0446.2375.4387.4393.7396.5403.3411.7417.2419.5422.4419.0417 6420.0426.9427.6430.5428.2438.0448.4452.0454.0458.5464.5461.9464.037.138.240.543.145.247.148.051.358.468.670.372.776.578.081.581.282.385.990.388.789.889.291.091.593.292.794.697.0100.0103.1105.6110.1117.5118.5136.0214.6235.3250.8283.4298.3403.1556.0675.9667.9625.9675.6693.4690.6685.8682.0677.9674.6673.4672.7676.1682.5686.0683.1664.0641.3644.6656.6659.9659.9662.8677.2691.3688.582.982.181.481.080.680.379.677.477.179.181.081.281.582.684.285.387.588.489.392.494.798.699.499.499.499.499.499.6100.0100.9102.8107.3114.7120.5126.4145.8169.6189.0213.4232.6257.8301.8345.9393.8318.5322 9326.7330.6339.6350.2357.6360.8364.5360.6358.3359.9367.4368.7375.9377.8389.0398.9402.1404.4409.2413.4407.6410.6100.0101.2104.0107.4114.7120.6124.1130.31371145.4152.0158.3159.5165.2181.0200.2171.9174.0173.6175.1176.2177.1180.61837187.4189.4190.7191.9192.7193.9195.0197.7198.9200.4201.4202.4203.6204.5205.1206.6See next page for continuation of table.222

TABLE B-53.—Consumer price indexes, selected expenditure classes, 1939-82—Continued[1967=100]TransportationMedical carYear or monthTotalTotalNewcarsPrivate transportationUsedcarsMotorfuel ^AutomobilemaintenanceandrepairOtherPublictransportationTotalMedicalcarecommoditiesMedicalcareservices1939194019411942194319441945194619471948 ....19491950195119521953 .195419551956195719581959196019611962196319641965196619671968 .196919701971197219731974197519761977 .197819791980198119821981:Jan FebMarAormr»jur&iir: :JulyAusSeptOctNovDec1982:JanFebMarAprNBWJuneJulyAuo ...Sept :OctNovDec43.042.744.248.147.947.947.850.355.561.866.468.272.577.379.578.377.478.883.386 089.689.690.692.593.094.395.997.2100.0103 2107.2112 7118.6119.9123.8137.7150.6165.5177 2185.5212.0249 7280 0291.5264.72709273 5275 3277.8279.9282.6283 7285 2287 2289.1289.8289 92880285.1282.9285 6292.8296.1296.2295.3295 5295 8294.844.243.645.952.351.451.451.354.361.568.272.372.575.880.882.480.378.980.184.787 491.190.691.393.093.494.796.397.5100.01030106.51111116.6117.5121.5136.6149.8164.61766185.0212.3249 2277 5287.5262.9269 4271.7273 4276.0277.9279.6280 52819283 9285.8286.5286 6284 5281.3278.8281.5288.9292.3292.4291.129112914290.443.243.346.669.275682.883.487.494.995894.390 993.59841015105.9104.5104 5104.1103.5103.2100999.1100.0102 8104.4107 6112.01110111.1117 5127.6135 71429153.8166.0179 3190 2197.6185 3184 8182 91861190.9192.2192 519191913192 5195.3197.0197 4195 5194.4196 0197 5198.1198.6198 7197 7197 7199 0200.189.2*75.971.869.177.480 289.583.686994.896.0100.199497.0100.0(3)103.1104 3110.2110 5117.6122 6146.4167,9182 8186.5201.02081256 9296.4234.0234 3235 42391245.2252.9260 3266 9272 8278 2281.4281.9280.5279 7280.9285.12914298.2302.4304.4304.6306 7310 5312.649.048.150.553.454.054.253.854.962.270.472.371.873.975.880.382.583.686.590.088 889.992.591.491.991.891.494 997.0100.01014104.7105 6106.3107.6118.1159 9170.8177.9188 2196.3265.63691410 9389.4385.2410.8420 7419 3416.5414.4412.9411.72411 1409 9409.5408.44061399 2384.1366.9370.6392.4400.2398.4394.2390.73883381.743.143.044.948.849.450.050.452.056.459.661.162.367.068.672.374.876.579.582.483 785.587.289.390.491.692.894.596.2100.0105 5112.2120.6129.2135.1142.2156.8176.6189.7203 7220.6242.6268 3293 6315.8282.7285.4287.7289 0290.8291.9293.5295.5298.73013302.8304.1305.5307 7310.2311.9313.6316.0318.0319.2320.6321.9322.3323.1103.41097119.2128.4129.1127.8132.4141.2163.1177.3184.6198.6222 62413257.8232.4234.2234.7236.3238.9241.0242.9243.0244.2247 5249.5250.6253.3253 4254.5255.1255.7258.7260.8260.8260.0261.4260.7259.633.133.133.133.333.433.533.534.436.040.745.248.954.057.561.365.567.470.011176178.381.084.687.488.590.191.995.2100.0104.6112.7128.5137.7143.4144.8148.0158.6174.2182.4187.8200.3251.6312 0346.0286.4288.1293.9297.2297.7303.9323.1326.5329.1330.8333.2333.8334.9336.8336.7339.3342.1345.6347.2348.1353.3356.3356.0355.636.736.837.038039.941142.144 448.151152.753.756359.361463.464 867.269973 276.479.181.483.585.687.389.593.4100.01061113.41206128.4132 5137.71505168.6184.7202 4219.4239.7265 9294 5328.7279.5282.6284.7287 0289.0291.5295.6299.3301.7304 8308.2310.2313.4316 2318.8321.7323.8326.4330.0333.3336.0338.7342.2344.371.170.871.473 073.574 374.876 281.886187.488.591091.892693.794 796.799 3102 8104.4104.5103.3101.7100.8100.5100.2100.5100.0100 2101.31036105.4105.6105.9109 6118.8126.01341143.5153.81681186 5205.7176.7179.2180.7182.4184.7186.3187.7189.4190.8192.1193.1194.9195.9197.7200.0202.4204.1205.6206.5208.2209.9211.6212.9213.732.532.532.733 735.436 937.940143.546 448.149.251755.057 058.760 462.865568772.074.977.780.282.684.687.392.0100.0107.3116.0124 2133.3138.2144.3159.1179.1197.1216 7235.4258.3287 4318 2356.0302.1305.2307.5309.8311.7314.4319.2323.4326.1329.7333.7335.7339.4342.4345.1348.0350.2353.0357.3361.0364.0366.9371.0373.41 Includes alcoholic beverages, not shown separately.2 Includes direct pricing of diesel fuel and gasohol beginning September 1981.3 Not available.Note.—Data beginning 1978 are for all urban consumers; earlier data are for urban wage earners and clerical workers.Source: Department of Labor, Bureau of Labor Statistics.

TABLE B-54.—Consumer price indexes, commodities, services, and special groups, 1939-82[1967-100]CommoditiesServicesSpecial indexesYear ormonthAllitemsFoodCommodities less foodAllDurableAllservicesRentAllcommoditiesNondurableServiceslessrentAllitemslessfoodAllitemslessenergyAllitemslessfoodandenergyEnergy1193919401941194219431944194519461947194819491950195119521953195419551956195719581959I96019611962196319641965 ....1966196719681969 „19701971197219731974197519761977197819791980198119821981:JanFebMarAprMayJuneJulyAugSeptOctNov .Dec1982:JanFebMarJuneJulyAugSeptOct.NovD€C41.642044.148851.852 753.958 566.972171.472177.879 580180580 281.484 386.687.388.789.690.691.792.994.597.2100 0104.2109.8116.3121.3125.3133.1147.7161.2170 5181.5195.4217.4246.8272.4289.12605283.2265.1266.8269.0271.3274.4276.5279.3279 9280.7281.5282.528342831284.3287.1290.6292,2292.8293.3294.1293.6292.440.240 643.349.654.054.756.362 475.080478.378885.987 086.785985.185.988.690.690.791.592.092.893.694.695.798.2100.0103.7108.4113.5117.4120.9129.9145.5158.4165.2174.7187.1208.4233.9253.6263.8245.4248.3249.8250.8251.9253.2255.0256.2257.7257.9258.0258.4258.8259.5258.8258.9261.5265.1266.5266.4266.6267.5267.8267.734.635238.445150.349650.758170.676 673.574 582.884 383.082881.682.284.988.587.188.089.189.991.292.494.499.1100.0103.6108.9114.9118.4123.5141.4161.7175.41808192.2211.4234.5254.6274.6285.7268.6270.8272.2272.9272.5273.6276.2277.4278,0277 6277.1277.8281.0283 3283 0283.9285.5287.8288.5287.4287.6287.0286.4286.547.748 050.456.058.461.664.168476.882.781.581.487.588 388.587 586.987.890.591.592.793.193.494.194.895.696.297.5100.0103.7108.1112.5116.8119.4123.5136.6149.11566165.1174.7195.1222.0241.2250.9232.4238.0239.6241.1242.6243.8245.5245.9246.2246.5245.9246 0245.2245.0247.8251,9253.5253.8253.9255.4256.0255.848.548151.458460.365 970.974180.386,287.488495.196495.793 391.591.594 495.997.396.796.697.697.998.898.498.5100 0103.1107.0111.8116.5118.9121.9130.6145.5154 3163.2173.9191.1210.4227.1241.12210220.3219.8221.1223.9226.6229.6230.9232.6232 9233.2233.7233.4233 72335235.8239.8243.2244.7244.6244.1246.0246.6247.344.344 746.751653.856 658.662972.277 876.376282.082483.183 583 585.387688.289.390791.291.892.793.594.897.01000104.1108.8113.1117.0119.8124.8140.9151.7158 3166.5174.3198.7235.2257.5261.62453253.2257.5258.1258.2258.0257.5258.4260.3260 7261.1261.1260.22601258 4255.0256.2261.2263.0263.6264.6265.7266.1264.743.543 644.245646.447 548.249151.154 356.958.761.864567.369 570.972.775.678.580.883.585.286.888.590.292.295.8100 0105.2112.5121.6128.4133.3139.1152.1166.6180 4194.3210.9234.2270.3305.7333.3287,7290.1292.5295.4299.6303.5308.8312.2317.3318 6320.6321.8323.9325 3325 5328.4331.8334.9337.0338.9339.7340.3338.6335.656.056.257.258.558.558.658.859.261.165.168.070.473.276 280.383 284 385.987.589.190.491.792.994.095.095.996.998.2100 0102.4105.7110.1115.2119.2124.3130.6137.3144 7153.5164.0176.0191.6208.2224.02009201.9203.0204.2205.9206.8207.8210.3211.92136215.0216.5217.82186219 6220.1221.8222.6224.8226.0226.9228.9230.2230.838.138,138,640.342.144.245.146749.051.954.556.059.362 264.866768.270.173.376.479.081.983.985.587.389.291.595.3100.0105.7113.8123.7130.8135.9141.8156.0171.9186 8201.6219.4244.9285.1324.3354.2304.2306.9309.5312.8317.4321.9328.1331.7337.5338 7340.8342.0344.2345.7345.7349.1352.8356.5358.5360.5361.3361.6359.3355.547.247 348.752153.655 756.959 464.969670.371175.777 579.079 579.781.183.885.787.388.889.790.892.093.294.596.7100.0104.4110.1116.7122.1125.8130.7143.7157.1167 5178.4191.2213.0244.0270.6288.4257.6260.4262.3264.2267.0269.5272.7274.9278.22790280.1280.8281.42821281 7282.9286.0289.7291.5292.5292.9294.0293.6292.183.986.387.083.389.390.491.692.994.397.3100.0104.4110.3117.0122.0126.1133.8146.9160.2169.2179.8193.8213.1238.0261.7279.3251.2252.5260.2263.5265.6268.6269 4270.4271.1272.1273.4273.6275.7278.3280.7282.0282.7283.1284.0283.6282.583 385.287.088389.390.591.693.094.396.6100 0104.6110.7117.6123.1126.9131.3142.2155.3165 5175.8188.7207.0232.8257.1276.1245.7246.8248.1255.6259.0261.3264.82659267.2267.9268.5269.5269.8272.2274.9277.3278.7279,8280.4281.5281,2279.990.190.391.894.294.494.795.094.696.397.8100.0101.5104.2107,0111.2114.3123.5159.7176.6189.3207.3220.4275.9361.1410.0416.1381.7401.1409.3409,8411.3414.0415.7416.1417.1414.9414,1414.6416.4413.0406.1395.7402.1418.6424.5424.5424.2425.0422.6419.91 fuel oil, coal, and bottled gas; gas (piped) and electricity; and motor fuel, motor oil, coolant, etc.Note.—Data beginning 1978 are for all urban consumers; earlier data are for urban wage earners and clerical workers.Source: Department of Labor, Bureau of Labor Statistics.224

TABLE B-55.—Changes in consumer price indexes, commodities and services, 1948-82[Percent change]194819491950195119521953195419551956195719581959I960. .1961196219631964 .196519661967196819691970197119721973197419751976197719781979198019811982Year or month1981:JanFebMarADrIvTayJune .JulyAusSeptOctNovDec1982:JanFebMar.AprMayJuneJulvAugSeptOctNovDecAlt itemsDec.toDec. 127185.85.9.9.6-.5.42.9301.81.51.571.2161.21.93.43.04.76.1553.4348.812.27.0486.89.013.312 48.93.90.81.07.6.8.91.1 81.0.2.3.34.3-.1.4101.26.2.2.3_ 2-.4Yeartoyear7.8101.07.92.2.8.5-.41.53.62.7.81.61.01.11.21.31.72.92.94.25.4594.3336.211.09.15.86.57.711.313 510.46.10.81.0.6.4.8.71.1.81.1.4.5,43.2-.31.01.06.3.2.53Dec.toDec. 11.7417.75.9-.6-1.4_.42.62.61.3.61.1o1.014.81.62.52.53.85.5402.93410.412.76.3336.18913.01116.03.6Total0.71.26.4.4..5,75.6!o,22.3~\o101.45-.0'.3-.0Yeartoyear7.2-2 6.69.01.3-.9-.9.93.12.3.1.9.5.9.91.11.22.61.83.74.54.73.43.07.412.08.94.35.87.111.412.28.44.0UnadjustedSeasonallyadjustedUnadjustedSeasonallyad-Justed0.61.1,40A.8.6A2.3.1-is191.36.0.2.6.3CommoditiesDec.toDec. 1-0.8-3 79.67.4-1.1-1.3-1.6-.93.12.82.2-.83.1= 91.5191.43.43.91.24.37.22.24.34720.112.26.5 68.011.810.210.24.33.1FoodYeartoyear8.5401.411.11.8-1.5-.2-1.4.73.34.2-1.61.01.3.91.41.32.25.0.93.65.15.53.04.314.514.48.53.16.310.010.98.67.94.0Commoditiesless foodDec.toDec 15.3485.74.6~.2-1.402.52.2.81.5-.3.6.71.2.71.93.13.74.54.82.32.55.013.26.25.14.97.714.311.56.73.8Change from preceding monthSeasonallyUnadjustedadjusted0.8 0.4 0.6.6 1.35 .3 7.4~X \\ .7A 2 .61.0 .7 .64 .5 5.2-.1 .3 .2-.2 .1 .1 .1 .112 7 - 2.8 .6 .0-.1 -.4 -.3.3 -.1.e .8 1.1.8 .6 1.72 .1 6-.4 3 .1.1.0.2 .6-2 .1 .2.0 1 -.1UnadjustedYeartoyear63483.2534.4433.3202.5403.82.93.3201.9201.92.2394.45.26.9815.6384.49.39.5837.78.511.015.413.19.01.1 881.01.31.117121.5.5.9.55!o.9.9.86.6.1.2-.1-.8Dec.toDec. 1Energy 2-0.74.31.5-112.1- 8-22.01.81.41.73.1453.12.816.821.611.66.97.28.037.418.111.91.33.15.120!4.7.41.22.14-.8-1.7= 2.61.64.11.40-.1.2-.6-.6Yeartoyear0.21.72.62.33-.41.81.62.21.52.72.73.92.88.029.310.67.29.56.325.230.913.51.5ServicesDec.Year toto Dec. 1year77 6115 3,6-.1 3.67.5 5.2.9 4.6.2 4.2-1.1 1.9_ 7 231.0 3.131 4.51.1 2.71.3 3.7.4 2.73 19.7 1.77 23.8 1.8.6 2.614 4.92.6 4.037 6.14.2 7.441 823.8 4.122 363.4 6.210.6 11.39.2 8.150 7.35.4 7.958 9.311.7 13.713 8 \A28.6 13.04.0 4.3SeasonallyUnadjustedadjusted0.7 1.112 88511.0.5 1.4.5 1.38 1.76 11.8 1.6.4 .4.2 .6.4 ,41 70 .4-.5 .1-.5 .9.9 1.01.5 .98 .6.2 .6.2 .2.8 .2.3 — 5.2 -.9SeasonallyadjustedUnadjustedSeasonallyadjusted1 Changes from December to December are based on unadjusted indexes.2 Fuel oil, coal, and bottled gas; gas (piped) and electricity; and motor fuel, motor oil, coolant, etc.Note—Data beginning 1978 are for all urban consumers; earlier data are for urban wage earners and clerical workers.Source: Department of Labor, Bureau of Labor Statistics.225

1958195919601961196219631964196519661967196819691970197119721973197419751976197719781979198019811982Year or month1981;JanFebMarAprMayJuneJulyAug...::::::::::::..Sept .........OctNovDec1982:JanFebMarApr(Jay..: 7JuneJulyAugSeptOctDecTABLE B-56.—Changes in special consumer price indexes, 1938-82[Percent change]All items lessenergyDec.toDec. 1191.414.8121.8131.93.5314.96.45.63.33.58.311.56.74.66.89.211.111.7864.2YeartoYear29.81511121.314153.2284.45.76.14.33.46.19.89.1566.37.810.011.710 06.7All items lessfood andenergyDec.toDec. 1182.281.5111.812153.3395.16.16.63.13.04.711.36.7616.48511.312.1964.5YeartoYearChange from preceding month0.6 5.5.9 91.3 .811.3.4.3.4.5.8 9.9.5.23- 1justed0.54.81.21.01.3.913.4.5.3.2.4.1.910 .9.5.4,2.4-.1=.52.32.1151.11.31.21.51.42.43.54.65.86.24.73.13.58.39.26.66.27.39.712.510.47.40.6.4.61.01.11.41.01.1.5.4.30.8.9.9.6.0.4-.1All iterns lessfood,< Jnergy,and homepurchaseandfina ice 1Dec. Yearto toDec. 1 Year4.65.25.73,42.94.011.16.36.85.56.97.59.99.46.00.5.8.'9.8.9.81.17.4,3,4.67.6.6.4.4.8.6.3YeartoYear3.74.4494.33.16.210.18.3576.4689.611.2956.1All items All items lessfoodDec. Year Dec. Yearto to to toDec. 1 Year Dec. 1 Year18 27 16 2.31.5 .8 2.3 1.915 16 10 177 10 1.1 1.012 11 12 1216 12 1.6 1.312 13 10 1319 17 1.6 1.43.4 2.9 3.3 2.330 29 3.5 3.447 4.2 4.9 4.46.1 5.4 5.7 5.55.5 5.9 6.5 6.03.4 4,3 3.1 4.63.4 3.3 3.0 3.08.8 6.2 5.6 3.912.2 11.0 12.2 9.97.0 9.1 7.1 9.348 58 6.2 6.66.8 6.5 6.3 6.59077 8.5 7,213.3 11.3 14.0 11.412.4 13.5 12.9 14.689 104 9.9 10.93.9 6.1 4.0 6.6SeasonallyUnadsonallySea-Unadjustedadjustejustejustedad-0.8 0.8 0.8 0.910 10 11 10s .64757.8 .8 1.1 .9.9 7 .9 .81.1 1.1 1.2 1.3.8 .8 .8 .810 11 12 12.4.'3 .5 .4 .6.3.2.4 .3 .2 .2.3 .2 .2 .2- 3 -.1 -2.4 .210 10 1*1 101.2 1.0 1.3 1.2.6 .6 .6 7.2 .423 2.1515 4= 2 1 — 1= .4= .5 •=.3UnadjustedSeasonallyUnadjustedSeasonallyadjustedUnadjustedSeasonallyadjustedAll itemsDec.toDec. 14.5 3.94.9 5.25.2 4.55.0 3.527 3.33.3 8.57.8 11.18.7 6.66.8 516.1 6.36,0 797.3 10.89.0 10.89.5 8.57.6 5.0Unadjusted0.6 0.9.8 13.6 .8.8 .67 .6.8 .61.0 .8.8 7.9 .8.8.6 .4.7 .4.5 .5.4.5 .2.671.0.6 7.4 .2.4 .57 .42 .1.5Seasonallyadjusted1 Changes from December to December are based on unadjusted indexes.2 All items less food, energy, and home purchase and financing, taxes, and insurance; estimated series.3 An experimental measure using a rental equivalence approach for homeownership costs. Effective with data for January 1983, theconsumer price index for all urban consumers will incorporate a rental equivalence measure.Note.—Data beginning 1978 are for all urban consumers; earlier data are for urban wage earners and clerical workers.Source: Department of Labor, Bureau of Labor Statistics.0.710.8.4.5.876.6.4.1„, 21.08.364.3226

TABLE B-57.—Producer price indexes by stage of processing, 1947-82[1967=100]Finished goodsYear or monthTotalfinishedgoodsTotalConsumer foodsCrudeTotalFinished goods excluding consumer foodsTotalConsumer goodsDurableProcessedNondurableCapitalequipmentfinishedconsumergoods19471948..19491950195119521953195419551956195719581959I9601961196219631964196519661967196819691970197119721973.197419751976197719781979198019811982 *74.079977.679 086.586 085.185.385 587.991193.293.093.793 794 093.794195.798.8100 0102.8106.6110.3113 7117.2127 9147.5163 4170.61817195.9217.7247.0269 8280.682.890 483.184 795.294389.488.786.586.389 394.590.192.191792.591.491.995.4101.6100 0103.6110.0113.5115 3121.7146 4166.91810180.4189 9207.2226.2239.5253 6259.399.4107.1101.392.2105.9112.8105.294.798.898.797.4103.594.3100.696.197.095.598.298.6104.8100.0107.5116.0116.3115.8121.21607180.81812193.9201.0216.8233.1237.2263.8252.580.287.680.183.493.291.386.787.684.484.387.993.189.590.790.991.790.790.894.9101.0100.0103.0108.9113.1115.1121.7143 9164.61813177.8187 3204.6223.8237.8250.6257.7100.0102.6105.4109.1113.1115.4120.1139.3156 2166.1177 7190.7213.3247.8273.3285.779.084.082.283.589.588.389.189.490.192.394.694.795.996.396.296.096.095.996.698.1100.0102.1104.6107.7111.4113.5118.6138.61531162.6174 3186.7211.5250.8276.5287.874.679.781.882.788.288.989.690.391.294.397.198.499.699.298 898.397.898.297.998.5100.0102.2104.0106.9110.8113.3115.4125.9138 2144.5152.8166.9183.2206.2218.6226.780.785.882.383 690.087 888.688.989.491.193.292.694.094.794 794.895.194.895.997.81000102.2105.0108.3111.7113.6120.5146.8163 0174.8189.3200.0231.3283.9319.6333.555.460 463.464971.272 473.674.576 782.487 589.891.591.791892.292.493.394.496.8100 0103.5106.9112.0116.6119.5123.5141.0162 5173.4184.6199.2216.5239.8264.3279.680.586582.583 991.890 789.289.188.589.892.494.493.694.594394.694.194.396.199.4100 0102.7106.6109.9112.9116.6129.2149.3163.6169.7180.7194.9217.9248.9271.3280.91981:JanFebMarAorJune. Sri:::: :; :" :JulySectOctNovDec1982: >JanFebMarAprMay :.:.: :.:.:JuneJuly .".Aug......OctNovDec260.9263 3266 0268.5269.6270 52718271 52715274 3274.7275.4277.9277.9277 3277 3277 8279.92817282 328142841284 9285.1251.02513252 6251.9252.8253 8257 6256 3256 2254 0252.7252.9256.4258.225712600262 3263.4260.6259 7259 9257 8257 6258.2257.9265.6279 7279.3263.1258.9262.7256 9253 5253 8260.0273.9280.6282.5263.3266.6259.9254.7241.0239.2227.8232.0235.6247.2248.4247.92481247.4249.8251.3255.0254 2254 4252 0249.9249.0252.1254.0254.5257.3260.3262.0260.2259.4260.6258.0257.4257.1262.4265.5268 7272,1273.3274.1274.7274.6274 72791280.0280.9283.0282.4281.9281.1281.0283.4286.7287.9286.6290.8291.9292.0265.1268.5272 5276.1277.0277.7277.9277.7277 92816282.4283.2285.2284.9284.0282.3281.8284.8288.8290.2289.1293.3294.6294.3214.9215.1214 0216.6218.1218.2218.1218.3215 8224 5224.7225.4226.2224.0223.9224.1225.0225.9226.7227.5223.2231.1230.8231.5302.7308.4316 0320.4321.0322.0322.5322.1324 2324 3325.4326.3329.3330.3328.8325.7324.3328.7335.3337.2338.4339.7342.4341.4254.6258 1260.8262.5263.8265.4265.8265 32715273.0274.1276.2275.0275.8277.2278.1279.2280.2280.7279.5283.8284.0285.1262.5265.0268.2270.6271.5272.3273.5273.0273.12751275.2275.8278.3278.6nil 277.3217.1280.1282.1282.8282.0284.2285.2285.1See next page for continuation of table.227

TABLE B-57.—Producer price indexes by stage of processing,[1967-100]1947-82—ContinuedIntermediate materials, supplies, and componentsCrude materials for further processingYear or monthTotalFoodsandfeeds 3OtherMaterials andcomponentsFormanufacturingtainersSuppliesTotalForconstructionProcessedfirolcandlubricantsFoodstuffsandfeedstuffsTotalOtherFuelOther19471948194972.478.375.270.076174.272.177 874.566.073.173.285.596.988.266.869.870.177.581076.3101.2110996.0111.7120 8100.366.678778.390.6100791.61950195119521953195478.688.135.586.086.577 787.084 385.385.778188.584 886.286.377 084.383 785.185.589.993.992 893.493.372.084.579.980.081.578 988.888 884.386.3104 6120.1110 3101.9101.0107 6124.5117 2104.9104.977 979.479 982.779.0104 7120.7104 6100.198.21955195619571958195988.192.094.194.395.688.392.695.094.896.488.492.694.895.296.588.993.594.094.096.693.396.2101.996.095.682.688.692.594.794.284.887.188.090.091.297.197.699.8102.099.495.193.197.2103.096.278.884.489.290.391.9103.8107.6106.2102.2105.8I960196119621963::.:..:196495.695.094.995.295.5:::::::::::::96.895.595.395.095.696.595.394.794.995.995.994,694.294.595.498.299.499.098.196.095.594.795.994.794.090.791.893.895.294.397.096.597.595.494.595.193.895.792.990.8:;;:::;::;:::92.892.692.193.292.8101.4102.5102.0100.7102.41966:::::::::::::::::::19671968196996.899.2100.0102.3105.8100099.4102.796.998.9100 0102.5106.197.499.31000102.2105.896.298.8100 0105.0110.897.499.2100097.698.595.898.4100 0102.4106.395.299.4100 0101.0102.899.3105.71000101.6108.497.1105.9100 0101.3109.3100 0102.2106.893.596.3100.0102.3106.6104.5106.71000102.1106.919701971197219731974109.9114.1118.7131.6162.91091111.7118.51684200.2109 9114.3118.91281159.51100112.8117.0127 7162.2112,6119.7126.2136 7161.6105.0115.2118.91315199.1111.4116.6121.91292152.21080111.011561406154.51123115.1127.6174 0196.11120114.2127.5180 0189.4112.7117.0128.0162 5208.9122.6139.0148.7164 5219.4109.8110.7121.91615205.419751976197719781979180.0189.1201.5215.6243.2195.31853190.5203.1226.1178.61894202.3216.5244.4178.7185 4195.4208.7234.4176.4188.4203.4224.7247.4233.02501282.5295.3364.8171.4180 2188.3202.8226.8168.11790188.7198.5218.2196.9202 7209.2234.4274.3191.8190,2192.1216.2247.9206.9228.5245.0272.3330.0271.5305.3372.1426.6507.6188.3206.7212.2233.1284.5198019811982 l280.3306.0310.4252.6250,3239.6282 3310.1315.7265 7286.1290.1268 3287.6293.5503 0595.4591.8254 5276,1285.5244 5263.8272.2304 6329.0319.5259.2257.4247.8401.0482.3474.0615.0751.2866.3346.1413.7376.91981:JanFebMarAprMayJune296.1298.3302.0305.8306.7307.22709261.3255.6254.9253.1253.2298 0301.0305.4309.5310.7311.2279 6280.3281.6284.1285.1285.8279 2280.3282.7288.0288.5289.65519569.8598.3608.5608.7605.7264.6268.2270.9274.3276.4277.2257 8257.8258.9262.4264.0264.6328 0336.5334.2336.3334.4335.4270 7267,1262,1263.5260.6264.3450.1484.9488.4492.1492.4487.4677.4697.7703.6716.673B.4759,2391.0427.9430,9432.5428.3418.1JulyAugSeptNovDec308.5310.1309.7309.4309.0309.4251.1250.2243.5239.3235 2235.2312.7314.5314.6314.6314 5314.9287.9289.8290.2290.2289 5289.3290.4290.7290.0290.1290.2291.1602.0607.8601.4596.9595.1598.1278.8280.3280.6280.9280.6280.2266.0266.1267 2268.3337.3333.0327.4319 9313 9311.5267.2261.8253.4245.7238 3233.7487.2485.3486.0479.2476.3478.6781.2766.7788.7779.0792.5813.0413.1413.9410.2404.1397.8396.21982:»Jan .FebMarAprMayJune::;::::::::::::311.0311.1310.6309.9309.8309.9238.8239.4237.7240.92450245.1316.4316.4316.0315.1314 6314.7290.4290.9290.4290.62914289.8292.0293.0293.3294.0293 7294.5604.4596.8593.0579.9570.9581.1282.5285.5286.3287.0287.0286.5269.8270.4270,6272.12734273.4318.4321.6320.0322.6328 3325.6242.6248.3247.9254.4262 6259.9481.5479.3475.2469.9470 2467.7812.9824.5839.7851.28648C83.9399.53918387.1378.8376 6370.0JulySentOctNovDec.311.1310.8310.7310.0310.1310.2243.6240.2238 4234 8234.6235.4316.1316.0316 0315 5315.7315.7289.2288.7290 2289 5288.9288.7294.3293.5293.4293 2293.0294.5600.7603.8593.2590 2594.3593.6286.3285.4285.5285.1284.7284.6273.1272.6272 5272 3273.0273.2323.4319.8316 3312 2313.4312.6255.5249.6242.9236 3236.3237.0469.8471.0474.3475 4479.0475.0901.3906.9926.3919.4955.3949.5369.2369.5369.6372.2369.5366.01 Data have been revised through August 1982 to reflect the availability of late reports and corrections by respondents. All data aresubject to revision 4 months after original publication.* Intermediate materials for food manufacturing and feeds.Source: Department of Labor, Bureau of Labor Statistics.228

TABLE B-58.—Producer price indexes by stage of processing, special groups, 1974-82[1967=100]Finished goodsExcluding food andenergyIntermediate materials, supplies,and componentsCrude materials for furprocessingtherYear or monthTotalFoodTotalEnergyCapitalequipmentConsumergoodsexcludedandenergyTotalFoodsandfeeds 1OtherTotalEnergyFoodstuffsandfeedstuffsEnergyOther197419751976197719781979198019811982 21981:JanFebMarAprMayJuneJulyAugSeptOctNovDec1982: 2JanFeb..MarApr«h» ::JuneJulyAugSeptOctNov...Dec147.5163 4170.6181.7195.9217.7247.0269.8280.6260.9263.3266.0268 5269.6270.5271.82715271.5274.3274 7275.4277.9277 9277.3277.3277.8279.9281.7282.32814284.1284 9285.1166.9181.0180.4189.9207.2226.2239.5253.6259.3251.0251.3252.62519252.8253.8257.6256.3256.2254.0252.7252.9256.4258.2257.1260.0262.3263.4260.6259.72599257.8257.6258.2215.2252 4282.3326.7347.7469.9701.3835.4823.4758.1790.2838.78539854.2857.3852.4842 0847.1841.6842 2846.6842.3832 6814.0775.3758.2789.8834.7844 3846 6841.7855 3845.9133.3148 5156.8166.3178.7194.7216.4235.1248.5228.2229.5230.2232 8234.0234.7235.5236.1235.8240.72416242.3244.7244 6245.2246.4247.3248.1248.8249.52480252.7253 0253.7141.0162 5173.4184.6199.2216.5239.8264.3279.6254.6256.7258.1260 8262.5263.8265.4265.8265.3271:5273.0274.1276.2275 0275.8277.2278.1279.2280.2280.7279 5283.8284 0285.1129.1141.0148.1156.6168.0183.3204.2220.1232.5214.4215.4215.82183219.3219.7220.3220.9220.7225.0225.7226.2228.6229.0229.5230.6231.5232.1232.6233.3232 0236.7237.0237.4162.9180 0189.1201.5215.6243.2280.3306.0310.4 .296.1298.3302.03058306.7307.2308.53101309.7309.4309 0309.4311.03111310.6309.9309.8309.9311.1310.8310 7310.03101310.2200.2195.3185.3190.5203.1226.1252.6250.3239.6270.9261.3255.6254.9253.1253.2251.1250.2243.5239.3235.2235.2238.8239.4237.7240.9245.0245.1243.6240.2238.4234.8234.6235.4188.72208236.8267.3280.3348.6484.9573.6570.9532.0548.8575.4585 3586.0583.4580.6585.9579.7575.7574 0576.8582.6575.7572.2560.2552.0561.4579.3582.2572 4569.2572.4571.2156.7174.7185.0196.1210.4234.2261.8283.4290.1274.3275.9277.82813282.6283.4285.5287.0287.7288.2288 2288.4289.4290.2290.2290.7291.1290.1289.6289.2290.3290.1290.0290.2196.1196.9202.7209.2234.4274.3304.6329.0319.5328.0336.5334.2336,3334.4335.4337.3333.0327.4319.9313.9311.5318.4321.6320.0322.6328.3325.6323.4319.8316.3312.2313.4312.6189.4191.8190.2192.1216.2247.9259.2257.4247.8270.7267.1262.1263.5260.6264.3267.2261.8253.4245.7238.3233.7242.6248.3247.9254.4262.6259.9255.5249.6242.9236.3236.3237.0223.02669283.1323.5362.5439.9586.1783.4801.7696.0782.67851790 5798,2793.5793.6786.4795.7786.87912800.6801.57969788.8778.5784.0792.0799.4801.7810.0816.7830.2820.1198.3165.0191.0190.1209.2253.0269.4266.0238.2274.1271.1275 5277 9272 7267.5267.0269.0263.3257.8249 3?4fi??%!249 9248.5246.8243.7?34 3232.9?m 233.2?30fi227.5227.61 Intermediate materials for food manufacturing and feeds.2 Data have been revised through August 1982 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.229

TABLE B-59.—Producer price indexes for major commodity groups, 1940-82[1967 = 100]Farm products and processedfoods and feedsIndustrial commoditiesYear or monthTotalFarmproductsProcessedfoods andfeedsTotalTextileproductsandapparelHides,skins,leather,andrelatedproductsFuels andrelatedproducts,andpower»Chemicalsand alliedproducts *194019411942194319441945194619471948194919501951 ...19521953195419551956195719581959 ,I96019611962196319641965196619671968196919701971197219731974197519761977 . .19781979198019811982 •1981:Jan ,.FebMar...AprMayJuneJulyAugOctNovDec1982: *JanFebMarAprMayJuneJulyAug , ,SeptOctNovDec94.3101.589.693.9106 9102.796 095.791290.693.798.193.593.793.794.793.893.297.1103 5100.0102 4108.01117113.9122.4159.1177.4184.2183.1188 8206.6229.8244.7251.5248.9257.9255.1253 5253.8252.9254.3256.8254 2250 3246.0242.5241.0246.0248.4247.5251.6255 8255.3252.4249.6247.5243.9244.0244.841.450.364.875.075.578.59091094117.5101.6106.7124 2117.2106 2104.798 296.999 5103.997.597.296.398 096.094.698.7105 9100.0102 5109.11110112.9125.0176.3187 7186.7191.0192 5212.5241.4249.4254 9242.3264.5262.4260 7263.3259.6260.7263 3257 92511243.1237.4234.6242.2247.1244.72506256 5252.7246.6240.8234.4229.1230.6232.582 988.780.683.492 791.687 488.985.084.987 491.889.489.591.091.992.592 395.51012100.0102 2107.31121114 5120.8148.11709182.6178.01861202 6222.5241.2248 7251.5253.3250.2248 5247.6248.2249.9252 22512248 9246.6244 3243.6247.1248.1248.125112544255.8254.6253.5253.6251.0250 4250.644.047 350.751.552.353.058070 876.975.378.086184.184 885.086 990.893 393.695.395.394.894.894.795296.498 5100.0102 5106.011001141117.9125.9153 8171.5182.41951209.4236.5274.83041312.3291.5295.7299 6303.5304.7305.1306 2307 2307 4309.0309 3310.0311.8311.63110309 9309 6310.6312.8313.2312.9314.4315.1315.0103.6108.198.9102.7114.6103.4100.898.698.798.798.897,098.499.597.798.698.599.299.8100.1100.0103.7106.0107.1109.0113.6123.8139.1137.9148.2154.0159.8168.7183.5199.7204.3193.1193.9195.2197.6199.2200.1201.3202.4202.9204.0203.6203.4205.0205.62054205.4205.0204.1204.2203.8202.6203.5202.445.248.452.852.752.252.961183.384.279.986.399.180.181.377.677.381.982.082.994.290.891.792.790.090.394.3103.4100.0103.2108.9110.3114.1131.3143.1145.1148.5167.8179.3200.0252.4248.9260.9263.0258.2257.7261.2263.5263.7261.6261.1261.3261.7260.0259.8260.7261.8261.6260.6263.4263.2261.8263.1262.0264.8264.7264.3265.251.454.656.257.859.560.164 476.990.586.287.190.390.192.691.391.294.099.195.395.396.197.296.796.393.795.597.8100.098.9100.9106 2115.2118.6134.3208.3245.1265.6302.2322.5408.1574,0694.5693.4634.6667.5696.5707.2709.0707.6704.9704.3703.5698.1698.1702.5705.1697.8689.7670.6662.2677.3701.1705.6701.8699.6707.3702.652.457.063.364.164.865.270 593.795.987.688.9101796.597 798.998.599.1101.2102.0101.6101.8100.799.197.998.399.099.4100.099.899.9102 2104.1104.2110.0146.8181.3187.2192.8198.8222,3260.3287.6292.4274.3277.6280.4286.0288.6290.5291.3293 3293 3292.4292.0291.8292.9293.6294.6294.3295.0293.3291.6291.6291.4290.4290.5289.3See next page for continuation of table.230

TABLE B-59.—Producer price indexes for major commodity groups,1940-82—ContinuedYear or monthRubberandplasticproductsLumberandwoodproducts[1967 = 100]Pulp,paper,andalliedproductsIndustrial commodities—ContinuedMetalsandmetalproductsMachineryandequipmentFurnitureandhouseholddurablesNonmetallicmineralproductsTransportationequipment:Motorvehiclesandequipment3Miscellaneousproducts19401941194219431944194519461947194819491950195119521953195419551956195719581959I9601961196219631964 . . .1965196619671968...19691970197119721973197419751976197719781979198019811982 21981:JanFebMarAprIVfayJun'e :JulyAiigSeotOcitNovDec1982: 2JanFebMarAprMayJuneJulyAugOctNovDec57 161571673.611170.570 870.572 870.585.9105.495.589.190.4102.4103 8103.4103 3102.9103199.296 396.895 595.997 8100.01034105.3108 31091109.31124136.2150 2159.2167 6174 8194.3217 4232 6241.6224.8226.4228 4230 82318233.423212341235 7237 3238.0238 3237 3239.3240.824112421242.5242.0242.6243 3243 0242 6243.027.432 735.637.740.641.247.273.484.077.789.397.294.494.392.697.198.593.592.498.895.391.091.693.595.495.9100.2100.0113.3125.3113.6127 3144.3177.2183.6176.9205.6236.3276 0300.4288.9292.8284.7296.5294.7294.4299.4298 4298.1296.5294.5289.3284.3282.1285.4285.5285.2285.3286.5284.6289.0288.6284.2283.0279.6279.9284.872.575.772.474.388.085.785.585.587.893.695.496.497.398.195.296 395.695 496.298.8100.0101.1104.0108.21101113.41221151.7170.4179.4186.4195 6219.0249 2273.8288.6264.4267.2269.027142721272.9274.9275.9277 8279 2280.4281.0285 5286.3287.4288.5289 6289.5289.1289.3289.2289.2289.6289.537 838 539.139.039 039.644.354.962.563.066.373.873.976.376.982.189 291.090.492.392 491.991291.393 896.498 8100.0102.6108.51166118 7123.5132 8171.9185 6195.9209.02271259.3286.4300 4301.8294.0294.0296.4298 82991298.4302.0304.1304 9305 3304.2303.3304 7304.2302.9303.1302 8299.3299.5299.2301.8302.13010300.941.442142.842.442.142.246.453.758.261.063.170.570.672.273.475.781.887.689.491.392.091.992.092.292.893.996.8100.0103.2106.5111.4115 5117.9121.7139.4161.4171.0181.7196.1213.9239.8263.3278.7253.3255.3257.5259.6260.7262.1264.8266.2268.1269.3270.4272.0274.1275.4276.2277.6278.2278.6279.6279.9280.3280.9281.3281.853 857 261.861.463163.267.177.081.682.984.791.890.191.992.993.395 898.399.199.399.098.497 797.097 496.998.0100.0102.8104.9107.5110 0111.4115.2127.9139.7145.6151.51604171.3187.7198.5206.8194.0195.2195.8196.4197 4197.3199.5199.6201.0201.3202.1202.9203.5204.6205.5206.0206.5207.0206.8208.1207.7208.4208.3208.649150 252 352.453 555.759 366.371673.575.480.180.183.385.187.591394.895.897.097 297.697 697.197 397.598 4100.0103.7107.7112.9122 4126.1130.2153.2174.0186.3200.5222 8248.6283.0309.5320.2296.6297.9300.9310.8312.0313.6314.3314.1313.2313.3313.7313.5315.6319.0319.9320.2321.2320.9321.1320.5320.2321.2321.5320.940.443 247.247.247 548.356.064.170.875.775.379.484.083.683.886.391295.198.1100.398.898.698.697.898.398.598.6100.0102.8104.8108.7114.9118.0119.2129.2144.6153.8163.7176.0190.5208.8237.6251.3229.0230.9229.5233.9236.0236.7237.4238.4232.8247.8248.9249.5250.8246.8246.8247.2249.2251.1252.0252.8245.0258.1257.5257.973.576 578.079.283 983.485 686.486 587 690.292 092.293 093.393 794.595 295.997 7100.0102.2105.2109.9112 9114.6119.7133.1147.7153.7164.3184.3208.7258.8265.7276.6264.3264.9264.0266.0266.9266.3263.2262.6267.0268.5267.5267.6268.3273.5272.7273.2272.2271.5273.4272.0280.3285.9285.7290.31 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 1982 to reflect the availability of late reports and corrections by respondents. All data aresubject to revision 4 months after original publication.3 Index for total transportation equipment is not shown but is available beginning December 1968.Source: Department of Labor, Bureau of Labor Statistics.231

Year or month1950195119521953195419551956195719581959I9601961196219631964196519661967196819691970197119721973197419751976197719781979198019811982 •1981:JanFebMarJuneJulySeptOctDec:....:::..:::..1982:»JanFebMarAprMay'::::::::::.::.JuneJulyAugsept'::.::OctNovDecTABLE B-60.—Changes in producer price indexes for finished goods, 1950-82TotalfinishedgoodsDec.toDec. 110.42.9=2.2.5= .1124.23.2= .418-.5.1—• 23322163.14.82.23.23811818.3663.76.99.212.811.87.13.51.4.91.0.9.5o 1.0.9_ o20.2.8.61.0Yeartoyear1.89.5-.6= 1.022.83.62.380=13.41732122.83.73.53.1319115.310 84.46.57.811.113.59.24.0UnadjustedSea-son-3justed1.2A.9.4 3.2.6.5— 2„ 1To.5-ll.5Finishedconsumerfoods[Percent change]-1.1 -1.6 1.2 1.2 1.4 1.4 .4 .4 5.7 5.7.5 .8 .2 .7 1.2 1.2-Is-lo -.4-.4 =.1 .3 .4— 8 -.2 1.5 1.5 .8 1.5 .2-.1-.2 .4 :9 .4 1.1 .1 .3.1 .0 .i -.1 -.1 .4 .6 -ill -'.7FinishedFinished goods excluding consumer foodsenergygoodsTotal Consumer Cap talDec. Yeargoods equipmentDec. Yearto toDec. 1Oec. Year Dec. Year Dec. Yearto toyear to to to to to to Dec. 1yearDec. 1 year Dec. 1 year Dec. 1 year13,35.31.912.48.2.91.67.210.33.42.49.7-5.9 =.9-1.1 -1.3 .8 1.7«2.2 -5.21.6 .9 2.3 1.7-1.9 =.8.31.1 1.229 -2517 8 56 303.6 -.22.5 2.4 8.3 7.45.3 3.51.7 2.5 4.3 6.24 582 .1 1.3 2.6=3.752-4.722.841.341.0.11.92= 1.8= .3 -.1 .2 .1.9-.2 .3 .4-1.2 :i 0.2.4 .5i _ l .9 1.091 389 .7 1.5 1.21.4 6.51.7 1.6 3.9 2.54 162.1 19 3,1 3.34.88.2=2.55.93.66.23.21.62.43.44.32.12.62.73.53.72.02.93.92.02.12.43.03.43.04.64.92.43.53.34.84.180 56 2 1 20 20 19 20 2522 5 20 3 66 41 74 45 53 3313.055-2 56.914.084— 35.321.2726.26.916.01216.37.020.567606.716.910 56.27.222.68.26.47.314.215.26.76.516.411.512.117.311.815.7117 9.1 8.3 7.3 8.5 7.1 7.9 7.9 8.57.4 9.2 14.8 11.9 17,5 13.3 8.8 8.7 58.06.435.17.5 5.9 13.3 16.2 14.2 18.6 11.4 10.8 27.8 49.21.4 5.9 8.8 10.3 8.5 10.2 9.2 10.22.1 2.2 4.0 4.5 3.9 4.1 4.0 5.814.1 19.1-1.4Percent change from preceding monthSea-Sea-Sea-Sea-Sea-son-UnadjustejustejustedUnad-sonsonallsonallyUnad-Unadjustedadjustejusted3Unadjustesonad-3 3justed justedjusted0.7 0.6 1.6 1.4 1.6 1.4 1.5 1.2 2.2 1.9.1 -.1 1.2 1.0 1.3 1.1 .8 .9 4.2 3.8.51.2 1.2 1.5 1.46.1 S.8-.3 2 1.3 1.2 1.3 1.2 llọ 1.8 1.32 .4 .2 .3 .0 7 > .0 -.8.5 .3 .6 .3 .5 .5.4 .41.5 .8 .2 .2 .1 .1 .6 .6 .6 -.55 1_ i 21.2 = 11=-.0.0.1 .5 2.6= .9 -2 1.6 .8 1.3 .8 2.3 1.0=-.1-.5 =.7 .3 .8 .3 .9 .6 .71.4.1.3 .4.4 .6 .5 .91.4 1.1 .7 .4 J .4 .8 .5 =.5 -.974 5-.1 -.3 -.4 = .4 -1.2 -1.6- 1 = 2 = .1 -.3 -4 .3 .5 -2.2 -2.61.1 1.7 -.3 = .4 —6 —.7.3 =4.8 =5.2.9 .6 -.0-.213 .4 -2.2 -3.0.5.9 111 1.1.4 .7 4.2 4.2Finished goodsexcluding foodand energyDec.toDec. 16.15.66.38.39.410.77.84.71.5.6Is.3.3.12.1.'31.0= .0A.31.9.3Yeartoyear11.45.66.17.59.011.18.65.7UnadjustedSeasonallyadjusted1.2.5ill.4.6.4.6.31.0.2.7-.1.3.5.2.6.4.6— 1Is1 Changes from December to December are based on unadjusted indexes.z Oata7iave been revised through August 1982 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.232

MONEY STOCK, CREDIT, AND FINANCETABLE B-61.—Money stock measures and liquid assets, 1959-82[Averages of daily figures; billions of dollars, seasonally adjusted]Year and monthMlSum ofcurrency,demanddeposits,travelers'checks, andothercheckabledeposits

TABLE B-62,—Components of money stock measures and liquid assets, 1959-82[Averages of daily figures; billions of dollars, seasonally adjusted, except as noted]PeriodCurrencyDemanddeposits1OthercheckabledepositsOvernightrepurchaseagreements(RPs)(net)NSANSAMoneymarketmutual fund(MMMF)balancesOvernightEurodollarsGeneralpurposeandbroker/dealerNSAInstitutiononlyNSASavingsdepositsSmalldenominationtimedeposits2Largedenominationtimedeposits2Termrepurchaseagreements(RPs)NSATermEurodollars(net)NSASavingsbondsShorttermTreasurysecuritiesBankers'acceptancesCommercialpaperDecember:1959I9601961196219631964196519661967196819691970197119721973197419751976197719781979198019811982"28.9?9 029.6W fi32.534.336.340 443.446.1491WIVift61 567.873 880 688 697 4106.1116?123.1132.6111.6112 5116.5118.1121.7127.0132.5134.6143.9155.1158.8166.3176.8193.6202.5207.42141224.42396253.9262.2267 2236.4240.20.00.00.112.49?7428.416.926977.0101.30.00.0 0.0.0.0111.62.5142.5316.87.27513717 822122,730531.439.50.0o.0.0.0.0.0.0.0.0.0o.0o.0.0o.0102.03.60.0n.0.0 n.0.0n.0.0no i2.1i??8?97134.445 8196.7 151.26.1 177.50.0o.0o .0.0•f).0.0.0on on469319.313933.743.1146.01587175.0194.3213.9234.8256.5?5?K263.3268.5263.2259.3?908320 21?S9337.6387 74*tl7490 4479.9421.73989343.6400.311.812 915.220726.229.935.255.9790101.9121.7153 6192.0233 9267.6290.03409396545415339652.67517854.7904.21.2203.96.910.715.221.223.131.037.420.445 057.673 2111.2144.41298118.21452194 6221.8257 9300.3332.60.00.00!c.0101.52.4142.5337.18.49015.021027 530.237 835.433.60.781.41.61.92.41.72.12.12.92.72.22.73.65.48.09.713.118729.942.948.466.746.145746.546948.149,049.6SO?51251.851.752 0VH57 660 463.267 271776480.379.672367.738.636 737.039 840.738.540.743?38.746.159.549 2W341150 053.677.1811899128.51567176.50.581.010n1.21.51.61.72.23.23.33.53.34.710.68.48.811.821.426.531.839.73.6515.2687.79.110.214.417822.534.034 532.735241.950.148051.762979.297.0981104.21981:JanFeb .MarAprMavJune116?117?117.81191119.4119.7July120.5Aug1?0 7Sept .... 121.1Oct121.3Nov121.8Dec123.1254.1244 8243.0243.5240.4237.7236.7236.6234.7235.7235.7236.443 253359.566565.266.768.169 571.271.674 777.030 630431.931834.536.535.435 332.730.230 431.452 6S849 7S?4.6 85.4506.5 %n98.86.4 102.96.9 112.878 1???6.9 130.65.9 137.365 144 96.7 151.215017 320.221319.520.121.623 326.629.432 033.7384 5378 5378.53788373.5366.8361.03509343.1339.6340 9343.676817757782.07841795.8805.5814.08308839,7849.8856.6854.7267.52717269.8267.6278.3285.6293.1299 8302.3302.2300.6300.339238136.136 737.738.837.233433.833.435 635.450.252252.152.657.057.958.761.061.263.465.566.771771070.670370.069.769.468968.467.967 767.7161.1163 6161.9157.6158.2160.3161.8164.1168.1176.0179.9176.532.432.533.334.535.636.437.137.337.637.138.139.797.797 096.194.297.1100.3100.8102.4103.8104.4103.7104.21982:JanFebMarAprMayJuneJutyAugiNovDec"123.8124.6125.1126.31?7 4128.4128.8I?*) 1 )no 5W ?Wfi132.6239.3234.5233.0233.02327231.0230.6231.1232 6236.22383240.281.183.885.888.687087.587.490293 096 51007101.335.735.636.734.635 836.036.437 636839 740639.57.5 154.97.3 156.16.3 159.45.8 162.170 164 67.0 168.97.0696562666.1171.7180 618? 51841186 6177.532.530.531.531.532833.736.743143 944 845343.1348.8348.6350.7350.53509349.9344.0342 0342 43526362 3400.3'Demand deposits at all commercial banks other than those due to domestic banks, the U.S. Government, and foreign banks andofficial institutions less cash items in the process of collection and Federal Reserve float.2 Small denomination and large denomination deposits are those issued in amounts of less than $100,000 and more than $100,000,respectively.Note, NSA indicates data are not seasonally adjusted.Travelers checks are a component of money stock but are not shown here.See also Table B-61.Source: Board of Governors of the Federal Reserve System.852.3859.4869.9881.6894.1900.9919.7930.6932.6923.8923 0904.2302.6308.0312.6317.23216328.3335.8339 6339 3342 53404332.632.532.531.534.232631.229.332130 531333 533.669.973.874.478.583 384.884.281.567.867.867.767.767 767.867.767 6180.3186.4191.0191.71919194.8199.9200.540.237338.339.940.340.840.2105.5108.4110.3109.71121115.7118.7112.0234

TABLE B-63.—Commercial bank loans and investments, 1939-82[Billions of dollars]Year and monthTotal loansandinvestmentsTotalLoansCommercialandindustrialUS.TreasurysecuritiesInvestmentsOthersecuritiesLoans plusloans soldto bankaffiliatesEnd of month >1939- Dec1940- Dec1941- Dec1942- Dec1943- Dec1944- Dec1945- Dec1946- Dec1947: Dec1948: Dec1948- Dec1949- Dec1950- Dec1951- Dec.1952: Dec1953- Dec1954: Dec1955: Dec1956- Dec1957: Dec1958- Dec1959- DecI960- Dec1961- Dec1962- Dec1963: Dec1964: Dec1965: Dec1966- Dec1967: Dec1968: Dec1969- Dec1970: Dec1971: Dec1972- DecAverage formonth 21972- Dec1973- Dec1974- Dec1975- Dec1976: Dec1977: Dec1978- Dec1979- Dec.1980: Dec1981- Dec1982- Dec1982:JanFebMarJuneJulvA UgSeptOctNovDec40.743950 767.4851105.5124 0114 0116.3114.3113.0118.7124.7130 2139.11431153.1157.61616166.41812188.7197 4212.82312250.2272.3300.13161352.0390.2401.7435.5485.7558.0572 6647 8713.6745 2804.6891.51,013.51,135.91,239.61316 31,412.4132011332 41342 51,352.51,362.01,368.813761138311,389.41397 51398 51,412.417.218 821.719.219.121.626131.138.142.541.542.051.156.562.866.269.180.688.191.595.6110.5116.7123.6137.3153.7172,9198.2213.9231.3258.2279.4292.0320.9378.9390 5460.5520.1517.4555.0632.5747.0849.9915.1973.91,042.3974.5985.2995.01,002.01,010.81,017.11 023.71028 31,033.51,038.11 036.41,042.3Seasonally adjusted39.442143.947 652.158.469.578 686.295.9105.7110.0116.2130.4137 5165 4196.91896190.9210.9245.9291.2326.8358 0392.4360.3365.53700373.1378.9383.4386.7387 9392.5394.8392.0392.416.317 821841.459877.690674 869.262.662.366.461.160.462.262 267.660.357.256.965157.759 965.364.761.560.757.153.559.460.751.257.860.662.665 858.553.682.2100.899.893.894.5110.0111.0130.9114.1115.1114.4116.6116.3115.8116.5117.8118.2122.3126.4130.97.174726.86.16.3738.19.09.29.210.312.413.414.214 716.416.816.317.920.520.520.823.929.235.038.744.848.761.371.371.185.7104.2116.5116.3128.8139.9145.6148.8159.3172.8191.5214.4231.4239.2231.5232.0233.1234.0234.9235.9235.9237.1237.6237.2235.8239.2283.3294.7323.7381.5393.1464.8524.8521.8558.7637.1750.7852.9917.8976.71,045.2977.4988.0997.81,004.81,013.51,020.11,026.51,031.11,036.41,040.91,039.31,045.21 Data are for December 31 call dates.2 Data are prorated averages of Wednesday figures for domestically chartered banks and averages of current and previous month-enddata for foreign-related institutions. Lease financing receivables are included in total loans and investments and in total loans.Note, —Beginning December 1981, levels have been reduced because of shifts from U.S. banking offices to International BankingFacilities «

TABLE B-64,—Total funds raised in credit markets by nonfinancial sectors, 1974-82[Billions of dollars; quarterly data at seasonally adjusted annual rates]Item 1974 1975 1976 1977 1978 1979 1980 1981Total funds raised by nonfinancial sectorsU.S. GovernmentForeignPrivate domestic nonfinancial sectorsCorporate equitiesDebt instrumentsDebt capital instrumentsState and local government obligations.Corporate bondsMortgagesHomeMulti-family residentialCommercialFarmOther debt instrumentsConsumer creditBank loans n.e.cOpen-market paperOtherBy borrowing sector: TotalState and local governmentsHouseholdsNonfinanciai businessFarmNonfarm noncorporateCorporateDebt instrumentsEquitiesTotal funds supplied to nonfinancial sectorsFinanced directly or indirectly by:Private domestic nonfinancial sectorsDeposits and currencyCheckable deposits and currencyTime and savings depositsMoney market fund sharesSecurity repurchase agreementsForeign depositsCredit market instrumentsCorporate equitiesForeign fundsAt banksCredit and equity instruments ,U.S. Government-related loans, net „.,U.S. Government cash balancesPrivate insurance and pension reservesOther sources.. ,193.9 214.411.8 85.414.8 11.5167.4 117.54.1 9.9163.3107.5100.6 100.916.5 16.119.7 27.264.4 57.637.3 42.06.9 -.015.1 11.05.0 4.662.7 6.69.9 9.632.6 -10.56.6 -2.613.5 10.1167.4 117.515.5 13.753.9 52.198.0 51.67.8 8.520.2 12.569.9 30.765.9 20.84.1 9.9193.9 214.4123.5 148.173.7 101.28.5 15.665.3 83.32.4 1.3-2.2 .2-.250.4 50.7-.6 -3.821.8 2.110.1 -=-8.711.7 10.819.1 23.2-4.6 2.833.4 39.7.8 -1.6273.569.019.6184.910.5174.3123.615.722.885.163.93.911.65.750.725.44.44.016.9184.915.289.580.210.215.454.544.010.5273.5173.5133.417.8111.7= .02.31.744,7-4.613.2-4J17.920.43.047.715.7334.356.813.9263.62.7260.9169.821.921.0126.994.37.118.47.191.140.226.72.921.3263.615.4137.3110.912.328.370.467.62.7334.3184.0148.525.5119.3.22.21.339.0-3.543.51.242.317.6.960.727.5401.753.733.2314.83R9198.728.420.1150.2112.19.221.77.2116.248.837.15.225.1314.819.1169.3126.314.632.479.379.4-.1401.7219.7152.325.6110.36.97.52.072.5= 5.146.76.340.527.23.766.637.8402.037.421.0343.6-7.8351.5216.029.822.5163.7120.17.823.911.8135.545.449.211.129.7343.620.2176.5146.921.434.491.299.0-7.8402.0258.9151.927.282.234.46.61.5122.9-15.922.725.6=2.931.8.560.028.1397.179.229.3288.712.9275.8204.135.933.2135.196.78.820.29.371.74.935.46.624.9288.727.3117.5143.914.433.895.782.812.9397.1271.1179.214.5127.829.26.51.189.72.15.6-23.028.629.0-3.680.814.2406.987.427.3292.3-11.5303.7175.032.923.9118.378.64.625.39.8128.825.351.119.233.1292.322.3120.4149.516.440.592.6104.1-11.5406.9291.3221.027.882.9107.52.5101.9-31.613.6-8.822.334.288.5-20.8See next page for continuation of table.236

TABLE B-64.—Total funds raised in credit markets by nonfinancial sectors, 1974-82—Continued[Billions of dollars; quarterly data at seasonally adjusted annual rates]Item1981I II III IVI1982Total funds raised by nonfinancial sectorsU.S. GovernmentForeignPrivate domestic nonfinancial sectorsCorporate equitiesDebt instrumentsDebt capital instrumentsState and local government obligations....Corporate bondsMortgagesHomeMulti-family residentialCommercialFarmOther debt instrumentsConsumer creditBank loans n.e.cOpen-market paperOtherBy borrowing sector: TotalState and local governmentsHouseholdsNonfinancial businessFarmNonfarm noncorporateCorporateDebt instrumentsEquitiesTotal funds supplied to nonfinancial sectorsFinanced directly or indirectly by:Private domestic nonfinancial sectorsDeposits and currencyCheckable deposits and currencyTime and savings depositsMoney market fund sharesSecurity repurchase agreementsForeign depositsCredit market instrumentsCorporate equitiesForeign fundsAt banksCredit and equity instrumentsU.S. Government-related loans, netU.S. Government cash balancesPrivate insurance and pension reserves. Other sourcesSource: Board of Governors of the Federal Reserve System.431.9111.333.6287.05.2281.8192.736.025.0131.893.44.425.38.589.126.522.811.328.5287.027.1135.0125.019.237.168.763.55.2431.9309.3284.069.739.2148.416.99.740.9-15.521.8-25.447.227.214.179.3-19.7444.552.535.7356.3-3.4359.7200.334.224.5141.696.95.729.49.5159.432.272.610.144.5356.323.1147.1186.120.546.5119.1122.5-3.4444.5278.3153.2-5.2108.359.9-1.6-8.2154.2-29.055.024.031.023.3-2.594.7-4.3380.862.718.9299.2-24.6323.8156.926.319.5111.172.54.123.710.8166.834.266.032.933.8299.214.8128.1156.416.140.1100.2124.8-24.6380.8285.5217.5-6.6103.8137.3-13.8-3.2123.0-55.03.211.9-8.737.4-7.295.0-33.0370.6123.020.9226.7-23.0249.7150.035.026.488.651.64.222.610.299.68.343.222.325.9226.724.371.7130.79.638.582.5105.5-23.0370.6291.9229.253.280.284.38.62.889.5-26.8-25.7-45.619.949.0-3.885.3-26.1361.894.815.5251.5-5.3256.8159.738.320.3101.267.26.220.57.397.16.669.912.28.4251.525.682.1143.85.628.0110.2115.5-5.3361.8242.6205.327.3148.237.6.3-8.148.3-11.0-32.9-46.013.010.023.284.234.7399.5101.416.5281.65.0276.6153.657.516.779.451.83.920.13.6123.025.486.6-5.316.4281.646.997.2137.411.332.893.388.35.0399.5296.5149.7-9.5112.141.21.74.1151.2-4.423.7-16.340.010.1-29.699.1-.4479.7221.21.3257.2.0257.2172.954.342.576.251.47.111.06.684.38.246.6-.930.4257.239.281.6136.512.525.998.098.0.0479.7329.9204.6-5.8123.586.57.6-7.2137.8-12.5-40.8-61.720.953.242.385.49.7237

TABLE B-65.—Federal Reserve Bank credit and member bank reserves, 1929-82[Averages of daily figures; millions of dollars]Reserve Bank credit outstandingMember bank reserves 1Year and monthTotalU.S.Governmentand FederalagencysecuritiesMember bankborrowingsTotalSeasonalOtherTotalRequired1929: Dec.1933: Dec.1939: Dec.1940: Dec.1941: Dec.1942: Dec.1943: Dec.1944: Dec.1945: Dec.1946: Dec.1947: Dec.1948: Dec.1949: Dec.1950: Dec.1951: Dec.1952: Dec.1953: Dec.1954: Dec.1955: Dec.1956: Dec.1957: Dec.1958: Dec.1959: Dec.I960: Dec1961: Dec1962: Dec1963: Dec1964: Dec1965: Dec1966: Dec1967: Dec1968: Dec1969: Dec1970: Dec1971: Dec1972: Dec1973: Dec....1974: Dec1975: Dec1976: Dec1977: Dec1978: Dec1979: Dec1980: Dec1981: Dec1982: Dec...1982:Jan..Feb..,Mar..fcJune..JulyAugSept....OctNovDec P....1,6432,6692,6122,3052,4046,03511,91419,61224,74424,74622,85823,97819,01221,60625,44627,29927,10726,31726,85327,15626,18628,41229,43529,06031,21733,21836,61039,87343,85346,86451,26856,61064,10066,70874,25576,85185,64293,96799,651107,632116,382129,330139,896143,250151,920159,968152,297150,554146,815150,361151,333152,140153,468153,903153,324153,666156,151159,9684462,4322,5102,1882,2195,54911,16618,69323,70823,76721,90523,00218,28720,34523,40924,40025,63924,91724,60224,76523,98226,31227,03627,24829,09830,54633,72937,12640,88543,76048,89152,52957,50061,68869,15871,09479,70186,67992,108100,328107,948117,344126,276127,895137,796146,358136,657136,050133,635136,649138,809139,814141,623141,791140,962141,443143,442146,358801953354902653341572241341181426571,593441246839688710557906871493043272434545572387651,0863211071,0491,298703127625588741,4731,6176426991,5261,7131,6111,5811,1051,205510976455579396142991141804826586547028227298426071,1191,3801,3061,0271,1541,4121,7031,4941,5431,4931,7251,9702,3682,5542,5042,5142,5472,1393,3165,5144,6994,9904,70841 4,64332 6,58513 7,41612 7,24254 7,876134 11,11282 12,147116 13,73853 13,48233 12,91175 14,114132 12,791174 11,569167 12,131237 11,419239 11,121225 11,176119 11,602102 11,38686 11,76847 12,13033 12,9112,3952,58811,47314,04912,81213,15212,74914,16816,02716,51717,26119,99016,29117,39120,31021,18019,92019,27919,24019,53519,42018,89918,93219,28320,11820,04020,74621,60922,71923,83025,26027,22128,03129,26531,32931,35335,06836,94134,98935,13636,47141,57243,9723 40,09741,91842,17243,21041,28039,23039,55839,55239,56739,86440,17739,96340,58741,19942,1722,347* 1,8226,4627,4039,42210,77611,70112,88414,53615,61716,27519,19315,48816,36419,48420,45719,22718,57618,64618,88318,84318,38318,45018,51419,55019,46820,21021,19822,26723,43824,91526,76627,77428,99331,16431,13434,80636,60234,72734,96436,29741,44743,57840,06741,60641,35442,78540,98138,87339,28439,19239,25739,57339,86639,57940,18340,79741,3541 Beginning December 1959, part of currency and cash held by member banks allowed as reserves; beginning November 1960 all suchcurrency and cash allowed.Beginning November 1972, includes reserve deficiencies on which Federal Reserve Banks were allowed to waive penalties for atransition period In connection with bank adaptation to Regulation J as amended effective November 9, 1972. Transition period endedafter second quarter 1974.Effective November 1975, includes reserve deficiencies on which penalties are waived over a 24-month period when a nonmemberbank merges into an existing member bank, or when a nonmember bank joins the Federal Reserve System.2 Data are for licensed banks only.3 Includes all reserve balances of depository institutions plus vault cash at institutions with required reserve balances plus vault cashequal to required reserves at other institutions.4 Reserve balances with Federal Reserve Banks plus vault cash used to satisfy reserve requirements less required reserves. (Thismeasure of excess reserves is comparable to the old excess reserves concept published historically.)Source: Board of Governors of the Federal Reserve System.238

TABLE B-66.—Aggregate reserves of depository institutions and monetary base, J959-82[Averages of daily figures; billions of dollars]Adjusted for changes in reserve requirements'Year and monthSeasonally adjustedReserves of depository institutionsTotal*RequiredNonborrowedMonetarybase 3Not seasonally adjustedReserves of depository institutionsTotal 2RequiredNonborrowedMonetarybase 31959- Dec .I960- Dec1961- Dec1962- Dec1963- Dec1964- Dec1965- Dec1966: Decig67- Dec1968- Dec .. .1969- Dec1970- Dec1971- Dec1972: Dec1973- Dec . .1974- Dec1975- Dec1976* Dec1977- Dec1978- Dec1979* Dec1980- Dec1981* Dec1982- Dec"1981:Jan .FebMarMavJuneJulySeDtOctNovDec1982:Jan ....FebMar . .AprMayJuneJulyAucSeDtOctNov0ec p14.9415.1315.6716.0416.4617.0717.7717.8319.5120.7021.0122.1323.5826.3227 6329.2529.2929.8631.1732.8234.2636.4637.9940.9136 5236.5236 8537.02371837.2037 2837 3437.7237 6037 6237.9938.7138 2638 3638 4338.5038.5838 5238 8039.5739.8840.4640.9113.9915.0615.5415.7816.1316.8017.3317.3019.2819.9619.8921.8023.4525.27263328.5229.1629.8130.6031.9532.7934.7737.3540.28351235.2235 8535.6834 9535.1735 60359236.2736 42369537.3537.2036 4736 8036 8737.3937.3737 8338 2938.6339.4039.8440.2814.4314.3915.0915.4715.9716.6617.3517.4919.1420.2820.7221.8823.3926.0327 3328.9929.0229.5930.9832.5933.9335.9537.6740.39361436.1736 5736.8536 9236.8636.9437 0537.3137 3337 2737.6738.3037 9637 99381638.1538.2738 2138 4939.1839.4740.0640.3944.344.545.747.149.451.954.756.860.564.867.972.077.184.290.398.3104.5112.0121.4132.2142.5155.0162.7175.1155.4156.0156.7158.0158.5158.9159.61600160.6160.81612162.7164.3164.7165.2166 5167.7168.8169.2170.1171.9172.8173.7175.115.2215.4215.9616.3116.7117.3218.0618.1619.8220.7221.0022.1423.6326.3527.8529.5929.7030.2731.6733.3734.8337.1138.6641.5938.0136.2836.2436.8836.8936.6837.2437.0637.5237.7037 7838.6640.0438.0537.8038 3338.1938.0738.4338.5139.3540.0040.6841.5914.2815.3415.8216.0516.3817.0617.6217.6319.5919.9719.8821.8123 5125.3026 5528.8629.5730.2231.1132.5033.3535.4238.0340.9636.6234.9735.2435.5434.6634.6535.56356436.0636.5237.1238.0338.5236.2636.2436.7637.0736.8637.7438.0038.4239.5240.0640.9614.7214.6715.3715 7416.2216.9217 6417.82194520.2920.7221.8923 4526.0627 5529.3329.4330.00314833.1334.5036.5938.3441.0737 6435.9335.9636.7136.6336.3536.9036 7737.1137.4237 4438.3439.6237.7537.4438.0637.8337.7638.1238.2038.9739.5940.2841.0745.245 546.748150.452.955857961865.868.873.078285.4917100.0106 3114.1123 7134.8145.4158 0165.8178.4156 5154.3154 9157.0157.9158.4160 5160 3160.2160 8162 6165.8165.3162.9163.3165 6167.1168.2170.0170 4171.4172.9175.1178.4Reserve aggregates include required reserves of member banks and Edge Act corporations and other depository institutions.Discontinuities associated with the implementation of the Monetary Control Act, the inclusion of Edge Act corporation reserves, andother changes in Regulation D have been removed. Beginning with the week ended December 23, 1981, reserves aggregates have beenreduced by shifts of resemble liabilities to international banking facilities (IBFS), On the basis of reports of liabilities transferred toIBFS by U.S. commercial banks and U.S. agencies and branches OT foreign banks, it is estimated that required reserves were lowered onaverage by $10 to $20 million in December 1981 and $40 to $70 million in January 1982.2 Reserve balances with Federal Reserve Banks (which exclude required clearing balances) plus vault cash at institutions with requiredreserve balances plus vault cash equal to required reserves at other institutions.3 Includes reserve balances and required clearing balances at Federal Reserve Banks in the current week plus vault cash held twoweeks earlier used to satisfy reserve requirements at all depository institutions plus currency outside the U.S. Treasury, Federal ReserveBanks, the vaults of depository institutions, and surplus vault cash at depository institutions.Source: Board of Governors of the Federal Reserve System.239

TABLE B-67.—Bond yields and interest rates, 1929-82[Percent per annum]Year ormonthU.S. Treasury securities(new3-month6-monthConstantmaturities 2yearsyearsCorporatebonds(Moody's)AaaBaaHighgrademunicipalbonds(Standard&Poor's)PrimecommercialmonthsPrime ratecharged bybanks *Discountrate,FederalBank ofNew York*Federalfundsrate*1929..1933..1939..1940..1941..1942..1943..1944..1945..1946..1947..1948..1949..1950..1951..1952..1953..1954..1955..1956..195719581959196019611962196319641965..1966..1967..1968..1969..1970..1971..1972..1973..1974..1975..1976..1977..1978..1979..1980..1981..1982..0.515.023.014.103.326.373.375.375.375.5941.0401.1021.2181.5521.7661.931.9531.7532.6583.2671.8393.4052.9282.3782.7783.1573.5493.9544.8814.3215.3396.6776.4584.3484.0717.0417.8865.8384.9895.2657.22110.04111.50614.07710.6863.8323.2472.6052.9083.2533.6864.0555.0824.6305.4706.8536.5624.5114.4667.1787.9266.1225.2665.5107.57210.01711.37413.81111.0842.471.632.473.193.982.844.463.983.543.473.674.034.225.235.035.687.027.295.655.726.957.827.496.776.698.299.7211.5514.4412.922.852.402.823.183.653.324.334.123.883.954.004.194.284.925.075.656.677.356.166.216.847.567.997.617.428.419.4411.4613.9113.004.734.493.012.842.772.832.732.722.622.532.612.822.662.622.862.963.202.903.063.363.893.794.384.414.354.334.264.404.495.135.516.187.038.047.397.217.448.578.838.438.028.739.6311.9414.1713.795.907.764.964.754.334.283.913.613.293.053.243.473.423.243.413.523.743.513.533.884.714.735.055.195.085.024.864.834.875.676.236.947.819.118.568.168.249.5010.619.758.979.4910.6913.6716.0416.114.274.71ZM2.502.102.362.061.861.671.642.012.402.211.982.002.192.722.372.532.933.603.563.953.733.463.183.233.223.273.823.984.515.816.515.705.275.186.096.896.495.565.906.398.5111.2311.575.895.825.816.256.466.977.808.457.747.607.968.929.009.009.029.5610.7812.6614.7015.145.851.73.59.56.53.66.69.73.75.811.031.441.491.452.16• 2.332.521.582.183.313.812.463.973.852.973.263.553.974.385.555.105.907.837.715.114.738.159.846.325.345.617.997 10.9112.2914.7611.895.50-6.001.50-4.001.501.501.501.501.501.501.501.501.50-1.751.75-2.002.002.072.563.003.173.053.163.774.203.834.484.824.504.504.504.504.545.635.616.307.967.915.725.258.0310.817.866.846.839.0612.6715.2718.8714.865.162.561.001.001.00M.00•1.008 1.00•1.00•1.001.001.341.501.591.751.751.991.601.892.773.122.153.363.533.003.003.233.554.044.504.195.165.875.954.884.506.447.836.255.505.467.4610.2811.7713.4211.021.782.733.111.573.303.221.962.683.183.504.075.114.225.668.207.184.664.438.7310.505.825.045.547.9311.1913.3616.3812.26See next page for continuation of table.240

TABLE B-67 .—Bond yields and interest rates, 1929-82—Continued[Percent per annum]Year ormonth3-monthBills(newissues) 1U.S. Treasury securities6-monthConstantmaturities 23years10yearsCorporatebonds(Moody's)AaaBaaHighgrademunicipalbonds(Standard&Poor's)Newhomemortgageviews(FHLBB) 3Primecommercialpaper.monthsPrime ratecharged bybanks(high-low) 4Discountrate,FederalReserveBank ofNew York(high-low)*Federalfundsrate 51980:JanFebMar ...Apr.;;;; ...May.... ...June...12.03612.81415.52614.0039.1506.99511.85112.72115.10013.6189.1497.21810.8812.8414.0512.029.448.9110.8012.4112.7511.4710.189.7811.0912.3812.9612.0410.9910.5812.4213.5714.4514.1913.1712.717.218.049.098.407.377.6011.8711.9312.6213.0313.6812.6612.6613.6016.5014.939.298.0315.25-15.2516.75-15.2519.50-16.7520.00-19.5019.00-14,0014.00-12.0012.00-12.0013.00-12.0013.00-13.0013.00-13.0013.00-12.0012.00-11.0013.8214.1317.1917.6110.989.47July....Aug....Sept...OctNovDec8.1269.25910.32111.58013.88815.6618.1019.44310.54611.56613.61214.7709.2710.6311.5712.0113.3113.6510.2511.1011.5111.7512.6812.8411.0711.6412.0212.3112.9713.2112.6513.1513.7014.2314.6415.148.088.628.959.119.5510.0912.4812.2512.3512.6113.0413.288.299.6111.0412.3214.7316.4912.00-11.0011.50-11.0013.00-11.5014.50-13.5017.75-14.5021.50-17.7511.00-10.0010.00-10.0011.00-10.0011.00-11.0012.00-11.0013.00-12.009.039.6110.8712.8115.8518.901981:JanFebMartzz:June14.72414.90513.47813.63516.29514.55713.88314.13412.98313.43415.33413.94713.0113.6513.5114.0915.0814.2912.5713.1913.1213.6814.1013.4712.8113.3513.3313.8814.3213.7515.0315.3715.3415.5615.9515.809.6510.0310.1210.5510.7310.5613.2613.5414.0214.1514.1014.6715.1014.8713.5914.1716.6615.2221.50-20.0020.00-19.0019.00-17.5018.00-17.0020.50-18.0020.50-20.0013.00-13.0013.00-13.0013.00-13.0013.00-13.0014.00-13.0014.00-14.0019.0815.9314.7015.7218.5219.10JulyAugSeptOctNovDec14.69915.61214.95113.87311.26910.92614.40215.54815.05714.01311.53011.47115.1516.0016.2215.5013.1113.6614.2814.9415.3215.1513.3913.7214.3814.8915.4915.4014.2214.2316.1716.3416.9217.1116.3916.5511.0312.1312.8612.6711.7112.7714.7215.2715.2915.6516.3815.8716.0916.6215.9314.7211.9612.1420.50-20.0020.50-20.5020.50-19.5019.50-18.0018.00-16.0015.75-15.7514.00-14.0014.00-14.0014.00-14.0014.00-14.0014.00-13.0013.00-12.0019.0417.8215.8715.0813.3112.371982:JanFebMar....ApeMay,...June...12.41213.78012.49312.82112.14812.10812.93013.70912.62112.86112.22012.31014.6414.7314.1314.1813.7714.4814.5914.4313.8613.8713.6214.3015.1815.2714.5814.4614.2614.8117.1017.1816.8216.7816.6416.9213.1612.8112.7212.4511.9912.4215.2515.1215.6715.8415.8915.4013.3514.2713.4713.6413.0213.7915.75-15.7517.00-15.7516.50-16.5016.50-16.5016.50-16.5016.50-16.5012.00-12.0012.00-12.0012.00-12.0012.00-12.0012.00-12.0012.00-12.0013.2214.7814.6814.9414.4514.15July....Aug....Sept...OctNovDec11.9149.0068.1967.7508.0428.01312.23610,1059.5398.2998.3196.22514.0012.6212.0310.629.989.8813.9513.0612.3410.9110.5510.5414.6113.7112.9412.1211.6811.8316.8016.3215.6314.7314.3014.1412.1111.1210.619.599.979.9115.7015.6814.9814.4113.8113.7013.0010.8010.869.218.728.5016.50-15.5015.50-13.5013.50-13.5013.50-12.0012.00-11.5011.50-11.5012.00-11.5011.50-10.0010.00-10.0010.00-9.509.50-9.009.00-8.5012.5910.1210.319.719.208.951 Rate on new issues within period; bank-discount basis.3 Yields on the more actively traded issues adjusted to constant maturities by the Treasury Department.'Effective rate (in the primary market) on conventional mortgages, reflecting fees and charges as well as contract rate andassuming on the average, repayment at end of 10 years. Rates beginning January 1973 not strictly comparable with prior rates.«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.8 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.7 Beginning November 1979, data are for 6-months paper.Sources: Department of the Treasury, Board of Governors of the Federal Reserve System, Federal Home Loan Bank Board (FHLBB),Moody's Investors Service, and Standard & Poor's Corporation.241

TABLE B-68.—Consumer credit outstanding and net change, 1930-82[Millions of dollars]Amount outstanding (end of month)Net change from preceding periodYear and monthTotalTotalInstallment credit lAutomobileRevolving2TotalInstallmentcredit»TotalNoninstallmentMobilehome 8 Other credit 4AutomobileNoninstallmentcredit 41950: Dec1951: Dec1952: Dec1953: Dec1954: Dec1955: Dec1956: Dec1957: Dec1958: Dec1959: DecI960: Dec1961: Dec1962: Dec1963: Dec1964: Dec1965: Dec1966: Dec1967: Dec1968: Dec1969: Dec1970: Dec1971: Dec1972: Dec1973: Dec1974: Dec1975: Dec1976: Dec1977: Dec1978: Dec...1979: Dec1980: Dec.1981: Dec1981:JanFebMar....%~June...July...,Aug....Sept...OctNovDec1982:JanFebMar...,AprMay....June...July....Aug....Sept...OctNov25,64127,26832,55136,73638,19245,34849,26852,19152,70260,74165,10467,63573,91782,80592,591103,207109,749115,430126,949137,742143,113157,795177,639203,077213,427223,140248,916289,133337,917383,363388,239413,544384,847383,232385,685388,857391,077394,531397,210401,449406,234406,670407,970413,544409,444406,682406,520408,109409,500412,599413,366415,140417,624417,422419,76815,50316,22020,47024,25424,89130,26933,17135,44335,33941,12345,05146,02750,99457,82965,57273,88179,33983,14891,681101,161105,528118,255133,173155,108164,594171,996193,525230,564273,645312,024313,472333,375310,760309,385311,071313,669315,679318,792320,656324,161328,187328,652329,053333,375330,135327,435327,131328,363329,338331,851332,471333,808335,948334,977336,9916,0155,9587,6359,6859,74713,47114,48415,47214,25816,63218,08317,59919,92422,84225,81729,35530,99231,13134,34836,94636,32540,51947,86253,77254,26657,24267,70782,911101,647116,362116,838126,431115,778116,195118,049119,076119,582120,400121,476123,481125,703126,344126,385126,431125,525125,294125,559126,201127,220128,415128,359128,281129,085128,619129,5942,1053,7205,1288,5289,70011,70913,68115,01917,18939,27448,30956,93758,35263,04957,55656,04755,35655,71655,82056,79856,76457,28058,31858,45158,92363,04961,43359,51458,49158,64158,64759,30259,82460,47560,93260,91761,5002,4617,2269,52613,58014,64214,43414,57314,94515,23516,83817,32218,48617,20217,11317,16217,34217,57617,70417,76017,95918,12418,30018,38018,48618,39718,34318,36318,40218,47918,54318,60118,74118,77818,81418,8219,48810,26212,83514,56915,14416,79a18,68719,97121,08124,49126,96828,42831,07034,98739,75544,52648,34752,01755,22860,49561,61461,98266,08576,04782,00585,30194,05693,434108,454121,887120,960125,409120,224120,030120,504121,535122,701123,890124,656125,441126,042125,557125,365125,409124,780124,284124,718125,119124,992125,591125,687126,311127,153126,627127,07610,13811,04812,08112,48213,30115,07916,09716,74817,36319,61820,05321,60822,92324,97627,01929,32630,41032,28235,26836,58137,58539,54044,46647,96948,83351,14455,39158,56964,27171,33974,76780,16974,08773,84774,61475,18875,39875,73976,55477,28878,04778,01878,91780,16979,30979.24779,38979,74680,16280,74880,89581,33281,67682,44582,7774,7891,6275,2834,1851,4567,1563,9202,9235118,0394,3632,5316,2828,8889,78610,6166,5425,68111,51910,7935,37114,68219,84425,43810,3509,71325,77640,21748,78445,4463,2717174,2503,7846375,3782,9022,272-1045,7843,9289764,9676,8357,7438,3095,4583,8098,5339,4804,36712,72714,91821,9359,4867,40221,52937,03943,08138,3791,537-571,6772,050623,7241,013988-1,2142,3741,451-4842,3252,9182,9753,5381,6371393,2172,598-6214,1947,3435,9104942,97610,46515,20418,73614,7154,876 1,448 47625,305 19,903 9,5931,7041,9623,2083,5182,0782,7082,7912,5573,4305841,2124321,620-5165542,0582,0012,279992-1491,138542,656Seasonally adjusted s1,2061,8452,9712,7221,5712,0311,5512,4282,9751,002600-33443759901,1751,3991,349570661,092-3242,523318311,526648-1141491,0561,8592,0791,024564 68-121-56-2823395965561-402505-781,8161,5189101,0334018191,7781,0186516152,2554351,5551,3152,0532,0432,3071,0841,8722,9861,3131,00419554,9263,5038642,3114,2473,1785,7037,0673,4285,4024981172377965076771,240129455-4186124651,177-591-436883602930422-215463781331 Installment credit covers most short* and intermediate-term credit extended to individuals through regular business channels,usually to finance the purchase of consumer goods and services or to refinance debts incurred for such purposes, and scheduled to berepaid (or with the option of repayment) in two or more installments. Credit secured by real estate is generally excluded.a Consists of credit cards at retailers, gasoline companies, and commercial banks, and check credit at commercial banks. Prior to1968, included in "other," except gasoline companies, included in noninstallment credit prior to 1971. Beginning 1977, includes openendcredit at retailers, previously included in other. Also beginning 1977, some retail credit was reclassified from commercial intoconsumer credit.4 Because of inconsistencies in the data and infrequent benchmarking, series on noninstallment credit is no longer published by theFederal Reserve Board on a regular basis. Data are shown here as a general indication of trends.o For installment credit, computed as the difference between extensions and liquidations (both seasonally adjusted); see also TableB-69. For noninstallment credit, computed as the change from one month to another in the seasonally adjusted amount outstanding.Source: Board of Governors of the Federal Reserve System.242

TABLE B-69.—Consumer installment credit extended and liquidated, 1950-82[Millions of dollars; monthly data seasonally adjusted]Year or monthTotalAutomobileRevolving *Mobile home 2OtherExtendedLiquidatedExtendedLiquidatedExtendedLiquidatedExtendedLiquidatedExtendedLiquidated1950...1951...1952...1953...1954...,1955....1956....1957....1958....1959...,22,13024,58330,61632,57932,26540,26340,88643,10140,95649,13418,86123,86726,35528,79431,62534,88237,89940,75941,29043,3958,4458,95111,61012,74011,74116,73215,57216,55414,28718,0086,9069,0089,93210,68911,67913,00814,55915,56715,50115,63813,68515,63219,00619,83920,52423,53125,31426,54726,66931,12611,95514,85916,42318,10519,94621,87423,34025,19225,78927,7571960...1961....1962...1963...1964...1965...1966...,1967...,1968....1969...,50,82750,59857,56264,66072,44579,91883,82189,058101,426109,42247,02249,73552,60157,82264,61671,61678,36585,19492,07599,94518,11216,47720,16422,61724,79227,91327,84427,62332,22833,68616,66116,96017,84019,69921,81524,38626,20627,48229,01331.0903,4816,1822,7264,56732,71534,12137,39842,04347,65352,00555,97761,43565,71769,55430,36132,77534,76138,12342,80147,23052,15957,71260,33664,2881970...,1971...,1972...1973....1974...,1975...,1976...,1977...,1978...,1979...115,007138,046152,275173,035172,765180,083210,740257,600297,668324,777110,352127,789136,787152,817163,276172,675189,179222,138254,589286,39630,85736,70643,70249,60646,51452,42063,74375,64187,98193,90131,41432,51238,08143,69646,01949,44453,27860,43769,24579,1868,68921,86224,65928,70233,21336,95643,93487,596105,125120,1747,27820,81823,48526,69931,24335,61641,76481,34896,090111,5466122,5215,1217,0615,7884,3264,8595,7125,4126,4714781,7542,9754,1844,7204,5364,7205,3415,1264,86874,84976,95778,79387,66687,25086,38198,20488,65199,150104,23171,18872,70572,24678,23881,29483,07989,41775,01284,12890,7961980...,1931...,306,076336,341304,628316,44783,45494,40482,97784,809128,068140,135126,653135,4385,0936,0284,6104,86789,46195,77490,38891,3331981:Jan..,Feb..Mar.,feJune,July.Aug.SeptOct..Nov.Dec.1982:Jan..Feb..Mar.Apr..May.JuneJuly.Aug.SeptOct..Nov.27,46628,68229,37029,27128,37729,22328,29028.32329,40626,83627,37026,65626,88827,15027,46228,68429,19729,73727,51427,57928,26828,06231,61026,26026,83726,39926,54926,80627,19226,73925,89526,43125,83426,77026,68926,44527,07526,47227,50927,79828,38826,94427,51327,17628,38629,0877,3438,2298,4997,4597,3847,5158,0598,3969,0007,4908,0737,3527,4747,2837,1837,8718,4298,1827,3327,1127,5467,97010,3297,3127,3986,9736,8117,4987,3667,0036,5376,9216,4667,5097,2847,5957,3397,2117,6387,4707.5277,2717,5147,0418,0488,51311,53511,73811,62012,38311,87612,65811,70611,66312,26311,75311,37911,59211,07011,73012,14312,41612,52813,36112,55112,49712,46412,34012,48910.94411,41911,11011,44311,52011,65111,59011,48611,69211,42911,35811,53311,26611,88511,83611,91711,99112,85411,93912,35412,25412,23212,3823924056165936205094455205324754795084343644115444784594415814524764844514925524103723993863643753534043654604083964934083923784404424804448,1968,3108,6358,8368,4978,5417,7447,6117,1187,4397,2047,9107,7737,7257,8537,7627,7357,1907,3897,8067,2768,3087,5537,5287,7647,8857,4167,7767,7607,5087,4437,5867,4997,5077,1247,4437,0297,4617,9297,6157,3567,2057,4397,6267,7481 Consists of credit cards at retailers, gasoline companies, 2nd commercial banks, and check credit at commercial banks. Prior to1968, included in "other," except gasoline companies, included in noninstallment credit prior to 1971. Beginning 1977, includes openendcredit at retailers, previously included in ''other/' Also beginning 1977, some retail credit was reclassified from commercial intoconsumer credit.2 Not reported separately prior to July 1970.Note.—Installment credit covers most short- and intermediate-term credit extended to individuals through regular business channels,usually to finance the purchase of consumer goods and services or to refinance debts incurred for such purposes, and scheduled to berepaid (or with the option of repayment) in two or more installments. Credit secured by real estate is generally excluded.Liquidated credit includes repayments, chargeoffs, 2nd other credit.See also Table 6-68.Source: Board of Governors of the Federal Reserve System.243

TABLE B-70.—Mortgage debt outstanding by type of property and of financing, 1939-82[Billions of dollars]Nonfarm propertiesNonfarm properties by type of mortgageEnd of yearor quarterAllpropertiesTotal1- to 4-familyhousesFarmpropertiesMultifamilypropertiesCommercialproperties1Total 2Government underwritten1- to 4-family housesTotalFHAinsuredVAguaranteedConventional 3Total1- to 4-familyhouses193935.56.628.916.35.67.01.81.81.827.114.51940..,..194119421943194436.537.636.735.334.76.56.46.05.44.930.031.230.829.929.717.418.418.217.817.95.75.95.85.85.66.97.06.76.36.22.33.03.74.14.22.33.0374.14.22.33.03.74.14.227.728.227.125.825.515.115.414.51371371945194619471948194935.541.848.956.262.74.84.95.15.35.630.836.943.950.957.118.623.028.233.337.65.76.16.67.58.66.47.79.110.210.84.36.39.813.617.14.36.19.312.515.04.1373.85.36.9I0.22.45.57.28.126.530.634.137.340.014.316.918.920.822.61950195119521953195472.882.391.4101.3113.76.16.77.2778.266.775.684.293.6105.445.251.758.566.175.710.111.512.312.913.511.512.513.414.516.322.126.629.332.136.218.822.925.428.132.18.59710.812.012.810.313,214.616.119.344.749.154.961.569.326.328.933.238.043.619551956195719581959129.9144.5156.5171.8190.89.09.810.411.112.1120.9134.6146.1160.7178.788.299.0107.6117.7130.914.314.915.316.818.718.320.723.226.129.242.947.851.655.259.338.943.947.250.153.814.315.516.519.723.824.628.430.730.430,078.086.894.6105.5119.449.355.160.467.677.019601961196219631964207.5228.0251.4278.5305.912.813.915.216.818.9194.7214.1236.2261.7287.0141.9154.6169.3186.4203.420.323.025.829.033.632.436.541.146.250.062.365.669.473.477.256.459.162.265.969.226729.532.335.038.329.729.629.930.930.9132.3148.5166.9188.2209.885.595.5107.1120.5134.119651966196719681969333.3356.5381.2410.9441.421.223.125.127.429.2312.1333.4356.1383.5412.2220.5232.9247.3264.8283.237.240.343.947.352.254.560.164.871.476.981.284.188.293.4100.273.176.179.984.490.242.044.847.450.654.531.131.332.533.835.7231.0249.3267.9290.1312.0147.4156.9167.4180.4193.019701971197219731974474.2526.5603.4681.6744.330.332.235.841.346.3443.8494.3567.7640.3698.0298.1328.3372.2415.5451.260.170.1B2.S93.1100.085.695.91127131.7146.9109.2120.7131.1135.0140.297.3105.2113.0116.2121.359.965.768.266.265.137.339.544.750.056.2334.6373.5436.5505.3557.8200.8223.1259.2299.2329.919751976197719781979806.1893.01,022.61,173.61,337.751.156.663.670.882.7755.0836.4958.91,102.81,255.1495.0560.7657.8770.6891.1100.6104.5111.5120.7128.4159.3171.2189.6211.4235.6147.0154.1161.7176.4199.01277133.5141.6153.4172.966.166.568.071.481.061.667.073.682.092.0608.0682.3797.2926.41,056.1367.3427.1516.2617.3718.1198019811980:IIIIllIV1,471.81,583.51,371.11,398.11,435.51,471.892.0101.786.089.090.692.01,379.81,481.81,285.11,309.01,344.91,379.8987.01,060.5914.3931.6960.7987.0137.1141.4130.0132.4134.6137.1255.7279.9240.9245.1249.6255.7225.1239.0207.5211.6218.9225.1195.2207.6180.8184.1190.0195.293.6101.386.087.490.693.6101.6106,294.896799.4101.61,154.71,242.81,077.61,097.41,126.01,1547791.8852.9733.4747.5770.7791.81981:|II .."IIIIIV1,497.61,533.21,561.61,583.594.597.5100.0101.71,403.11,435.71,461.61,481.81,004.01,028.31,047.61,060.5138.1139.3140.2141.4261.0268.1273.7279.9229.1233.6237.0239.0198.8202.7205.9207.695.798.1100.0101.3103.1104.6105.9106.21,174.01,202.01,224.61,242.8805.2825.68417852.91982:in""!!!;1,602.81,624.21,635.8103.6105.5106.71,499.21,518.71,529.11,071.91,085.21.092.3142.9143.8144.7284.4289.7292.2240.6209.0102.0107.01,258.6862.91 Includes negligible amount of farm loans held by savings and loan associations.2 Includes FHA insured multifamily properties, not shown separately.8 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.244

TABLE B-71-—Mortgage debt outstanding by bolder, 1939-82[Billions of dollars]Major financial institutionsOther holders19391940194119421943194419451946194719481949195019511952195319541955195619571958195919601961196219631964196519661967196819691970197119721973197419751976197719781979198019811980:I.||IllIV1981:IIIIllIV1982:End of yearor quarter35.536.537.636 735.334.735.541.848 956.262.772.882 3914101.3113.7129 9144.515651718190.8207 5228.0251.4278 5305.9333 3356.5381.24109441.4474 2526 5603.4681.6744 3806.1893 01,022.61,173.61,337.71,471.81,583.51,371.11,398.11,435 51,471.81,497.61,533.21,561.61,583.51,602.81,624.21,635.8||HITotalTotal18.619.520.720.720.220.221.026.031.837.842.951.759.566.975.185.799.3111.2119.7131.5145.5157.6172.6192.5217.1241.0264.6280.8298.8319.9339.1355.9394.2450.0505.4542.6581.2647.5745.0848.2938.6997.21,040.6951.2958.8977.5997.21,006.91,023.11,033.81,040.61,041.51,042.71,028.83.84.14.64.64.64.85.47.18.910.311.613.715.618.422.026.131435.740.045.653.160168.878.890.9101.3110 3114.4121.8130.8140.2150.3174.3206.2231.7249.3278.6323.0381.2432.8475.7503.2518.4479.0481.1492.1503.2507.6515.3518.8518.4515.9512.7495.4Mutualsavingsbanks4.84.94.84.64.44.34.24.44.95.86.78.39.911.412.915.017.519.721.223.325.026.929.132.336.240.644.647.350.553.556.157.962.067.673.274.977,281.688.195.298.999.9100.099.299.299.399.999.7100.010O.O100.097.596.394.2Savingsand loanassociationsCommercialbanks i4.34.64.94.74.54.44.87.29.410.911.613.714.715.916.918.621.022.723.325.528.128.830.434.539.444.049.754.459.065.770.773.382.599.3119.1132.1136.2151.3179.0214.0245.2263.0284.5250.7253.0258.0263.0266.7273.2279.0284.5289.4294.0298.3Lifeinsurancecompanies5.76.06.46.76.76.76.67.28.710.812.916.119.321.323.326.029.433.035.237.139.241.844.246.950.555.260.064.667.570.072.074.475.576.981.486.289.291.696.8106.2118.8131.1137.7122.4125.6128.1131.1132.9134.7136.0137.7138.8139.5140.8Federalandrelatedagencies2 5.04.94.74.33.63.02.42.01.81.82.32.83.54.14.64.85.36.27.78.010.211.512.212.611.812.213.517.520.925.131.138.346.454.664.882.1101.0116.6f40.3170.4215.7256.6289.1228.6238.2247.1256.6263.5271.4279.9289.1301.0315.1333.2Individualsandothers11.912.012.211.711.511.512.113.815.316.617.518.419.320.421.723.225.327.129.132.335.138.443.146.349.552.755.258.261.465.971.279.985.998.9111.4119.7123.8128.9137.2155.0183.4218.1253.8191.4201.1210.9218.1227.2238.6247.9253.8260.3266.4273.81 Includes loans held by nondeposit trust companies, but not by bank trust departments.2 Includes former Federal National Mortgage Association (FNMA) and new Government National Mortgage Association (GNMA), as wellas Federal Housing Administration, Veterans Administration, Public Housing Administration, Farmers Home Administration, and in earlieryears Reconstruction Finance Corporation, Homeowners Loan Corporation, and Federal Farm Mortgage Corporation. A!so includes GNMAPools and U.S.-sponsored agencies such as new FNMA, Federal Land Banks, and Federal Home Loan Mortgage Corporation. Other U.S.agencies (amounts small or current separate data not readily available) included with "individuals and others.Source: Board of Governors of the Federal Reserve System, based on data from various Government and private organizations.245

GOVERNMENT FINANCETABLE B-72.—Federal budget receipts, outlays, and debt, fiscal years 1973-84[Millions of dollars; fiscal years]Description197319741975Actual^1976Transitionquarter19771978BUDGET RECEIPTS AND OUTLAYS:Total receiptsFederal fundsTrust fundsInterfund transactionsTotal outlaysFederal fundsTrust fundsInterf und transactionsTotal surplus or deficit (-)Federal funds230,799161,35790,76621,325245,647186,95180,021-21,325= 14,849=25,59310,745263,224181,219103,138-21,133267,912199,91889,126= 21,133-4,68814,011279,090187,505116,683-25,098324,245240,081109,261-25,098-=45,154-52,5767,422298,060201.099131,750-34,789364,473269,921129,341-=34,789= 66,413-68,8222,40981,23254,08531,530-4,38394,18865,08833,482-4,383-12,956-11,004-=1,952355,559241,312150,560= 36,313400,506295,756141,063-36,313=44,948=54,4449,496399,561270,490165,568=36,498448,368331,991152,874-36,498=48,807=61,50112,694Trust fundsOUTSTANDING DEBT, END OF PERIOD:Gross Federal debtHeld by Government agenciesHeld by the publicFederal Reserve SystemOtherBUDGET RECEIPTSIndividual income taxesCorporation income taxesSocial insurance taxes and contributionsExcise taxesEstate and gift taxesCustoms dutiesMiscellaneous receipts:Deposits of earnings by FederalReserve SystemAH otherBUDGET OUTLAYSNational defenseInternational affairsGeneral science, space, and technol-, ogyEnergyNatural resources and environmentAgricultureCommerce and housing creditTransportation...Community and regional development..Education, training, employment, andsocial servicesHealthIncome securityVeterans benefits and servicesAdministration of justiceGeneral governmentGeneral purpose fiscal assistanceNet interestAllowancesUndistributed offsetting receiptsComposition of undistributed offsettinereceipts:Employer share, employee retirementRents and royalties on the OuterContinental Shelf468,426125,381343,04575,181267,863230,799103,24636,15363,11516,2604,9173,1883,495425245,64774,5414,0664,0301.1794,7634,8529249,0654,59512,73517,40572,96512,0132,1312,568735117,346-6,882-2,927-3,956486,247140,194346,05380,648265,405263,224118,95238,62075,07116,8445,0353,3344,845523267,91277,7815,6813,9778375,6702,2273,9259,1724,13412,34420,36484,43713,3862,4623,2436,89021,449-10,068=3,319-6,748544,131147,225396,90684,993311,913279,090122,38640,62184,53416,5514,6113,6765,777935324,24585,5526,9223,989MS 1,6595,60710,3883,73815,87025,742108,57616,5972,9423,1337,18723,244=6,408-3,980-2.428631,866151,566480,30094,714385,586298,060131,60341,40990,76916,9635,2164,0745,4512,576364,47389,4305,5544,3703,1278,124215023,79213,4354,76718,73731,503127,39018,4323,3202,9487,23526,711^6,904-4,242=2,662646,379148,052498,32796,702401,62581,23238,8018,46025,2194,4731,4551,2121,50011194,18822,3072,1911,1617942,5325841,3923,3041,3405,1628,18132,7973,9628598832,0926,946-2,296=985-1,311709,138157,295551,843105,004446,839355,559157,62654,892106,48517,5487,3275,1505,908623400,50697,5014,8194,6774,17210,0005,5269814,6366,34820,98536,582137,90018,0383,6003,1699,49929,877-6,922-4,548-2,374780,425169,477610,948115,480495,468399,561180,98859,952120,96718,3765,2856,5736,641778448,368105,1865,9224,7425,86110,9257,7313,33115,44511,07026,46341,232146,18018,9743,8023,7069,60135,435- 7,242-4,983=2,259See next page for continuation of table.246

TABLE B-72.—Federal budget receipts, outlays, and debt, fiscal years 1973-84—Continued[Millions of dollars; fiscal years]DescriptionActual1979 1980 1981 1982Estimates1983 1984BUDGET RECEIPTS AND OUTLAYS:Total receipts463,302517,112599,272617,766597,494659,702Federal fundsTrust fundsInterfund transactions..316,366186,988-40,052350,856210,930-44,674410,422239,413-50,563409,253268,407-59,894376,945314,755-94,206404,745330,210-75,253Total outlays..490,997576,675657,204728,375805,202848,483Federal fundsTrust fundsInterf und transactions....362,396168,653-40,052419,220202,129-44,674475,171232,596-50,563526,113262,155-59,894603,047296,361-94,206610,467313,269-75,253Total surplus or deficit (-)..-27,694-59,563-57,932-110,609-207,708-188,781Federal funds...Trust fundsOUTSTANDING DEBT, END OF PERIOD:-46,03018,335-68,3648,801-64,7496,817-116,8606,252-226,10218,393-205,72116,941Gross Federal debt833,751914,3171,003,9411,146,9871,383,7441,606,339Held by Government agencies..Held by the publicFederal Reserve System..Other189,162644,589115,594528,996199,212715,105120,846594,259209,507794,434124,466669,968217,560929,427134,497794,929239,3171,144,427258,9121,347,427BUDGET RECEIPTS...463,302517,112599,272617,766597,494659,702Individual income taxesCorporation income taxesSocial insurance taxes and contributionsExcise taxesEstate and gift taxesCustoms dutiesMiscellaneous receipts:Deposits of earnings by FederalSystemAllotherBUDGET OUTLAYS..Reserve217,84165,677138,93918,7455,41174398,327925490,997244,06964,600157,80324,3296,3897,17411,767981576,675285,91761,137182,72040,8396,7878,08312,834956657,204297,74449,207201,49836,3117,9918,85415,186975728,375285,19435,286210,31337,2576,1148,81913,4061,105805,202295,58951,770242,93740,3535,9029,13712,8191,195848,483National defenseInternational affairsGeneral science, space, and technologyEnergy .\Natural resources and environmentAgricultureCommerce and housing creditTransportationCommunity and regional developmentEducation, training, employment, and social services,HealthIncome securityVeterans benefits and servicesAdministration of justiceGeneral governmentGeneral purpose fiscal assistanceNet interestAllowancesUndistributed offsetting receipts117,6816,0915,0416,85612,0916,2382,57917,4599,54229,68546,962160,15919,9284,1534,0938,37242,606-8,538135,85610,7335,7226,31313,8124,7627,78821,12010,06830,76755,220193,10021,1834,5704,5058,58452,458-9,887159,76511,1306,35910,27713,5255,5723,94623,3819,39431,40265,982225,10122,9884,6964,6146,85668,726-16,509187,4189,9827,0704,67412,93414,8753,86520,5607,16526,30074,017248,34323,9554,6714,7266,39384,697-13,270214,76911,9397,7594,50612,08721,0751,92821,8767,37326,67682,362282,47224,4115,2735,7946,38288,936-20,414245,30513,2508,2503,3069,83212,15041325,1456,95125,25690,647282,42225,7245,4915,9936,968103,180949-22,750Composition of undistributed offsetting receipts:Employer share, employee retirementRents and royalties on the Outer ContinentalShelf-5,271-3,267-5,787-4,101-6,371-10,138-7,020-6,250-8,214-11,793-9,853-11,895Note.—Under provisions of the Congressional Budget Act of 1974,1... , ........fiscal year 1977. Through fiscal year 1976, the fiscal year was on a July 1-June 30 basis. Beginning October 1976 (fiscal year 1977).the fiscal year is on an October 1-September 30 basis. The period July 1,1976 through September 30, 1976 is a separate fiscal periodknown as the transition quarter.Refunds of receipts are excluded from receipts and outlays.See "Budget of the United States Government, Fiscal Year 1984" for additional information.Sources: Department of the Treasury and Office of Management and Budget.247

TABLE B-73.—Federal budget receipts and outlays, off-budget outlays, and debt, fiscal years 1929-84[Billions of dollars]Fiscal yearReceiptsBudgetOutlaysSurplus ordeficit(->Off-budgetoutlaysBudgetand offbudgetsurplus ordeficit(->Gross Feder. il debt (endofpe rlnA\TotalHeld bythe public1929193319391940194119421943194419451946 . . .1947194819491950195119521953195419551956195719581959I96019611962196319641965196B1967196819691970197119721973197419751976Transition quarter..1977197819791980198119821983*1984*3.92.05.06.48.614.423.644.345.239.338.441.839.439.551.666.269.669.765.574.580.079 679.292 594,499.7106.6112.7116 81309148 9153.0186.9192 81871207.3230.8263.2279.1298181.23556399.6463.3517.1599.3617.8597 5659.73.14.68.89.513.635.178.591.392.755.234.529.838.842.645.567.776.170.968.570.576.782.692.192 297.8106.8111.3118.6118 4134 7157 6178.1183.61957210.2230.7245.6267.9324.2364.594.24005448.4491.0576.7657.2728.4805.2848.5.7=2.6-3.931-5.0-20.8-54.947 0-47.5-15.93.912 0.6316.1= 15=6.5-1.2=3 04.13.2=-2 9-12.93=3.4-71 48-5.916-3 887-25.23.22823 0-23.4-14.8=4.7=45.266413.0449-48.827.7-59,6-57.9110 6207 7-188.80.11.48.1731.88710.412.514.221.017.317.014.0-14.9=6.1-53.2=73.7= 14.7= 536= 59.240.2-73.878.9-127.9=224.8=202.8U6.9*22.548.250.757.579.2142.6204.12601271.0257.1252 0252.6256.9255.32591266.0270.8274 4272.8272.42797287.8290 9292.9303.3310.8316.8323 2329 53413369.8367.13826409.5437.3468.4486.2544.1631.9646.47091780.4833.8914.31,003.91,147.01,383.71,606.341.442.848.267.8127.8184.8235.2241.9224.3216 3214.3219.0214.3214 8218.4224.5226.6222.2219.4226 4235.0237.2238.6248.4254.5257.62616264.7267 5290.6279.5284 9304 3323.8343.0346.1396.9480.3498.35518610.9644.6715.1794.4929.41,144.41,347.41 Not strictly comparable with later data.* Estimates.Note.—Under provisions of the Congressional Budget Act of 1974, the fiscal year for the Federal Government shifted beginning withfiscal year 1977. Through fiscal year 1976, the fiscal year was on a July 1-June 30 basis; beginning October 1976 (fiscal year 1977),the fiscal year is on an October 1-September 30 basis. The 3-month period from July 1, 1976 through September 30, 1976 is aseparate fiscal period known as the transition quarter.Data for 1929-39 are according to the administrative budget and those beginning 1940 according to the unified budget.Refunds of receipts are excluded from receipts and outlays.See "Budget of the United States Government, Fiscal Year 1984" for additional information.Sources: Department of the Treasury and Office of Management and Budget.248

TABLE B-74.—Relation of Federal Government receipts and expenditures in the national income andproduct accounts to the unified budget, fiscal years 1982-84[Billions of dollars; fiscal years]Receipts and expenditures 19821983EstimateTotal budget receipts....RECEIPTSGovernment contribution for employee retirement (grossing)..Other netting and grossingAdjustment to accrualsGeographic exclusions ...OtherFederal sector, national income and product accounts, receiptsTotal budget outlaysEXPENDITURESLending and financial transactionsGovernment contribution for employee retirement (grossing)...Defense timing adjustmentBonuses on Outer Continental Shelf land leases..Geographic exclusionsOtherFederal sector, national income and product accounts, expenditures..617.810.79.3-18.2-1.6.2618.2728.4-5.310.79.3-1.22.7-4.6-.3Note.-See Note, Table B-73.See Special Analysis B, "Special Analyses, Budget of the United States Government, Fiscal Year 1984" for description of thesecategories.Sources: Department of Commerce (Bureau of Economic Analysis), Department of the Treasury, and Office of Management andBudget.739.7597.512.211.78.2-1.7.0627.9805.2-3.812.211.7-1.78.3-4.81.9829.0659.714.013.9-.3-1.9.2685.6848.5-3.814.013.9-2.57.9-4.94.2877.3249

TABLE B-75.—Government receipts and expenditures, national income and product accounts, 1929-82[Billions of dollars; quarterly data at seasonally adjusted annual rates]Total governmentFederal GovernmentState and localgovernmentCalendar year or quarterReceiptsSurplus ordeficitnationalincomeandproductaccountsReceiptsSurplus ordeficitnationalincomeandproductaccountsReceiptsExpendituresExpendituresExpendituresSurplus ordeficitnationalincomeandproductaccounts192911.310.31.03.82.61.27.67.8-0.219339.310.7-1.42.74.0= 1.37.27.2=,1193915.417.6-2.26.78.9=2.29.69.6.0194019411942194319441945194619471948194917.725.032.649.251.253.251.056.958955.918.428.864.093.3103 092.745 642.550559.3=.7=3.8=31.4=44.1= 51.8= 39.55414.484=3.48.615.422.939.341.042.539.143.243,238.710.020.556.185.895.584.635.629.834.941.3= 1.3= 5.1= 33.146.6-54.54213.513.48.3=2.610.010.410.610.911.111.613.015.417.719.59.39.18.88.48.59.011.114.417.620.2.61.31.82.52.72.61.9l.C= .7195019511952195319541955195619571958195969.085 290.194 689.91011109.7116 2115.0129.461.079 293.9101697.098 0104.51152127.6131.08.061-3.8-69-7.1315.29= 12.6'••-1.650.064367.370 063.772 678.081978.789.840.857 871.177169.868171.979 688.991.09.265-3.7-7.1=6,04.46.12.3-10.3= 1.121.323425.427.429.031.735.038.542.046.422.523925.527.330.232.935.939.844.346.9= 1.2= 4= .0.11.3= 9=1.4=2.4=.4I96019611962 ,1963196419651966196719681969139.5144.8156.7168.5174.0188.3212 3228.22631296.7136.4149.1160.5167.8176.3187.8213 6242.42691286.83.1=4.3= 3.8-2.3-1*3-14.2=609.996.198.1106.2114.4114.9124.31418150.5174 4196.993.1101.9110.4114.2118.2123.8143 6163.7180.5188.43.0=3.9=4.2= 3.3= 1.8= 13.2-6.08.449.954.058.563.269.575.184.893.6107.3120,249.854.458.062.868.5.75.184.394.7107.2118.7.1.51.0=.C= 1.11.51970197119721973197419751976197719781979198019811982 p302.8322.6368 3413.1455 2470.5538.4605 46819765,1838.0957.3968.4313.4342.03716405.3460 0534.3574.9623 36811750.8871.2985.51,084.5= 10.6= 19.47.8=4 7=63.8=36.5-47 8 814.3=33.2-28.2116.1191.9198.6227 5258.6287 8287.3331.8375 24316493.6540.7628.2614.7204.3220.6244 3264.2299 3356.6384.842114610509.7602.1688.2762.6= 12.4=22.0-16.8=5.6= 11.5=69.3=53.1-45.9-29 516.1=61.4-60.0-147.9135.4153.0178.3195.0211.4237.7267.8297.7m385.9416.8437.3133.5150.4164.8181.6204.6232.2251.2269.7297.3321.5357.8385.0405.41.92.613.513.46.85.516.628.030.330.428.231.731.91980:1IllIV814.6809.2842.8885.2825.2853.4888 8917.4-=10.6=44.2=45 932 2525.7520.2542.4574.6565.4587.7615.4639.9-39.7-67.5-73.1=65.2374.5376.6389.3403.3345.3353.3362.2370.329.123.327.133.01981:||IIIIV939.8951.5974.3963.6948.1959.1998 71,036.1-8.3-7.6=24 5-72 5620.0627.0640.2625.7659.7667.5698.2727.4-39.7-40.558.0-101.7410.0415.2420.3421.5378.6382.2386.9392.431.332.933.529.11982:||IllIV951.1966.2972 21,041.81053.71095 91,146.790.7-87.5123 7609.9617.0613.7728.3736.6769.7815.9-118.4-119.6-156.0424.2434.3440.5396.5402.2408.2414.927.732.132.3Note.—Federaf grants-fn-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.250

TABLE B-76.—Federal Government receipts and expenditures, national income and product accounts,1958-84[Billions of dollars; quarterly data at seasonally adjusted annual rates]Year or quarterTotalPersonaltax andnontaxreceiptsReceiptsCorporateprofitstaxaccrualsIndirectbusinesstax andnontaxaccrualsTotal 1ContributionsforsocialinsurancePurchasesof goodsandservicesExpendituresTransferpaymentsTopersonsToforeignersGrantsin-aidtoStateandlocalgovernmentsNetinterestpaidSubsidieslesscurrentsurplusofgovernmententerprisesSurplusordeficitnationalincomeandproductaccountsFiscal year: 219581959196019611962196319641965196619671968196919701971197219731974197519761977197819791980198119821983 31984 3 ZCalendar year:19581959I9601961196219631964196519661967196819691970197119721973197419751976197719781979198019811982 p ,1981:IIIIIIV1982:IIllIVP78.185494 895.0104 0110.01156120.0132 7146.0159 9189.8194 8192.4213.4240.727162834314.9365.9414 3480.85251614 7618.2627.9685.678 789.896.1981106.2114 4114 9124 31418150.5174.4196.91919198 6227.5258.6287 8287 33318375.2431.64936540.7628 2614.7620.0627 0640 2625.7609.9617.0613 736.338.242 543.647 349.650.751.457.564.471.490.294.087.9100.5107.4122.7127 5137.2166.3186.5222.625012917303.0293.1304.136 839.943.644748.651.548 653.961767.579.795.192.690 3108.2114.7131.3125 8147 3170.1194.9230.6257.52981300.1286.4297.0307.9300.92999305.8295.6299.317.921422 320.022 723.325 727.130 830.333136.832 931.934.241.243.441852.558.967 376.170070 950.150.559.418 022.521.421522.524 626128931430.036.136130 633 536.643.345143 654 661.671.374 270.367 348.176.165 668 459.146.545.249.811.612.013 213.314.215.015.616.915.515.817.118.619.220.019.920.721.422 224.324.527.229.134 755750.755.259.311512.513.413 614.615.316 216.515 616.318.019.019 320 420.021.221.723.923 425.028.129.438.958 550.057.561.557.857.248.749.850.850.712.313.916.718.119.922.123.624.528.935.538.344.248.852.658.971.584.291.9101.0116.2133.3153.1170.3196 3214.4229.1262.812 414.917.618.320.523.124 025.033136.740.746.749.354462.779.589.894.1106.5118.5137.2159.5174.1204.3216.5199.9202.8206.1208.4214.9216.2217.5217.482.891.291398.1106.2111.7117.2118.5132.7154.9172.2184.6195.5212.9232.7255.7278.2328 8370.7411.2450.4495.6577 0666 5739.7829.0877.388 991.093.11019110.4114.2118 2123.8143 6163.7180.5188.4204.3220 6244.3264.2299.3356.6384 8421.1461.0509.7602.1688.2762.6659.7667.5698.2727.4728.3736.6769.7815.951.154.852 955.861.063.765.964.672.486.095.098.097.194.9100.6101.1104.5117 9125.1139.8150.4164.1189.82181250.1279.0302.553 953.953.757 463.764.665 267.378 890.998.097.695.796 2101.7102.0111.0122.7129.2143.4153.6168.3197.2228.9257.3217.0218.2230.0250.5249.7244.3259.0276.117.819.920 623.625126.527.428.431.837.242.748.755 067.776.187.2101.81314153.8166.6178.7197.8234 62734304.8342.2350.919 620.121.625 025.627.027 930.333 540.146.050.661372 780.593.3114.5146.3158.8169.6181.8205.0246.2280.9315.7268.8271.9289.0294.0297.2307.0321.8337.01.71.8182.12.12.12.22.22.32.22.12.22.02.32.82.73.0313.03.23.54.14.8576.06.46.51.81.81.92.12.22.22.22.2232.22.12.12.22.62.72.63.23.13.23.33.84.25.25.76.15.24.86.16.66.05.85.67.04.76.2696.97.68.39.810.912.714.817.819.222.626.832.640.441.648.457.566.374.779.186.790.183.486.990.15.66.86.57.28.09.110.411.114.415.918.620.324.429.037.540.643.954.661.167.577.380.588.787.783.690.290.686.383.683.085.082.084.25.45.6686.46.47.1778.28.79.610.411.913 514.014.015.719.621725.228.440.6SO 666 282.592.4106.65.26.26.86.2688.084929.8in14.113.814 4180?0 726.835?4? 453.171.984.866 358374 079.079 68? 888 788.22.425243.3414.0414.3485.2414.755• 7.06.59.276606.26.99.79.910 513112.822.120.7282.12.6404.23.9454.6554.74.55.26.5637.97.85.56.95.88.29.59.211.713.115.112,2 -39.713.7 =-40.513.0 -58.013.6 -101.712.711.612.623.4-4.7-5834-3.1-22-1.7-15 1.40-8.9-12 35.2-20.5-19.2-14.9-6.6-45 4-55.8-45.3-36.1-14,8-51.9-519-121.5-201.1-191.7-103-1.13.0-3.9-4.2.3-33-18-13.2-6.08.4-12.4-22.0-16.8-5.6-11.5-69.3-53.1-45.9-29.5-61.4-60.0-147.9-118.4-119.6-156.01 Includes an item for the difference between wage accruals and disbursements, not shown separately.2 Under provisions of the Congressional Budget Act of 1974, the fiscal year for the Federal Government shifted beginning with -fiscalyear 1977. Through fiscal year 1976, the fiscal year was on a July 1-June 30 basis; beginning October 1976 (fiscal year 1977), thefiscal year is on an October 1-September 30 basis. The 3-month period from July 1, 1976 through September 30, 1976 is a separatefiscal period known as the transition quarter.3 Estimates.Sources: Department of Commerce (Bureau of Economic Analysis) and Office of Management and Budget.251

TABLE B-77.—State and local government receipts and expenditures, national income and product accounts,1946-82[Billions of dollars; quarterly data at seasonally adjusted annual rates]Calendar yearor quarterReceiptsTotalPersonaltax andnontaxreceiptsCorporateprofitstaxaccrualsIndirectbusinesstax andnontaxaccrualsContributionsforsocialinsuranceFederalgrants-inaidExpendituresTotal 1PurchasesofgoodsandservicesTransferpaymentstopersonsNetinterestpaidlessdividendsreceivedSubsidieslesscurrentsurplusofgovernmententerprises19461947194819491950195119521953195419551956195719581959196019611962196319641965196619671968196919701971197219731974197519761977 .19781979198019811982 *1980:I||III ;.:IV1981:• ii ;*" ;*IILZI:;iv1982:ItIllIV*13.015.417.719.521.323.425.427.429.031.735.038.542.046.449.954.058.563.269.575.184.893.6107.3120.2135.4153.0178.3195.0211.4237.7267.8297.7327.6352.0385.9416.8437.3374.5376.6389.3403.3410.0415.2420.3421.5424.2434.3440.51.51.72.12,42.52.83.03.23.53.94.55.05.46.1677.48.28.810.010.912.814.617.520.623.226.432.836.039.043.149.656.363.870.478.888.697.175.577.379.682.784.887.290.392.393.695.498.8100.51.01.01.01.01,21.21.31.51.71.82.02.22,53.13.43.54.15.05.86.57.19.311.111.913.414.413.910715.912.514.215.015.413.614.012.510.110,211.29.310.712.213.314.615.917.418.819.921.623.825.727.229.332.034.437.039.442.646.149.754.060.967.675.083.391.599.7107.4116.2128.3140.7150.0160.2174.1192.8208.8168.8170.5176.1181.2187.1190.4195.5198.0201.5206.9210.9215.80.6.7.8.91.11.41.61.72.02.12.32.62.83.13,43.73.94.24.75.05.76.77.28.39.210.211.513.014.616.819.522.124.727.429.933.837.228.728.830.631.632.533,434.235.136.036.937.738.41.11.72.02.22.32.52.62.82.93.13.34.25.66.86.57.28.09.110.411.114.415.918.620.324.429.037.540.643.954.661.167.577.380.588.787.783.685.5»7.688.992.790.290.686.383.683.085.082.084.211.114.417.620.222.523.925.527.330.232.935.939.844.346,949.854.458.062.868.575.184.394.7107.21187133.5150.4164.8181.6204.6232.2251.2269.7297.3321.5357.8385.0405.4345.3353.3362.2370.3378.6382.2386.9392.4396.5402.2408.2414.99.912.815.318.019.821.823.225.027.830.633.537.141.143.746.550.854.359.064.671.179.889.3101.0111.2124.4138.7151.4168.5193.1217.2232.9250.4278.3306.0341.2368.0389.8329.6337.2345.2352.8361.1365.0370.1375.7380.4386.6392.7399.61.72.33.03.03.63.13.33.53.63.83.94.34.85.15.45.86.06.46.97.38.19.410.512.214717.319.320.720.924.627.629.732.835.039.643.045.137738.940.541.442.042.843.343,944.344745.446.00.2.1.1.1.1.0.0.0,1-.3-7-.9-1.1-1.4-2.0-1.7= 1.9-3.3-5.0-5.1-4.5-5.3-7.9-13.8-16.9-19.5^227-16.1-16.7-17.3-177-18.1-19.1-20.1=20.7=21.5-22.4-23.2=23.8=-07-.9-1.0-1.1-1.2-1.3-1.5-1.6-1.7-1.7-2.0=2,2=2.3-2.5-2.8-2.8-3.0-3.0-3,1-3.2-3.3-3.6-3.7=4.2-4.3-4.5-4.8-5.1-5.7-5.9-6.2-6.5-6.8-6.0-6.1-6.2-6.3=6,4-6.46.5=6.6-6.6676.7-68-6,91 Includes an item for the difference between wage accruals and disbursements, not shown separately.Source: Department of Commerce, Bureau of Economic Analysis.252

TABLE B-78.—State and local government revenues and expenditures, selected fiscal years, 1927-81Fiscal year l General revenues by source 2192719321934193619381940194219441946194819501952195319541955195619571958195919601961196219631962-63 6 ..1963-64*..1964-65 S ..1965-66 5 ...1966-67 5 ..,1967-68 5 ..1968-69 5 ..1969-70*..,1970-71 6 ...1971-72"...1972-73 5 ...1973-74 5 ..1974-75 s ..1975-76 5 ..1976-77 s ..1977-78°..1978-79 s ..1979-80 5 ...1980-81 s ..Total7,2717,2677,6788,3959,2289,60910,41810,90812,35617,25020,91125,18127,30729,01231,07334,66738,16441,21945,30650,50554,03758,25262,89062,26968,44374,00083,03691,197101,264114,550130,756144,927166,352190,214207,670228,171256,176285,796315,960343,278382,322423,404Propertytaxes4,7304,4874,0764,0934,4404,4304,5374,6044,9866,1267,3498,6529,3759,96710,73511,74912,86414,04714,98316,40518,00219,05420,08919,83321,24122,58324,67026,04727,74730,67334,05437,85242,13345,28347,70551,49157,00162,53566,42264,94468,49974,969Salesandgrossreceiptstaxes4707521,0081,4841,7941,9822,3512,2892,9864,4425,1546,3576,9277,2767,6438,6919,4679,82910,43711,84912,46313,49414,45614,44615,76217,11819,08520,53022,91126,51930,32233,23337,48842,04746.09849,81554,54760,59567,59674,24779,92785,971Individumcometaxes7074801532182242763424225437889981,0651,1271,2371,5381,7541,7591,9942,4632,6133,0373,2693,2673,7914,0904,7605,8267,3088,90810,81211,90015,23717,99419.49121,45424.57529,24533,17636,93242,08046,426[Millions of dollars]Corporationnetincometaxes9279491131651562724514475925938468177787448909841,0181,0011,1801,2661,3081,5051,5051,6951,9292,0382,2272,5183,1803,7383,4244,4165,4256,0156,6427,2739,17410,73812,12813,32114,1431162321,0169488009458589548551,8612,4862,5662,8702,9663,1313,3353,8434,8656,3776,9747,1317,8718,7228,66310,00211,02913,21415,37017,18119,15321,85726,14631,25339,25641,82047,03455,58962,57569,59275,16483,02990,294RevenuefromFederalGovernmentGeneral expenditures by function 2Allother 3 Total EducationHighwaysPublicwelfare1,7931,6431,4491,6041,8111,8722,1232,2692,6613,6854,5415,7636,2526,8977,5848,4659,2509,69910,51611,63412,56313,48914,85014,55615,95117,25019,26921,19723,59826,11829,97132,37435,82640,21046,54151,73557,19161,67368,43679,86495,466.11,5997,2107,7657,1817,644.8,7579,2299,1908,86311,02817,68422,78726,09827,91030,70133,72436,71140,37544,85148,88751,87656,20160,20664,81663,97769,30274,54682,84393,350102,411116,728131,332150,674166,873181,227«89592,2352,3111,8312,1772,4912,6382,5862,7933,3565,3797,1778,3189,39010,55711,90713,22014,13415,91917,28318,71920,57422,21623,77623,72926,28628,56333,28737,91941,15847,23852,71859,41364,88669,71475,83387,85897,216102,805110,758119,448133,211145,7841,8091,7411,5091,4251,6501,5731,4901,2001,6723,0363,8034,6504,9875,5276,4526,9537,8168,5679,5929,4289,84410,35711,13611,15011,66412,22112,77013,93214,48115,41716,42718,09519,01018,61519.94622,52823,90723,10524,60928,44033,31134,6031514448898271,0691,1561,2251,1331,4092,0992,9402,7882,9143,0603,1683,1393,4853,8184,1364,4044,7205,0845,4815,4205,7666,3156,7578,2189,85712,11014,67918,22621,07023,58225,08528,15532,60435,94139,14041,89847,28854,121Altother 43,0153,2692,9523,2153,5473,8623,8893,7374,5917,1708,86710,34210,61911,55712,19713,39914,94016,54717,87619,32521,06322,54924,42323,67825,58627,44730,02933,28136,91541,96347,50854,94061,90769,31678,09692,180103,004112,537122,476137,731155,277172,9411 Fiscal years not the same for all governments. See footnote 5.2 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 licenses and other taxes and charges and miscellaneous revenues.4 Includes expenditures for health, hospitals, police, local fire protection, natural resources, sanitation, housing and urban renewal,local parks and recreation, general control, financial administration, interest on general debt, and unallocable expenditures.6 Data for fiscal year ending in the 12-month period through June 30. Data for 1963 and earlier years include local governmentamounts grouped in terms of fiscal years ended during the particular calendar year.Note.—Data are not available for intervening years.Source: Department of Commerce, Bureau of the Census.253

TABLE B-79.—Interest-bearing public debt securities by kind of obligation, 1967-82[Millions of dollars]End of yearor monthTotalinterestbearingpublicdebtsecuritiesTotalMarketableTreasuryTreasurynotesTreasurybonds'TotalU.S.savingsbondsNonmarketableForeigngovernmentandpublicseries 2GovernmentaccountseriesOther*Fiscal year:196)1968196919701971197219731974322,286344,401351,729369,026396,289425,360456,353473,238* 210,672226,592226,107232,599245,473257,202262,971266,57558,53564,44068,35676,15486,67794,648100,061105,01949,10871,07378,94693,489104,807113,419117,840128,41997,41891,07978,80562,95653,98949,13545,07133,137111,614117,808125,623136,426150,816168,158193,382206,66351,21351,71251,71151,28153,00355,92159,41861,9211,5143,7414,0704,7559,27018,98528,52425,01156,15559,52666,79076,32382,784101,738115,4422,7312,8283,0514,0685,7593,6543,7014,28919751976197719781979532,122619,254697,629766,971819,007315,606392,581443,508485,155506,693128,569161,198156,091160,936161,378150,257191,758241,692267,865274,24236,77939,62645,72456,35571,073216,516226,673254,121281,816312,31465,48269,73375,41179,79880,44023,21621,50021,79921,68028,115124,173130,557140,113153,271176,3603,6444,88316,79727,06727,400198019811982906,402996,4951,140,883594,506683,209824,422199,832223,388277,900310,903363,643442,89083,77296,178103,631311,896313,286316,46172,72768,01767,27425,15820,49914,641189,848201,052210,46224,16423,71824,0851981:JanFebMarAprMayJuneJulyAugSeptOctNovDec1982:JanFebMarJuneJulyAugSept....OtiNovDec929,825946,455963,207962,779964,792969,921972,053978,920996,495999,4511,011,9361.027,3001,032,6781,042,1981,059,8151,064,5381,066,4101,078,4311,083,2961,108,1311,140,8831,136,8261,160,4891,195,496628,482642,905661,142657,906656,185660,769666,405673,765683,209689,578704,819720,293726,542737,532752,620755,833755,688763,995774,077801,427824,422824,662852,463881,476220,423228,972235,315225,849224,514218,786217,532219,854223,388229,061233,905245,015250,562254,037256,212254,880256,114256,007262,009273,066277,900283,923293,531311,820321,176324,540336,505341,052338,419348,788354,005357,603363,643362,649370,794375,332374,357382,070395,042399,700398,408406,925411,070427,426442,890438,068454,229465,03086,88389,39389,32391,00693,25293,19694,86896,30896,17897,867100,11999,946101,623101,426101,366101,253101,166101,063100,998100,935103,631102,672104,702104,627301,343303,550302,065304,873308,608309,152305,647305,155313,286309,874307,117307,007306,136304,666307,195308,705310,722314,436309,218306,704316,461312,164308,026314,02071,05770,44370,05769,51869,22968,93468,71968,35568,01767,71867,73967,83767,58167,37867,16367,03467,08267,12267,13267,14867,27467,51467,80167,71923,80423,98624,16224,41124,78923,51421,94321,43120,49920,47120,30919,02518,92018,38419,64119,44618,39517,45716,64315,60614,64114,62714,86314,691182,197185,020183,833186,979190,839192,962191,647192,060201,052198,053195,541196,665196,393195,722196,707198,538201,290205,954201,502199,896210,462205,717199,903205,42724,28724,10224,01523,96523,75023,74123,33923,31023,71823,63223,52923,48023,24323,18223,68423,68723,95523,90223,94124,05424,08524,30525,45926,1831 Includes Treasury bonds and minor amounts of Panama Canal and postal savings bonds.3 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.254

TABLE B-80.—Estimated ownership of public debt securities, 1967-82[Par values;' billions of dollars]1'ublic debt securitiesHeld by private investorsEnd of year or monthTotal 2Held byGovernmentaccountsHeld byFederalReserveBanksTotal 3Commercialbanks 4MutualsavingsbanksandinsurancecompaniesCorporations6State andlocalgovernments6Individuals7Miscellaneousinvestors38Fiscal year:196719681969322.9345.4352.971.876.184.846.752.254.1204.4217.0214.055.559.755.313.212.511.611.012.011.123.625.126.470.474.277.330.733.432.319701971197219731974370.1397.3426.4457.3474.295.2102.9111.5123.4138.257.765.571.475.080.5217.2228.9243.6258.9255.652.661.060.958.853.210.410.310.29.68.58.57.49.39.810.829.025.926.928.828.381.875.473.275.980.735.049.163.276.074.219751976197719781979 .. .533.2620.4698.8771.5826.5145.3149.6155.5167.9187.784.794.4104.7115.3115.5303.2376.4438.6488.3523.469.092.599.894.492.510.616.020.521.221.513.824.721.218.122.131.739.348.263.866.586.896.2106.5113.9115.591.3107.7142.4176.9205.3198019811982907.7997.91,142.0197.7208.1216.4120.7124.3134.4589.2665.4791.2109.7112.224.326.225.937.877.086.2123.0140.3229.3262.71981:JanFebMarAprMayJune . .- 934.1950.5964.5964.0968.5971.2189.5192.0190.9193.9197.8199.9117.2118.9119.0119 7118.3120.0627.4639.6654.6650.4652.3651.2117.2116.4117.5113.5113.2113.325.525.323.723.725.324.030.435.240.040.438.838.777.380.482.383.685.183.0134.2136.2138.6138.2139.9139.6242.8246.1252.5251.0250.0252.6JulyAugSept ....OctNovDec973.3980.2997.91,005.01,013.31,028.7198.6199.0208.1204.9202.1203.3123.4124 5124.3123.0126.5129.9651.3656.7665.4677.2684.6694.5114.2115.0112.2111.3110.0109.425.426.126.224.724.624.337.838.037.838.638.337.886.086.286.288.387.585.6139.5140.2140.3141.0141.6143.7248.4251.2262.7273.3282.6293.71982:JanFebMarAprMayJune1,038.41048.21 061.31 065.71 071.71,079.6202.82011202.5204.3206 7211.7128 3126 2125 6134 3129 8127.0707.3720 8733.3727.1735.2740.9111.41118114.3110.1109.4117.024.924 125.626.827.227.937.937.537.536.538.838.986.288.288.388.591.891.2144.1144.7146.5145.7146.2146.2302.8314.5321.1319.5321.8319.7JulyAug ..sept ..::::;•;OctNovDec1,089.61,109.21,142.01,142.81,161.71,197.1206.3206.5216.4211.0203.9209.4133.8132.9134.4132.1137.7139.9749.6769.8791.2799.7820.1849.4110.028.239.988.7146.4336.41 U.S. savings bonds, series A-F and J, and U.S. savings notes are included at current redemption value.2 As of July 31, 1974, public debt outstanding has been adjusted to exclude the notes of the International Monetary Fund to conformwith the Budget presentation. This adjustment applies to the 1967-82 data in this table.3 For comparability with 1975-82 published data, published data for 1967-74 have been adjusted to exclude notes of theInternational Monetary Fund. These adjustments amounted to $3.3 billion in 1967, $2.2 billion in 1968, and $0.8 billion in each year1969 through 1974. These adjustments were necessary in order to add to the total public debt figures as published by the Departmentof the Treasury. The Treasury Survey of Ownership on which private investor group estimates were based was discontinued in July 1982.4 Includes commercial banks, trust companies, and stock savings banks in the United States and Territories and island possessions;figures exclude securities held in trust departments.5 Exclusive of banks and insurance companies.8 Includes trust, sinking, and investment funds of State and local governments and their agencies, and of Territories and possessions.7 Includes partnerships and personal trust accounts.6 Includes savings and loan associations, nonprofit institutions, corporate pension trust funds, dealers and brokers, certajngovernment deposit accounts and government-sponsored agencies, and investments of foreign balances and international accounts inthe United States.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.Source: Department of the Treasury.255

TABLE B-81.—Maturity distribution and average length of marketable interest-bearing public debt securitiesheld by private investors, 1967-82End of year or monthAmountoutstanding,privatelyheldWithinlyearIto5yearsMaturity class5 to 10years10 to 20years20 yearsand overAverage lengthMillions of dollarsYearsMonthsFiscal year:1967196819691970197119721973197419751976197719781979198019811982150,321159,671156,008157,910161,863165,978167,869164,862210,382279,782326,674356,501380,530463,717549,863682,04356,56166,74669,31176,44374,80379,50984,04187,150115,677151,723161,329163,819181.883220,084256,187314,43653,58452,29550,18257,03558,55757,15754,13950,10365,85289,151113,319132,993127,574156,244182,237221,78321,05721,85018,0788,28614,50316,03316,38514,19715,38524,16933,06733,50032,27938,80948,74375,7496,1536,1106,0977,8766,3576,3588,7419,9308,8578,0878,42811,38318,48925,90132,56933,01712,96812,67012,3378,2727,6456,9224,5643,4814,6116,65210,53114,80520,30422,67930,12737,058543333222233315286311187113790111981:JanFebMarMay"!!"!!!JuneJulyAugSeptOctNovDec502,248515,178532,800528,992529,057531,525533,778540,228549,863558,169569,534580,670247,958256,007263,208254,533258,101252,489251,307251,533256,187263,717266,163275,322156,845160,163167,226167,570167,865172,784171,504180,669182,237177,834189,570188,42243,96943,38246,78649,61643,84247,03250,24245,29748,74352,20147,61550,85127,24128,69028,66228,58730,29630,26830,17232,60232,56932,53634,16434,05526,23526,93626,91828,68528,95328,95230,55330,12730,12731,88132,02232,020433333334491091011110100 101982:JanFebMarMayJuneJulyAugSeptOctNovDec590,139604,671619,030613,576618,699628,997634,556660,583682,043685,969708,769736,148284,171290,697295,476289,000290,476293,266295,118309,446314,436321,081327,565346,321183,843194,457200,544199,278203,612207,106206,380217,258221,783218,673235,443239,26254,37049,12052,61255,32954,36158,42563,02266,34775,74975,94472,64477,57034,06935,81935,82235,56535,70135,65135,58333.09733,01733,06535,75035,67733,68634,57834,57634,40434,54934,54934,45334,43537,05837,20637,36737,31844 4 44 333330100 1001111101110Note.—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 yearis on an October 1—September 30 basis.Source: Department of the Treasury.256

CORPORATE PROFITS AND FINANCETABLE B-82.—Corporate profits with inventory valuation and capital consumption adjustments, 1929-82[Billions of dollars; quarterly data at seasonally adjusted annual rates]Year or quarterCorporateprofits withinventoryvaluationand capitalconsumptionadjustmentsCorporateprofits taxliabilityProfits after tax with inventory valuation andcapital consumption adjustmentsTotalDividendsUndistributedprofits withinventoryvaluationand capitalconsumptionadjustments19299.01.47.75.81.91933-1.7.5-2.32.0-4.319395.31.43.93.8.1194019411942194319448.614.119.323.523.62.87.611.414.112.9586.57.99.510.7404.4434.44.6182.1365.06.11945194619471948194919.016 622.329427.110.79111.312.410.28.47511.017.016.94.65 66.37.07.23.8194.710 09.71950195119521953195433.938.736.136.335.217.922.619.420.317.616.016.116.716.017.58.88.58.58.89.17.27.68.27.28.41955195619571958195945 543.743 338.549.622 022.021419.023.623.421.821.819.526.010.311.111.511.312.213110.710.38.213.81960196119621963196447 648.656.662169.222 722.824.026 228.024.925.832.635941.212.913.314.415.517.312.112.518.220.423.91965196619671968196980 085.182 489 185.130 933.732 539 239.549151.449.950.045.619.119.420.222.022.530.032.029.727.923.1197019711972 .1973197471.483.296.6108.394.934.237.541.649.051.637.245.755.059.343.322.522.924.427.029.914.822.830.532.313.419751976197719781979110.5138.1167.3192.4194 850.663.872.783.287.659.974.394.6109.1107.230.837.440.847.052.729.136.953.762.254.5198019811982*181.6190.6161.184.781.258.897.0109.5102.358.165.170.338.944.432.11980:1IIIll(V195 3172.2177.8181.295.373.382.287.8100.098.995.693.356.257.858.759.643.941.036.933.71981:111tilIV200 318511931183.991.579.282.471.6108.9105.9110,7112.361.564.066.868.147.342.043.944.31982:j||t||157 1155.4166.256.755.360.9100.4100.0105.368.869.370.531.630.734.8Source: Department of Commerce, Bureau of Economic Analysis.257

TABLE B-83.—Corporate profits by industry, 1929-82[Billions of dollars; quarterly data at seasonally adjusted annual rates]Corporate profits with inventory valuation adjustment and without capital consumption adjustmentDomestic industriesYear orquarterTotalTotalTotalFinancial >FederalReservebanksOtherTotalManufacturing2 5.2NonfinancialTransportationandpublicutilitiesWholesafeandretailtradeOthernot.+Kesiof theworld192919331939194019411942194319441945 ..19461947194819491950195119521953195419551956195719581959196019611962196319641965196619671968196919701971197219731974..19751976197719781979198019811982"1980:1II.HIIV1981:1||IllIV1982:|.||Ill10.5-1.26.59.815.420.524.524.019.319.625.933.431.137.943.340.640.238.447.546.946.641.652.349.750.055.159 766.076.080.978.184.980.868.982.094.0105.696.7120.6151.6178.5205.1209.6199.4207.5166.0211,0189.4197.0200.4217.6202.6210.3199.4167.2162.2170.010.2-1.26.19.615.020.124.123.518.918.924.932.229.936.741.538.738.436.445.144,143.539.149.646,746.851.555.861.871.576.773.779.774.662474.985 392.080.4107.6137.4163 4185.4179.0169.1184.6149.6175.9157.8167.5175.5193 8181.7189.3173.7150.3144.1153.71.3.3.81.01.11.21.31.61.72.11.72.63.13.13.64.04.54.64.85.05.25.76.87.27.07.3686.97.5859.010.411.112114.115315.915.011.817.123131.030.329.222.722.531.528.627.229.426 822.720 820.420.022.224.20.0.0.0.0.0.0.01111.2.2.2.3,4.4.3.3.5.6.6.71.0.8.9101.11.4172.02.53.1363.3344.55.75.76.0627.79.611.914.515.711.612.511.412.213 214.215 215.616.116.015.81.3.3.3.91.01.21.31.61.62.01.62.32.93.03.33.74.14.34.54.54.65,16.06.26.36.4585.86.2687.07.98.08610.711911.49.36.211.116 923.320.717.28.16.819.916.115.817.113 68.6554.83.96.28.48.9-1.55.38.614.018.922.821.917.316.823.229.626.833.537.934.733.931.840.339.138.333.542.939.539.844.249 054.964.068 264.869.363.550260.870076.065.495.8120.3140 3154.4148.6140.0162.0127.1144.4129.2140.3146.1167 0159.0168 5153.31 Consists of the following industries: Banking; credit agencies other than banks; security and commodity brokers, dealers, andservices; insurance carriers; regulated investment companies; small business investment companies; and real estate investment trusts.' See Table B-84 for industry detail.Note.—The industry classification is on a company basis and is based on the 1972 Standard Industrial Classification (SIC) beginning1948, and on the 1942 SIC prior to 1948.Source: Department of Commerce, Bureau of Economic Analysis,258130.4121,9129.5-.43.35.59.511.813.813.29.79.013.617.616.220.924.621.722.019926.024.724.019.426.423.623.326.029 332.339.341938.541.236.626634.140 745.539.052.669.278 386.985.674.586.359.885.264.770.078.190 388.992 273.757.756.662.71.8.01.01,32.03.44.43.92.71.82.23.03.04.04.64.95.047 5.65.95.85.97.07.47.88.49310.011.011810710.810.3828.5908.76.110.014.517 820.615.917.419.118716.813.921.517.520115.619621.218.818,519.21,0-.571.21.42.23.03.23.33.84.65.54.55.05.04.83.8385.04.54.44.65.94.95.05.859 7,58.1829.110.410.59511,713 413.912.521.322.426 626.927.124.633.428.119.727.124.427.333 032.133035731.926.827.40.9= 7.3.61.11.51.61.61.52.12.93.63.13.63.73.33.1343.64.14.03.63.63.63.73.9445.15.6636.56.96.1596.5698.07.911.914.217 620.020.123.423.120.622723.524.323.323622.523 722.721.920.020.30.2.0.3.3.4.4.4.4.371.01.31.11.3171.91.8202.42.83.12.5273.03.23.6394.24.5424.45.26.1657.18613.716.313.014,315119.730.630.322.816.435.131729.624.92382Q.B21025716.918.216.3

Year or quarterTABLE B-84.—Corporate profits of manufacturing industries, 2929-82[Billions of dollars; quarterly data at seasonally adjusted annual rates]Corporate profits with inventory valuation adjustment and without capital consumption adjustmentTotalDurable goodsTotalmanufacturingPrimarymetalindustriesFabricatedmetalproductsMachinery,exceptelectricalElectricandelectronicequipmentMotorvehiclesandequipmentOtherTotalNondurable goodsFoodandkindredproductsChemicalsandalliedproductsPetroleumandcoalproductsOther192919331939194019411942194319441945194619471948194919501951 . ...1952195319541955195619571958195919601961196219631964 . .1965196619671968196919701971197219731974197519761977197819791980 ...19811982"1980:||IIIIV1981:II .HIIV1982:ItlMl5.243.35.59511.813.813 29.79013.617.616.220.924.621722.019926.024 724.019426.423 623.326.029.332.339341.938.541.236.626 634.140.745.539.052.669.278.386.985.674.586.359.885.264.770.078.190.388.992.273.757 756.662.72.641.73.1647.28.1744.5245.87.58.112.013.211711.910 514.312 813.39313.711611.414.016.317.923023.820.922.218.910 216.322.424.313.218.930.438.144.337.120.728.411.425.512.418.226.532.135.227.418.99112.712.21.61.52.33.1192.5172.9303.0192.3201.6162.02.5313.62.71.91.481.62.25.42.92.11.13.53.52.94.1-5.14.72.6,1427.04.74.1.7-31-6.5-5.4.81.11.3101.0 91.0111.1 91.181.0111.31.4202.42.42.32.0111.52.12.51.63.03.84.44.95.24.44.94.45.42.84.35.04.76.05.43.44.43.84.71.21.31.62.3231.9171.7212.0142.1181.9232.53.3394.54.14.13.7292.94.34.62.94.76.38.89.48.97.29.35.17.27.07.47.28.49.29.69.98.34.83.7.7.81.21.31.51.41.21.11.21.51.31.7131.31.51.61.72.73.02.92.82.31.21.92.83.02.13.45.66.55.14.45.13.55.23.54.34.56.24.94.84.33.63.73.21.42.13.12.4242.62.14.12.22.6.93.0302.54.04.94.7625.13.95.54.71.25.05.95.71.97.29.48.94.7-5.0-1.11.1-3.7-10.6-4.1-1.4-2.62.6-2.8-1.8Note.—The industry classification is on a company basis and is based on the 1972 Standard Industrial Classification (SIC) beginning1948, and on the 1942 SIC prior to 1948.Source: Department of Commerce, Bureau of Economic Analysis.-4.13.33.21.81.72.62.8262.62.93.53.23.12.93.5273.1354.04.45.15.24.95.74.92.94.35.76.22.94.37.68.811.09.86.86.22.36.77.16.37.18.47.86.32.4.03.52.72.6o172.4314.65.7595.26.67.810.08.18.911.49910.19.411.811910.710012.712.011.912.013.114.416.318.117.619.117.716.517.818.321.225.833.638.840.242.648.453.857.948.459.652.351.851.658.253.764.854.748.643.950.51.91.61.61.4171.8162.2181.8212.4222.32.32.72.72.83.23.23.23.03.23.52.92.42.88.66.96.86.05.76.28.76.56.65.54.97.610.48.57.78.16.76.37.01.71.82.32.82.32.22.23.02.82.82.53.53.13.23.23.64.04.64.94.35.24.53.94.45.26.05.66.58.37.98.37.16.78.25.77.45.56.67.49.47.58.07.86.55.85.12.81.92.32.7232.82.73.03.32.62.12.52.52.22.22.12.42.93.23.93.73.23.53.53.05.010.59.612.611.613.820.728.026.624.431.529.127.723.523.523.335.124.725.420.425.93.72.82.74.4363.32.93.64.13.63.34.34.24.14.34.65.36.06.86.37.06.95.96.47.27.86.68.911.013.814.514.813.014.411.714.112.212.712.914.914.414.114.110.011.412.5259

TABLE B-85.—Sates, profits, and stockholders 1 equity, all manufacturing corporations, 1950-82[Billions of dollars]All manufacturing corporationsDurable goods industriesNondurable goods industriesYear orquarterSales(net)Beforeincometaxes 1ProfitsAfterincometaxesStockholders'equity*Sales(net)Beforeincometaxes'ProfitsAfterincometaxesStockholders'equity 8Sales(net)Beforeincometaxes>ProfitsAfterincometaxesStockholders'equity"1950..181.91951..245.01952.,250.21953.,265.91954,,248.51955.,278.41956.,307.31957.,320.01958305.31959338.01960345.71961356.41962389.41963412.71964443.11965492.21966554.21967575.41968631.91969694.61970708,81971751.11972849.51973 1,017.21973: IV 275.1New series:1973: IV 236.61974 1,060.61975.. 1,065.21976.. 1,203.21977.. 1,328.11978.. 1,496.41979.. 1,741.81980.. 1,912.81981.. 2,144.71979:I406.6II436.4III..., 437.5IV.... 461.21980:I465.7II466.3464.2IV516.61981:520.8n'Z! 549.6Ill539.9IV534.41982:"Z501.0520.1507.123.227.422.924.420.928.629.828.222.729.727.527.531.934.939.646.551.847.855.458.148.152.963.281.421.420.692.179.9104.9115.1132.5154.2145.8158.536.542.638.236.839.535.933.237.239.045.640.034.028.930.927.812.911.910.711.311.215.116.215.412.716.315.215.317.719.523.227.530.929.032.133.228.631.036.548.113.013.258.749.164.570.481.198.792.6101.322.726.824.724.524.822.421.024.424.428.925.222.919.020.017.883.398.3103.7108.2113.1120.1131.6141.1147.4157.1165.4172.6181.4189.7199.8211.7230.3247.6265.9289.9306.8320.8343.4374.1386.4368.0395.0423.4462.7496.7540.5600.5668.1743.4576.2592.5609.2624.0643.9658.1670.5699.7718.4739.4753.5762.3756.5764.1774.3116.8122.0137.9122.8142.1159.5166.0148.6169.4173.9175.2195.3209.0226.3257.0291.7300.6335.5366.5363.1381.8435.8527.3140.1122.7529.0521.1589.6657.3760.7865.7889.1979.5207.5222.6213.6221.9219.8218.7212.6238.0234.1257.2245.1243.0226.4240.3225.312.915.412.914.011.416.516.515.811.415.814.013.616.818.521.226.229.225.730.631.523.026.533.643.610.810.141.135.350.757.969.672.457.467.218.821.616.415.715.813.511.916.216.720.716.413.410.812.78.56.76.15.55.85.68.18.37.95.88.17.06.98.69.511.614.516.414.616.516.912.914.518.424.86.36.224.721.430.834.841.845.235.641.711.413.310.310.19.78.27.210.410.112.710.38.56.88.25.339.947.249.852.454.958.865.270.572.877.982.384.989.193.398.5105.4115.2125.0135.6147.6155.1160.4171.4188.7194.7185.8196.0208.1224.3239.9262.6292.5317.7350.4281.9289.3296.5302.1308.0312.6317.2332.8339.4349.7354.2358.3353.0356.5360.195.1128.1128.0128.0125.7136.3147.8154.1156.7168.5171.8181.2194.1203.6216.8235.2262.4274.8296.4328.1345.7369.3413.7489.9135.0113.9531.6544.1613.7670.8735.7876.11,023.71,165.2199.1213.8223.9239.3245.9247.6251.6278.6286.7292.4294.8291.3274.6279.8281.810.312.110,010.49.612.113.212.411.313.913.513.915.116.418.320.322.622.024.826.625.226.529.637.810.610.551.044.654.357.262.981.888.491.317.721.121.921.223.722.421.321.022.324.923.520.618.118.219.36.15.75.25.55.67.07.87.56.98.38.28.59.210.011.613.014.614.415.516.415.716.518.023.36.77.034.127.733.735.539.353.556.959.611.213.514.414.415,114.213,714.014.216.214.914.312.211.812.543.551.153.955.758.261.366.470.674.679,283.187.792.396.3101.3106.3115.1122.6130.3142.3151.7160.5172.0185.4191.7182.1199.0215.3238.4256.8277.9308.0350.4393.0294.3303.2312.6321.9335.9345.5353.3366.9379.1389,7399,4404.0403.5407.6414.21 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.1 Annual data are average equity for the year (using four end-of-quarter figures).Note.—Data are not necessarily comparable from one period to another due to changes in accounting procedures, industryclassifications, sampling procedures, etc. For explanatory notes concerning compilation of the series, see "Quarterly Financial Report forManufacturing, Mining, and Trade Corporations, Federal Trade Commission.Source: Federal Trade Commission.260

TABLE B-86.—Relation of profits after taxes to stockholders' equity and to sales, all manufacturingcorporations, 1947-82Year or quarterRatio of profits after income taxes (annualrate) to stockholders' equity—percent *AllmanufacturingcorporationsDurablegoodsindustriesNondurablegoodsindustriesProfits after income taxes per dollar ofsales—centsAt!manufacturingcorporationsDurableRoodsindustriesNondurable" goodsindustries19471948 ..194919501951 „ .19521953 ..19541955 .19561957 ..19581959 „I960 .. .19611962 ..19631964 ..1965 „19661967 ..19681969 .. .1970 ..19711972 ..19731973- IVNew series:1973: IV1974 ..19751976 ..19771978 ..19791980 .19811979:|11 .HIIV1980:IIIHIIV ..1981:||IllIV ..1982:1 ,||III15.616.011.615.412110.310.59.912 612.310 98.610.4928.99810.311.613 013.411712.111.5939.710612.813.414.314.911613 914.215 016.413 913.615 718116.315.715 413 612.514.013.615.613.412.010110 59.214.415.712.116.913.011.11U10.313.812.811.38.010.48.58.19.610.111.713.814.211.712.211.48.39.010.813.112.913.312.610.313 714.516 015.411211.916.218 414.013.412.610 69.112.612.014.611.69.57.79.25.91 Annual ratios based on average equity for the year (using four end-of-quarter figures). Quarterly ratios based on equity at end ofquarter only.Note—Based on data in millions of dollars.See Note, Table B-85.Source: Federal Trade Commission.16.616.211.214.111.29.79.99.611.411.810.69.210.49.89.69.910.411.512.212.711.811.911.510.310.310.512.614.015.317.112.914.213.814.217.416.315.215.317.818.417.918.016.415.615.215.016.614.914.212.111.612.16.77.05.87.1494.34.34.5545.3484.24.8444.3454.75.25.65.65.05.14.8404.14.34.74.75.65.54.65.45.35.45.74.84.75.66.15.75.35.34.84.54.74.75.34.74.33.83.93.56.77.16.47.7534.54.24.6575.24.83.94.8403.9444.55.15.75.64.84.94.63,53.84.24.74.55.04.74.15.25.35.55.24.04.35.56.04.84.64.43.83.44.44.34.94.23.53.03.42.46.76.85.46.5454.14.34.45 15.3494.44.9484.7474.95.4555.6535.25.0454.54.44.85.06.16.45.1555.35.36.15.65.15.66.36.46.06.15.75.55.05.05.55.14.94.44.24.4261

TABLE B-87.—Relation of profits after taxes to stockholders' equity and to sales, all manufacturingcorporations, by industry group, 1981-82IndustryRatio of profits after income taxes (annualrate) to stockholders' equity—percent l1981 1982Profits after income taxes per dollarof sales—cents1981 1982All manufacturing corporations....13,412.010.110.59.24.74.33.83,93.5Durable goods industries ,U.69.57.79.25.94.23.53,03.42.4Stone, cfay, and glass productsPrimary metal industries11.913.95,83.0-3.74.6-3.47.3-8.34.64.92.51.21.9»1.32.9-3.7Iron and steelNonferrous metals18.46.3L8-6.21,0-13.2-.95.92.6.03.618-2.3.4-5.5-.5Fabricated metal productsMachinery, except electricalElectrical and electronic equipment,.,,...,....,Transportation equipment 114.114.112.91.99.415.512.33.89.811.812.64.39,910.812.611.65.17,311.44.64.26.34.5.62.96.84.31.13,25.74.71.33.15.24.63.21.73.84.41.4Motor vehicles and equipmentAircraft, guided missiles, andparts-6.913.9-1.611.7.010.811.8U.6-.212.6-2.24.1-.53.1.03.23.23.2-.13.7Instruments and related products...Other durable manufacturingproducts17.79.814.95.913.32,415.38.314.76.99.42.87.91.87,6,88.32.57.92.1Nondurable goods industries14.914.212.1U.612.14.94.44.24.4Food and kindred products. ...Tobacco manufacturesTextile mill productsPaper and allied productsPrinting and publishingChemicals and allied products*...13.819.49.99,715.613.914.618.66.512,515,513.312.618.42.66.29.713.012.321.34.96.513.812.211.920.88.46.113.510.73.2U.32.63.95.26.53.310.91.75.45.16.73.111.4.82.83.46.42.912.51.42.84.76.02.812.22.52.74.55.3Industrial chemicals and syntheticsDrugs11.916.111.418.68.920.87.717.65.618.95,310.25.612.44.313.64.011.82.812.3Petroleum and coal productsRubber and miscellaneous plasticsproductsOther nondurable manufacturingproducts17.411.414,415.49.115.013.98.77.0U.610.49.613.89,012.06.43.33.35.82.83.35.72.71.74.93.12.46.02.92.71 Ratios based on equity at end of quarter.* Includes other industries not shown separately.Source: Federal Trade Commission.262

TABLE B-88.—Determinants of business fixed investment 1955-82[Percent, except as noted]YearRealinvestmentaspercentof realGNPityutilizationmanufacturing1Cashflow aspercentofGNP 2Rate of return ondepreciab e assets 3BeforetaxNonfmancial corporationsAftertaxRate of return onstockholders'equity*BeforetaxAftertaxRatio ofmarketvalue tomentcost ofnetassets 61955195619571958...19599.39.79.78.78.887.186.483.775.281.99.38.98.98.69.319.816.815.212.816.49.8797.46.58.513.111610.58.410.56.2545.0395.11.11211041.01810411.25219601961. .19621963....19649.18.89.09.09.480.277.481.683.585.68.98.89.49.710.115.015.117.418.820.28.08.210.311.212.59.99.511.212.113.35.04.66.16.77.81.22213501.28214191.52119651966196719681969 .. ..10 511.010 410.310 789 691.186 987.186.210610.310 09.48.622121.819.318.916.514 013.712 411.39.715 515.213413.812.5969.2828.0711621146614801.52313531970 .197119721973197410.510.010.211.010.979.378.483.587.683.87.88.38.68.07.012.813.514.314.311.07.98.59.18.76.18.89.910.512.811.24.75.76.28.37.310911.17612581.157827197519761977197819799.79.710.211.011.572.979.581.984.485.79.09.39.79.58.911.912.913.913.712.17.77.98.78.67.48.58.610.210.710.25.24.86.36.86.6.811.911.797.761.709198019811982*11.311411.279.178.569.88.7959.610.511.09.56.6777.58.47.7< fl )5.551( 6 ).666694.6901 Federal Reserve Board index.2 Cash flow calculated as after-tax profits plus capitaj consumption allowance plus inventory valuation adjustment.3 Profits plus capital consumption adjustment and inventory valuation adjustment plus net interest paid divided by the stock ofdepreciable assets valued at current replacement cost.4 Profits corrected for inflation effects divided by net worth (physical capital component valued at current replacement cost).5 Equity plus interest-bearing debt divided by current replacement cost of net assets.« Not available.Sources: Department of Commerce (Bureau of Economic Analysis), Board of Governors of the Federal Reserve System, and Council ofEconomic Advisers.263

TABLE B-89.—Sources and uses of funds, nonfarm nonfinancial corporate business, 1946-82[Billions of dollars; quarterly data at seasonally adjusted annual rates]SourcesUsesYear orquarterTotalInternal'TotalTotalExternalCredit market fundsSecuritiesandmortgagesLoansandshorttermOther 2TotalCapita)expenditures3IncreaseinfinancialassetsDiscrepancy(sourcesless uses)194619471948..194918.727.028.919.98.112.919.119.510.614.19.7.46.98.46.53.13.65.46.74.93.33.0-.2= 1.83.75.83.3-2.716.825.625.318.318.117.320.314.8-1.48.45.03.51.91.43.61.61950195119521953195442.136.429.927.829.618.020.221.921.723.924.016.28.06.15.78.110.59.55.76.54.26.48.06.06.73.94.11.4-.4-.215.95.7-1.5.5-.840.437.629.228.027.824.030.224.625.722.916.47.44.62.34.91.7^1.2.6=.11.81955..195619571958..195952.744.943.441.956.329.529.531.530.336.023.215.411.911.720.210.212.812.310.512.36.47.510.410.58.13.75.31.9-.04.213.12.5-.41.27.949.140.839.138.551.232.636.834.927.737.016.54.04.210.814.23.54.14.33.45.01960196119621963196448.656.360.168.473.935.436.542.846.551.813.219.817.322.022.112.112.912.812.514.17.510.79.48.47.84.62.23.44.06.21.26.94.69.58.041.451.055.560.464.937.536.743.244.750.13.914.212.315,714.87.25.34.68.09.01965196619671968196991.897.694.7113.5115.558.562.663.665.064.433.335.031.148.551.118.523.827.827.732.37.614.319.115.014.611.09.58.712.617.714.811.23.320.918.882.791.388.5106.0115.361.074.772.275.483.721.816.616.330.631.69.16.46.27.5.21970197119721973,.1974102.3125.3151.6192.4190.161.873.585.091.785.640.551.866.6100.7104.435.337.243.456.769.926.332.82M20.726.39.04.416.936.043.65.314.623.244.034.598.7122.7149.1191.9190.180.086.099.0121.5137.918.736.750.170.552.23.62.62.4.5.01975..1976197719781979156.9210.8252.2315.4346.3119.7134.2157.4175.7188.837.276.694.9139.7157.530J54.570.479.391.238.738.233.931.925.9-8.016.336.547.46!).36.522.124.560.466.3150.9201.8237.6294.2347.1109.7148.3175.1202.2219.841.253.562.592.0127.36.09.014.721.219801981333.7352.2197.5231.1136.2121.195.792.657.523.138.269.640.628.5317.9314.8220.5260.997.453.915.837.41980:\\'ZIllIV1981:IIIIllIV363.2263.4326.4381.9333.6381.2348.9345.0192.6197.4199.3200.8222.4225.4235.2241.4170.666.0127.2181.1111.3155.8113.7103.6114.762.686.6118.768.7119.1100.282.546.158.663.761.741.634.83.212.768.64.022.957.127.184.397.069.955.93.440.562.442.636.713.521.1341.2248.7314.2367.5318.2352.2304.6284.0231.3215.6209.9225.2233.5260.0284.6265.5103.933.1104.3142.384.792.220.018.522.014.712.214.415.429.044.261.01982:H'ZIll*.297.7348.2371.7232.6234.3240.365.0113.9131.3110.293.398.030.633.159.379.760.338.7-45.220.533.3225.3304.9328.5241.9248.5264.2-16.656.464.372.343.343.11 Undistributed profits (after inventory valuation and capital consumption adjustments), capital consumption allowances, and foreignbranch profits, dividends, and subsidiaries' earnings retained abroad.1 Consists of tax liabilities, trade debt, and direct foreign investment in the United States.3 Plant and equipment, residential structures, inventory investment, and mineral rights from U.S. Government.Source: Board of Governors of the Federal Reserve System.264

TABLE B-9Q.~Current assets and liabilities of U.S. corporations, 1939-82[Billions of dollars]Current assetsCurrent liabilitiesEnd of yearor quarterTotalCash 1U.S.Governmentsecurities 2NotesandaccountsreceivableInventoriesOthercurrentassetsTotalNotesandaccountspayableOthercurrentliabilitiesNetworkingcapitalCurrentratio 3All corporation s*SEC series: 5193954.510.82.222.118.01.430.021.98.124.51.817194019411942194319441945194619471948194960.372 983.693 897.297 4108.1123 6133.0133.113.113917.621621.621.722.825.025.326.52.04010.116420.921115.314114.816.824.028 027.326.926.525.930.738.342.443.019.825 627.327 626.826 337.644 648.945.31.5141.3131.4241.7161.61.432.840 747.351651.745 851.961.564.460.723.226 426.026 326.825 731.637 639.337.59.614 321.325324.920120.323 925.023.327.532 336.342145.651.656.262.168.672.41.83817911.7671.8181.8802.1272.0832.0102.0652.1931950195119521953195419551956195719581959161.51791186.2190 6194 6224.0237 9244.7255 3277.328.130 030.831.133 434.634.834.937.436.319.720719.921.519 223.519118.618 822.856.861.567.468.573 688.997.7102.2109.7120.655.164 965.867 265 372.880482.281988,41.7212.424314.2596.7759.179.892 696.198.999 7121.0130.5133.1136.6153.148 354 959.359 561776.183 986.690 4101.031.637 836.839 438 045.046 646.546 252.081.686 590.191894 9103.0107 4111.6118.7124.22.02419341.9381.92719521.8511.8231.8381.8691.811I9601961289.0306.837.241.120.120.0129.2139.291.895.210.611.4160.4171.2106.8114.653.656.6128.6135.61.8021.792Nonfinancial corporations 6SEC series: 5196119621963196419651966196719661969254.7269.7288 2305.6336 0364.0386 2426.5473.634.837.139 840.542.841.945.548.247.916.516.816 715.814 413.010311.510.697.9103.2110 5119.91341146.6155.3173.9197.095.0100 5106 8113.1126 6142.81531166.0186.410.512.114 416.318119.722 026.931.6123.7132.4145 5156.6178 8199.4211.3244.1287.884.488.797 0104.91215137.5147.1168.8199.239.343.748 551.757.361.964.275.388.6131.0137.3142 7149.0157.2164.6174.9182.4185.72.0592.0371.9811.9511.8791.8251.8281.7471.64619701971197219731974492 3529.6599.3697.8790.750 253.359.066.371.17711.010.612.812.32061221.1248.2288.5322.11933200.4225.7263.9313.635 043.855.866.471.7304 9326.0375.6450.9530.42113220.5282.9340.3402.393 6105.592.7110.7128.1187.4203.6223.7246.9260.31.6151.6251.5951.5481.491FTC-FRB series: 7197419751976197719781979735.4759.0827 4912 71043 71,218.273.282.188.297 2105 5118.011.119.023 518 217 317.0265.8272.1292 9330 3388 0461.1319.5315.9342 5376 94316505.565.969.980.39011013116.7453.4451.6495.1557.1669 3807.8269.8264.2282.1317 6382 9461.2183.6187.4213.0239 6286 4346.6282.0307.4332.4355.5374.4410.51.6221.6811.6711.6381.5591.508198019811.333.51.427.1127.1131.719.317.9510.6536.7543.7587.1132.7153.6890.9980.0515.2562,9375.7417.1442.6447.11.4971.4561981:1ItIllIV1,374.51,388.31,410.91,427.1126.6126.2125.1131.719.219.918.017.9528.0533.1542.4536.7560.2565.3577.0587.1140.5143.8148.3153.6923.2931.5967.2980.0520.3525.9549.5562.9402.9405.5417.7417.1451.3456.8443.7447.11.4891.4901.4591.4561982:It1,423.61,419.4121.3123.417.117.4537.8534.4593.8589.2153.6155.0985.7982.6555.0554.9430.8427.8437.9436.81.4441.4451 Includes time certificates of deposit.2 Includes Federat agency issues.3 Total current assets divided by total current liabilities.4 Excludes banks, savings and loan associations, and insurance companies.5 Based on data from 'Statistics of Income," Department of the Treasury.6 Excludes banks, savings and loan associations, insurance companies, investment companies, finance companies (personal andcommercial), real estate companies, and security and commodity brokers, dealers, and exchanges.7 Based on data from "Quarterly financial Report for Manufacturing, Mining, and Trade Corporations," Federal Trade Commission. See"Federal Reserve Bulletin," July 1978, for details regarding the series.Note.—SEC series not available after 1974.Sources: Board of Governors of the federat Reserve System, Federal Trade Commission, and Securities and Exchange Commission.265

TABLE B-91.—State and municipal and corporate securities offered, 1934-82[Millions of dollars]Year or quarterStateandmunicipalsecuritiesofferedfor cash(principalamounts)TotalcorporateofferingsType of corporate securitystockPreferredstockCorporate securities offered for cashBondsandnotesManufacturinglIndustry of corporate issuerElectric,gas, andwater 2Transportation3CommunicationOther1934....1939....1940....1941....1942....1943....1944....1945....1946....1947....1948....1949....9391,1281,2389565244356617951,1572,3242,6902,9073972,1642,6772,6671,0621,1703,2026,0116,9006,5777,0786,0528710811034561633978917796147361831671121243697581,1277624924253721,9792,3862,3899179902,6704,8554,8825,0365,9734,890676049928485395101,0612,0263,7012,7422,2261,4141331,2711,2031,3574724771,4222,3192,1583,2572,1872,320176186324366481616091,45471128675580090257121103159 96211092113292931,0089461950....1951....1952....1953....1954....1955....1956....1957....1958....1959....1960....1961....1962....1963....1964....1965....1966....1967....1968....1969....1970....1971....19721973197419751976197719781979198019811982; First 3quarters1981:II...,III...IV...1982:II...III..3,5323,1894,4015,5586,9695,9775,4466,9587,4497,6817,2308,3608,55810,10710,54411,14811,08914,28816,37411,46017,76224,37022,94122,95322,82429,32633,84545,06046,21542,26147,13346,13449,2319,15913,3619,88213,73212,77017,62718,8346,3627,7419,5348,8989,51610,24010,93912,88411,5589,74810,15413,16510,70512,21113,95714,78217,38524,01421,26125,99737,45143,22939,70531,68037,82053,63253,31454,22948,21253,09378,89672,50354,58716,68123,75811,52920,53515,57215,96023,0558111,2121,3691,3261,2132,1852,3012,5161,3342,0271,6643,2941,3141,0112,6791,4731,9011,9273,8857,6407,0379,48510,7077,6424,0507,4148,3058,0477,9378,70618,99625,10714,9935,0119,6475,0935,3564,6575,8004,5366318385644898166356364115715314094504223434127245808816366911,3903,6833,3713,3412,2733,4592,8033,9162,8323,5303,6351,7883,4974372672805821,1261,7894,9205,6917,6017,0837,4887,4208,0029,9579,6537,1908,0819,4208,96910,85610,86512,58514,90421,20616,74017,66629,02330,06125,62820,70031,49742,75942,20642,26637,44340,85756,26545,60636,09710,86513,6746,16814,89910,3339,03416,7301,2003,1224,0392,2542,2682,9943,6474,2343,5152,0732,1524,0773,2493,5143,0465,4147,05611,0696,9586,34610,64711,6516,3984,83210,51118,65215,49613,75711,06211,56324,39817,3959,8475,5776,0441,8623,9122,3481,7715,7282,6492,4552,6753,0293,7132,4642,5293,9383,8043,2582,8513,0322,8252,6772,7602,9343,6664,9355,2936,71511,00911,72111,31410,26912,83615,89314,41813,70412,25313,73615,94014,49513,1273,2694,5162,9863,7244,2694,3724,4868134949925957788937248248249677186945679579827021,4941,6391,5641,7791,2531,1488608111,0053,6374,6493,2182,6963,2973,7272,7791,3108581,2114103003992806313996127608827201,1321,4191,4621,4247171,0501,8341,3031,1052,1899452,0031,9751,7752.1725,2915,8404,8364,8723,9324,4663,5624,4433,6404,6947,4016,1581,7651,3542,2941,8077035195566901,3001,0581,0682,1382,0372,7572,6192,4261,9912,7333,3833,5272,7613,9574,9804,7873,1674,3965,6718,9859,25212,86716,29810,8979,63210,98315,19419,11318,56519,80327,42931,67628,5355,6239,6934,46411,8968,0378,97811,5201 Prior to 1948, also includes extractive, radio broadcasting, airline companies, commercial, and miscellaneous company issues.2 Prior to 1948, also includes telephone, street railway, and bus company issues.3 Prior to 1948, includes railroad issues only.Note.—Covers substantially all new issues of State, municipal, and corporate securities offered for cash sale in the United States inamounts ovsr $100,000 and with terms to maturity of more than 1 year; excludes notes issued exclusively to commercial banks,intercorporate transactions, and issues to be sold over an extended period, such as employee-purchase plans. Closed-end investmentcompany Issues are included beginning 1973.Sources: Securities and Exchange Commission, "The Commercial and Financial Chronicle," and "The Bond Buyer."266

TABLE B-92.—Common stock prices and yields, 1949-82Common stock prices 1Common stock yields(percent) 5Year or monthNew York Stock Exchange indexes (De ;. 31, 1965 = 50) 8CompositeIndustrialTransportationUtilityFinanceDowJonesindustrialaverage 3Standard& Poor'scompositeindex(1941-43=10) 4Dividendpriceratio 6Earningspriceratio 71949 ..9 02179.4815.236.5915,481950 ..195119521953 ..195419551956 ..195719581959 ..10 8713.0813.8113.6716.1921.5424.4023.6724 5630.73216.31257.64270.76275 97333.94442.72493.01475.71491.66632.1218.4022.3424.5024.7329.6940.4946.6244.3846.2457.386.576.135.805.804.954.084.094.353.973.2313 9911.829.4710.268,577.957.557.896.235,7819601961 ..1962196319641965 ..196619671968 ..1969300135.3733 4937 5143 7647.3946.1550.7755.3754.6746.1851.9758.0057.4450.2653.5150.5846.9645.4145.4344.1942.8044.4549.8265.8570.49618.04691.55639.76714.81834.05910.88873.60879.12906.00876.7255.8566.2762.3869.8781.3788.1785.2691.9398.7097.843.472.983.373.173.013.003.403.203.073.245.904.625.825.505.325.596.635.735.67.6.081970 ..19711972 .19731974197519761977 .. . .19781979 ..45.7254.2260 2957.4243.8445.7354.4653.6953.7058.3248.0357.9265.7363.0848.0850.5260.4457.8658.2364.7632.1444.35501737.7431.8931.1039.57410943.5047.3437.2439.5338.4837.6929.7931.5036,9740 9239.2238.2060.0070.3878.3570.1249.6747.1452.9455.2556.6561.42753.19884.76950 71923.88759.37802.49974.92894.63820.23844.4083.2298.29109.20107.4382.8586.16102.0198.2096.02103.013.833.142.843.064.474.313.774.625.285.476.455.415.507.1211.599.158.9010.7912.0313.461980 ..19811982681074.0268.9378.7085.4478.1860 6172.6160.4137 3538.9139.7564.2573.5271.9989141932.92884.36118.78128.05119.715.265.205.8112.6611.961981:Jan..FebMarApr..MayJune762473.5276.4677.6076.2876.8089.2385.7489.3990.5788.7888.6374 4372.7677.0980.6376.7876.7138 5337.5937.8238.3438.2739.2370.0468.4872.8274.5974.6579.79962.13945.50987.181,004.86979.52996.27132.97128.40133.19134.43131.73132.284.805.004.884.864.985.0310.7211.44JulyAug..Sept.OctNovDec74.98

TABLE B-93.—Business formation and business failures, 1929-82Year or monthIndexof netbusinessformation(1967=100)businessincorporations(number)Businessfailurerate 2TotalNumber of failuresBusiness failures 1Liability size classUnder$100,000$100,000and overAmount of current liabilities(millions of dollars)TotalLiability size classUnder$100,000$100,000and over19291933 s1939"194019411942194319441945194619471948194919501951195219531954195519561957195819591960196119621963196419651966196719681969197019711972197319741975...1976197719781979104.886.490.890.194.592.490.898.295.491.491.198.194.591.192.894.798.099.598.9100.0107.6113.5107.1109.5115.5115.5111.2108.8117.2126.5132.9131.7132,916112,89796,34685,64093,09283,77892,946102,706117,411139,915141,163137,112150,781193,067182,713181,535182,057186,404197,724203,897200,010206,569233,635274,267264,209287,577316,601329,358319,149326,345375,766436,170478,019524,565103.9100.369.663.054.444.616.46.54.25.214.320.434.434.330.728.733.242.041.648.051.755.951.857.064.460.856.353.253.351.649.038.637.343.841.738.336.438.442.634.828.423.927.822,90919,85914,76813,61911,8489,4053,2211,2228091,1293,4745,2509,2469,1628,0587,6118,86211,08610,96912,68613,73914,96414,05315,44517,07515,78214,37413,50113,51413,06112,3649,6369,15410,74810,3269,5669,3459,91511,4329,6287,9196,6197,56422,16514,54113,40011,6859,2823,1551,1767591,0033,1034,8538,7088,7467,6267,0818,07510,22610,11311,61512,547L3.49912,70713,650L5.00613,77212,19211,346L1.34010,83310,1447,8297,1928,0197,6117,0406,6276,7337,5046,1764,8613,7123,9307449792272191631236646501263713975384164325307878561,0711,1921,4651,3461,7952,0692,0102,1822,1552,1742,2282,2201,8071,9622,7292,7152,5262,7183,1823,9283,4523,0582,9073,634483.3457.5182.5166.7136.1100.845.331.730.267.3204.6234.6308.1248.3259.5283.3394.2462.6449.4562.7615.3728.3692.8938.61,090.11,213.61,352.61,329.21,321.71,385.71,265.2941.01,142.11,887.81,916.92,000.22,298.63,053.14,380.23,011.33,095.32,656.02,667.4261.5215.5132.9119.910O.780.330.214.511.415.763.793.9161.4151.2131.6131.9167.5211.4206.4239.8267.1297.6278.9327.2370.1346.5321.0313.6321.7321.5297.9241.1231.3269.3271.3258.8235.6256.9298.6257.8208.3164.7179.9221.8242.049.746.835.420.515.117.118.851.6140.9140.7146.797.1128.0151.4226.6251.2243.0322.9348.2430.7413.9611.4720.0867.11,031.61,015.61,000.01,064.1967.3699.9910.81,618.41,645.61,741.52,063.02,796.34,081.62,753.42,887.02,491.32,487.51980...1981...121.1113.5533,520581,24242.161.311,74216,7945,6828,2336,0608,5614,635.16,955.2272.5405.84,362.66,549.3Seasonally adjusted1981:Jan..,Feb..Mar..,&July..,Aug..,Sept,Oct...Nov...Dec,1982:

AGRICULTURETABLE B-94.—Farm income, 1929-82[Billions of dollars; quarterly data at seasonally adjusted annual rates]Income of farm operators fromarmingGross farm incomeNet farm incomeYear or quarterTotal 1TotalCash marketing receiptsLivestockandproductsCropsValue ofinventorychanges"ProductionexpensesCurrentdollars1967dollars 319291933193913.86.910.711.35.37.96.22.84.55.12.53.3-0.1-.2.17.74.46.36.22.64.412.06.610.6194019411942194319441945194619471948194911.314.319 923 324.025.429.632 436 530.88.411.115.619.620.521.724.829.630.227.84.96.59.011.511.412.013.816.517.115.43.54.6658.19.29.711.013113112.4.3.41.1-.1-.4-.4.0-1.81.7-.96.97.810.011.612.313.114.517 018.818.04.56.59911.711.712.315.115 417.712,810.714.720 222 722.222.825.823 024 517.919501951 ....1952195319541955195619571958195933.138.337.834 434.233.534.034 839 037.928.532.932.531.029.829.530.429.733.533.616.119.618.216.916.316.016.417.419.218.912.413.214.314.113.613.514.012 314.214.7.81.2.9-.6.5.2~.s.8.019.522.322.821.521.822.222.723.725.827.213.615.915.013.012.411.311.311.113.210.718.920.518.816.215.414.113.813.115.212.319601961196219631964196519661967..1968196938 940 542.343.442.346.550 550 551.856,434.235.236.537.537.339.443.442.844.248,219.019.520.220.019.921.925.024.425.528.615315716.317.417.417.518 418.418.719.6.4.3.6.6-.81.0-.1.7.1.127.428.630.331.631.833.736.538.239.542.111.512.012.111.810.512.914.012.312.314.313 013 313.312.811.313.714.412.311.813.0197019711972197319741975197619771978197958.762 071.098.898.01010101.9108.6127 3151.350.552.761.186.992.488.995.496.2112.5131.729.530.535.645.841.343.146.347.658.868.621.022 325.541.151.145 849.048.653 763.1.01.4.93.4-1.63.4-2.41.01.15.644,447.252.165.472.075.883.390.2100.6119.014.214.818.933.426.025.218.718.426.732.412.212.215.125.117.615.611.010.213.614.91980 . ...19811982"150 6166.8163.7139.5143.5142.967.868.569.071775.073.9-4.35.5-.2130.5141.6144.220.125.119.58.29.26.71980:1||IllIV148.6145 2153 2155.4135.3134.3143.6144.866.764.469.370.868.669 974 374.0-1.4-4.2-6.0-5.6125.7128.7132.0135.422.916.521.220.09.56.88.57.81981.1IIIllIV161.8164 71715168.8142.5142.3146 7142.567.969.471.065.774.672 975 776.82.55.37.27.0139.0141.0143.2143.222.823.728.325.68.68.810.29.11982:||| ...HIIV162.0163 0161.6168.1143.4144.4143.2140.667.470.170.468.176.074 372.872.5-1.0-.5.0.5143.7144.2144.3144.618.318.817.323.56.56.65.98.0J 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 consumer price index (Department of Labor).Source: Department of Agriculture, except as noted.269

TABLE B-95.—Farm output and productivity indexes, 1929-82[1977 = 100]Farm outputProductivity indicatorsYearTotal *Total 8FeedgrainsCrops 2FoodgrainsOilcropsLivestockandproducts*r«.mrarmoutputperunit oftotalInputCropproductionperacre*Farm output per hour ofTotalId 111) WVIPCropsLivestockandproducts1929...444838396504548910141933...4243352755445.43910131939...48494036145650511112141940...1941...,1942....1943...,1944...,1945...,1946...,1947....1948....1949....1950....1951....1952....1953....1954....1955....1956....1957....1958....1959....I960....1961..,.1962....1963....1964....505258575958605863626163666666696967737476767780795152585558565956646159606262616363626968727071747241445147494751395750514750495154545864666962626859404548415153556462534949635751485047695566605659651616232320201922272626262626283034333936384344464657606772696866656467707374747779797879838286868991525358565758605863606061636464676868747477787982815354595558576057646059596262616364657372777881838112131414141516161819192022232426282933353739414547131415151616181820202222242526283033383741424547491415161616161717181819202122232425 26283132353740431965....1966....1967....1968....1969....827983858576737779807070797578676776807453555664658991949495858385878885838689915253586263565963666845495355591970....1971....1972....1973....1974....1975...1976....1977....1978....1979....84929193881001041117786879284939210010211371928891749196100108116698177869110810710093108666874877186741001051299910010199100959910010110487949495909997100102106889€99998896941001051136674788179899410010911970798487808991100105118646873768285931001091181980....1981....1982",.1031151171011161209712112412114314099114103106108107100112114991131181121291311041211261291381371 Farm output measures the annual volume of net farm production available for eventual human use through sales from farms orconsumption in farm households.1 Gross production.3 Includes items not included in groups shown.* Computed from variable weights for individual crops produced each year.Source: Department of Agriculture.270

TABLE B-96.—Farm input use, selected inputs, 1929-82YearFarm populationApril 1Number(thousands)Aspercentoftotalpopulation2Farm employment(thousands) 3TotalFamilyworkersHiredworkersCropsharvested(millionsofacres)*TotalSelected indexes of input use (1977=100)FarmlaborFarmrealestateMechanicalpowerandmachineryculturalchemicals8Feed,seed,andlivestockpurchases81929..1933..1939..1940....1941..,.19421943....194430,58032,39330,84030,54730,11828,91426,18624,81525.125.823.523.122.621.419.217.912,76312,73911,33810,97910,66910,50410,44610,2199,3609,8748,6118,3008,0177,9498,0107,9883,4032,8652,7272,6792,6522,5552,4362,2313653403313413443483573621009496979810110210346945741941741142141641210699104106104102101100910111328263739424448481945....1946....1947....1948....1949....24,42025,40325,82924,38324,19417.518.017.916.616.210,00010,29510,38210,3639,9647,8818,1068,1158,0267,7122,1192,1892,2672,3372,2523543523553563601019999100103386371351342329101105105106107131415161850495152561950..1951..1952..1953..1954..23,04821,89021,74819,87419,01915.214.213.912.511.79,9269,5469,1498,8648,6517,5977,3107,0056,7756,5702,3292,2362,1442,0892,081345344349348346102105105104103310310296285274108108107107107192123242458626363651955....1956....19571958195919,07818,71217,65617,12816,59211.511.110.39.89.38,3817,8527,6007,5037,3426,3455,9005,6605,5215,3902,0361,9521,9401,9821,952340324324324324103101999810026424923122221610710510410310426272728326669687377I960..1961..1962..1963..1964..15,63514,80314,31313,36712,9548.78.17.77.16.77,0576,9196,7006,5186,1105,1725,0294,8734,7384,5061,8851,8901,8271,7801,6043243022952982989898989898207198189183174102102103103103323538434677818383851965..1966..1967..1968..1969..1970..1971..1972..1973..1974..1975..1976..1977..1978..1979..198019811982 "...12,36311,59510,87510,45410,3079,7129,4259,6109,4729,2648,8648,253'6,1946.5016,241'6,051'5,7906.45.95.55.25.14.74.54.64.54.34.13.8'2.8'2.972.8'2.7'2.55,6105,2144,9034,7494,5964f5234,4364,3734,3374,3894,3424,3744,1553,9573,7743,7058 3,8163,7004,1283,8543,6503.5353,4193,3483,2753,2283,1693,0753,0262,9972,8592,6892,5012,4022,4562,4051,4821,3601,2531,2131,1761,1751,1611,1461,1681,3141,3171,3771,2961,2681,2731,3031,3601,2952982943063002902933052943213283363373453383493523663659696989897979898989897991001011041031031561471431381331261231171151121071031009593929010210110310210110410210110098979810010010010110182868786868787909396981001041071051054956666973758186909283961001071181201238689928993961021041079993101100104111108106'Farm population as defined by Department of Agriculture and Department of Commerce, i.e., civilian population living on farms inrural areas, regardless of occupation. See also footnote 7.2 Total population of United States including Armed Forces overseas, as of July 1.3 Includes persons doing farmwork on all farms. These data, published by the Department of Agriculture, differ from those onagricultural employment by the Department of Labor (see Table B-31) 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.s Nonfarm constant dollar value of feed, seed, and livestock purchases.'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 and 1981 is 7,806 and 3.5; 8,005 and 3.6; 7,553 and 3.4; 7,241 and 3.2; and 6,942 and 3.0,respectively.8 Previous basis for farm employment series has been discontinued. Employment after 1980 is estimated.Note.—Population includes Alaska and Hawaii beginning 1960.Sources.- Department of Agriculture and Department of Commerce (Bureau of the Census).271

Year or month19401941194219431944194519461947194819491950195119521953195419551956195719581959I96019611962196319641965 .. ..19661967196819691970197119721973197419751976197719781979198019811982"1981:JanFebMarAprMay......:..:::::::::::::::::JuneJulyAug ,Septoct I.::..:::::::::::::::;.NovDec1982:JanFebMarApr|£yJune:::::::: :JulyAugSeptOctNovDec*TABLE B-97.—Indexes of prices received and prices paid by farmers, 1940-82Prices received by farmers22273542434552606355566663565451 505155535253535352545855565960626998105101102100115132134138133145144143143142142142138133130130128132133133135139137136133136128129127Crops21253443464753615952546162555653545252515152545555535552525052566091117105102100105116125134122144144145143142138138130120120121122126123120123125125124119125114118116AllfarmproductsLivestockandproducts2329364141445060655658706456524947515753535253514954605760676767771049498101100124147144143144146145141144143147147146145140138133137142145147151149148147146142140138[1977-100]Allcommodities,services,interest,taxes,andwagerates l 18192225262830353836374142404040404243434444454545474949515355586271818995100108123138150155147148149150150150150151151150150150153153154154155156156156156155156155Total 2212226283030333943414247 47444443434446464646474747485050505254576173839197100108125138148150146146147149149150148148148147147145148148150150150151151151150149149149Prices paid by farmersProduction items3940424447495154586882911001091221361521651421421461461461551551551591591591591591591611611611671671671681681681683737414444454550555654575959595857585857575858575757565552484850525692120102100100108134144144136136145145147147147147147144144143143143147147146146146146146141141139Fuelsandenergy4949505051525354577988931001051371882132112012122162172162152142142142142142142172152072002022122142132132122132091 Includes items used for family living, not shown separately.* Includes other items not shown separately.3 Average for 48 States. Annual data are for March 1 of each year through 1975, for February 1 for 1976 through 1981, and for April 1,for 1982. Monthly data are for first of month.Source: Department of Agriculture.272Wagerates781014171920222322222526272727 282930323333343536384144485357596369798593100107117127136136140140140135135135135135135135135135136136136136136136136136136136136136TractorsandselfpropelledmachineryFertilizerAddendum:Averagefarmrealestatevalueperacre 3 777891011131414141618181819192122232425262729313335384042434753667586100109125145158157158157

TABLE B-98.—U.S. exports and imports of agricultural commodities, 1940-82[Billions of dollars]YearTotal»FeedgrainsFoodgrains 2ExportsOilseedsandproductsCottonTobaccoAnimalsandproductsTotal *Crops,fruits,andvegetabfes3mportsAnimalsandproductsCoffeeCocoabeansandproductsAgriculturatradebalance19401941194219431944194519461947194819491950195119521953 . .195419551956195719581959I960.. ..196119621963196419651966196719681969197019711972.19731974197519761977 _1978197919801981Jan-Nov:19811982.0.5.71.22.12.12.33.14.03.53.6294.0342.83.13.24.24.53.94.04.8505.05.66.36.26.96.46.36.0737.79417.721.921.923 023.629.434.741.243.339.733.7(*4444.1.32.3.3.3.4.3.6.5 5.8.8.91.11.3.9.9111.0153.54.65.2604.95.97.79.89.48.75.9( 'l.4.71.41.51.161.111'.5.61.01.0.8.91.2141.31.51.71.41.81.51.41.2141.31.84.75.46.2473.65.56.37.99.68.97.4t*4( 4n.2.322.2.3.4.5.5.6.6.6'.B1.01.21.21.31.3. 1.3192.22.44.35.74.5516.68.28.99.49.68.78.30.2.1.2.3^4!91.01.1 9[B.5l.Q.7.41.0.9'.B.5.4.5.5.34.6.5.91.31.0101.51.72.22.92.32.01.81 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..2.2.4.3'.3.32.3.4.3.4.4.3.4.4.4.4.4.4.5.5.5.6.57.7.8.991.11.41.21.31.51.31.40.1.3.81.21.3.9.9.7,5.4.3.3Ạ5.6.7.7.5.6.6.6.6'.B.87.7.891.01.11.61.81.7242.73.03.83.84.23.93.61.31.71.31.51.81.7232.83.12.94.05.24.54.24.04.04.04.03.94.13.83.73.94.04.14.14.54.55.05.05.85.86.58.410.29.311013.414.816.717.416.815.414.0(4 I.1.1'.2.2,2.2.2.2'.21.2.3.3.4.4.5.5.5.6.7.8.8.8.91.21.51.71.72.01.92.20.2.3A.3.4.4.4.6.4.71.1J.6.5.5.47.8.6.9.9.8.91.21.11.31.41.61.51.82.62.21.82.32.33.13.93.83.53.23.30.1.2!3.3'6'.&1.11.41.41.51.51.41.41.41.21.11.01.01.01.01.21.11.11.01.2.91.21.21.31.71.61.72.94.24.04.24.22.92.62.644444Ki.1.2'.3.2.2.2.2.2.2.2.1.1.22.3.2.2.3.5.61.01.41.2.9.9.9-0.8-10-.16.3.5.81.2.37-11-1.1-11-1.3-.9-.8.2.6( 4 )-11.0131.21.62.32.12.41.91.31.1151.9299.311712.612 010.214.618.023.926.624.319.7273

TABLE B-99.—Balance sheet of the farming sector, 1929-83[Billions of dollars]AssetsClaimsOther physical assetsFinancial assetsBeginning ofyearTotalRealestateLivestock»MachineryandmotorCrops svehiclesU.S.savingsbondsTotalRealestatedebtOtherdebtHouseholdequipmentandfurnishingsDepositsandcurrencyInvestmentsincooperativesProprietors'equities1929... 48.0 6.6 3.2 9.81933...1939...1940194119421943194419451946194719481949195019511952195319541955..,.1956195719581959....1960196119621963196419651966196719681969197019711972197319741975 3197619771978 ..19791980..,.1981....1982....1983*.53.054.862.973.684.093.8102.9115.9127.4134.6134.5154.3170.1167.6164.5168.9173.6182.8191.3207.6210.2210.9219.3227.6235.8243.8260.8274.3288.0302.8314.9326.0351.8394.8478.6502.6576.3664.2736.3873.41,004.81,091.01.091.81.070.030.834.133.634.437.541.648.253.961.068.573.776.677.689.598.5100.198.7102.2107.5115.7121.8131.1137.2138.5144.5150.2158.6167.5179.2189.1199.7209.2215.8223.2239.6267.3327.8359.7418.1496.4554.7655.0755.9830.0823,8789.15.15.37.19.69.79.09.711.913.314.412.917.119.514.811.711.210.611.013.917.715.215.616.417.315.914.517.619.018.820.223.523.727.334.142.424.529.429.031.951.361.460.853.658.33.13.34.04.95.46.55.45,37.410.112.214.116.717.418.418.719.320.220.121.822.722.222.523.523.924.826.027.429.831.332.334.436.639.344.254.764.071.077.085.196.7102.8111.4115.32.73.03.85.16.16.76.37.19.08.67.67.98.89.09.19.68.38.37.69.37.78:08.89.39.89.29.710.09.610.610.910.711.814.522.023.321.322.124.828.033.535.936.537.54.24.14.84.84.75.25.67.28.18.98.49.610.19.69.59.710.09.69.69.49.28.78.98.88.88.48.48.38.89.49.610.010.811.912.311.211.712.113.816.017.219.421.722.43.23.54.25.46.67.99.410.29.99.69.19.19.49.49.49.49.59.49.510.09.28.78.89.29.29.610.010.310.911.511.912.413.214.014.914.014.514.815.215.515.916.216.817.30.2.4.51.12.23.44.24.24.44.64.74.74.74.64.75.05.25.15,15.24.74.64.54.44.24.24.13.93.83.83.73.63.74.04.13.83.93.83.94.24.03,83.63.50.8.9.91.01.11.21.41.51.71.92.12.32.52.72.93.03.23.53.73.94.24.54.85.05.45.65.96.26.56.87.28.010.911.413,414.915.218.320.222.224.426.653.054.862.973.684.093.8102.9115.9127.4134.6134.5154.3170.1167.6164.5168.9173.6182.8191.3207.6210.2210.9219.3227.6235.8243.8260.8274.3288.0302.8314.9326.0351.8394.8478.6502.6576.3664.2736.3873.41,004.81,091.01,091.81,070.08.56.86.66.56.46.05.44.94.84.95.15.35.66.16.77.27.78.29.09.810.411.112.012.813.915.216.818.921.223.125.127.429.230.332,235.139.544.649.655.263.371.485.495.5105.6110.03.44.04.13.93.53.43.13.54.16.16.97.07.98.99.29.59.89.510.012.612.713.414.616.217.617.919.520.922.323.123.824.127.429.833.837.041.948.759.469.480.486.496.1105.043.044.352.563.875.185.495.0107.5118.1123.3122.1141.3155.5151.5147.6151.2154.9163.4170.8183.9185.4184.7190.9196.2201.4207.0220.1230.2240.6252.3261.9271.5292.2329.9405.3421.0484.8560.3613.6732.6839.0909.0890.1855.01 Beginning with 1961, horses and mules are excluded.3 Includes all crops held on farms and crops held off farms by farmers as security for Commodity Credit Corporation loans.9 Beginning 1975, data are for farms included in the new .farm definition, that is, places with sates of $1,000 or more annually.4 Forecast.Note.—Beginning I960, data include Alaska and Hawaii.Source: Department of Agriculture.274

INTERNATIONAL STATISTICSTABLE B-100.—Exchange rates, 1967-82[Cents per unit of foreign currency, except as noted]Year and monthBelgian francCanadiandollarFrench francGerman markItalian liraJapanese yenMarch 197319671968196919701971197219731974197519761977197819792.53782.01252.00261.99422.01392.05982.27162.57612.57132.72532.59212.79113.18093.4098100.33392.68992.80192.85595.80299.021100.93799.977102.25798.297101.41094.11287.72985.38622.19120.32320.19119.30218.08718.14819.82522.53620.80523.35420.94220.34422.21823.50435.54825.08425.04825.49127.42428.76831.36437.75838.72340.72939.73743.07949.86754.5610.17604.16022.16042.15940.15945.16174.17132.17192.15372.15338.12044.11328.11782.120350.38190.27613.27735.27903.27921.28779.32995,36915.34302.33705.33741.37342.47981.458341980198119821981:III. ..IllIV3.42472.70072.18442.96332.68992.51572.646585.53083.40881.01183.78483.42782.54783.91823.69418.48915.19920.60918.48417.24717.68255.08944.36241.18648.00843.95841.170. 44.508.11694.08842.07386.09995.08827.08232.08352.44311.45432.40151.48644.45491.43172.445721982:1IIIllIV2.41662.22162.10172.052987.72180.36680.02281.19916.68615.94914.39614.14342.63042.04840.26839.998.07932.07575.07169.06968.42821.41003.38614.38697NetherlandsguilderSwedish kronaSwiss francUnited KingdompoundMultilateral trade-weighted value ofthe U.S. dollar (March 1973=100)NominalMarch 19731967...1968196919701971 .1972 .19731974197519761977197819791980198119821981:1IIIffIV1982:flIll(V34.83427.75927.62627.59227.65128.65031.15335.97737.26739.63237.84640.75246.28449.84350.36940.19137.42743.86439.56737.05740.50038.83637.92036.60936.52622.58219.37319.34919.34219.28219.59221.02222.97022.56324.14122.95722.38322.13923.32323.64719.86015.91421.97620.52018.86618.09617.43216.92916.22913.66031.08423.10423.W923.18623.19924.32521.19331.70033.68838.74340.01341.71456.28360.12159.69751.02549.19652.81849.09847.75754.72653.35850.12447.27246.739247.24275.04239.35239.01239.59244.42250.08245.10234.03222.16180.48174.49191.84212.24232.58202.43174.80230.96207.91183.62188.22184.61177.95172.41164.81100.012O.0122.1122.4121.1117.8109.199.1101.498.5105.6103.392.488.187.4102.9116.694.5103.1110.0105.4109.9114.0119.8122.2Real 1 100.098.899.293.997.393.184.283.284.8100.8111.792.3100.3108.0102.7106.0109.2115.3116.2•Adjusted by the consumer price index for all urban consumers.Source: Board of Governors of the Federal Reserve System.275

TABLE B-101.—£7.5. international transactions, 1946-82[Millions of dollars; quarterly data seasonally adjusted, except as noted. Credits ( + )• debits ( }]Year orquarterMerchandise 12Exports Imports NetInvestment income 3Receipts Payments NetNetmilitarytransactionsNettravelandtransportationreceiptsOtherservices,net aBalanceon goodsandservices * ARemittances,pensions,and otherunilateraltransfers'Balanceoncurrentaccountl *1946..1947..1948..1949..1950..1951..1952..1953..1954..1955..1956..1957..1958..1959..I960..1961..1962..1963..1964..1965..1966..1967..1968..1969..1970..1971..1972..1973..1974..1975,.1976..1977..1978..1979..11,76416,09713,26512,21310,20314,24313,44912,41212,92914,42417,55619,56216,41416,45819,65020,10820,78122,27225,50126,46129,31030,66633,62636,41442,46943,31949,38171,41098,306107,088114,745120,816142,054184,473^5,067^5,973-7,557-6,874-9,081-11,176-10,838-10,975-10,353-11,527= 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=45,579-55,797-70,499-103,649-98,041=-124,051= 151,689475,813-211.8196,69710,1245,7085,3391,1223,0672,61114372,5762,8974,7536,2713,4621,1484,8925,5714,5215,2246,8014,9513,8173,8006356072,603-2,260-6,416911-5,3439,047-9,306-30,873-33,759-27,3467721,1021,9211,8312,0682,6332,7512,7362,9293,4063,8374,1803,7904,1324,6164,9995,6186,1576,8247,4377,5288,0209,36810,91211,74712,70714,76421,80827,58725,35129,28632,17942,24564,129-212-245-437=476-559-583-555-624-582-676-735-796-825-1,061-1,237-1,245-1,324-1,561-1,784-2,088-2,481-2,747-3,378-4,869-5,516-5,436-6,572-9,655-12,084-12,564-13,311-14,217-21,680-32,9145608571,4841,3551,5092,0502,1962,1122,3472,7303,1023,3842,9653,0713,3793,7544,2944,5965,0405,3495,0475,2735,9906,0436,2317,2718,19212,15315,50312,78715,97517,96220,56531,215-493-455^799-621-576-1,270-2,054-2,423-2,460-2,701-2,788-2,841-3,135=-2,805-2,752-2,596-2,449-2,304-2,133-2,122-2,935-3,226-3,143=3,328-3,354-2,893-3,420-2,070-1,653-7465591,528621-2,035733946374230-12029883-238-269-297-361-189-633-821-964-978-1,152-1,309-1,146-1,280-1,331-1,750-1,548-1,763-2,038-2,345-3,063-3,158-3,184-2,792-2,558-3,293-3,125-2,4293101451752082422543093073052994474824865735795948099601,0411,3871,3651,6121,6301,8332,1802,4952,7663,1843,9864,5984,7115,2245,9555,6907,80711,6176,9426,5112,1774,3993,1451,1952,4992,9285,1537,1073,1451,1665,1326,3466,0257,1679,6048,2855,9635,7083,5633,3935,6252,269= 1,94111,0219,30922,8939,382-9,451-9,7435,095=2,922=2,625-4,525= 5,638=4,017= 3,515-2,531-2,481-2,280-2,498-2,423-2,345=2,361=2,448-2,308-2,524-2,638=2,754-2,781-2,854-2,932-3,125-2,952-2,994-3,294-3,701-3,854-3,8818 -7,186=4,613-4,998-4,617-5,030-5,5614,8858,9922,417873-1,840884614= 1,2862194302,7304,762784-1,2822,8243,8223,3874,4146,8235,4323,0312,5836113992,331-1,433-5,7957,1402,12418,2804,384-14,068-14,7734661980....1981....1980:IIV1981:IIV1982:II111*..224,237236,25454,75255,84355,78657,85660,68360,28457,69457,59355,78055,17452,480-249,575264,143-64,431-62,363-59,735=63,046-64,995-66,831-65,539-66,778-61,653- 60,869=64,938-25,338-27,889-9,679-6,520-3,949-5,190-4,312-6,547=7,845-9,185-5,873-5,695-12,45872,68685,94519,94416,01617,84818,87720,52821,64222,04821,72720,89022,56221,880-42,776-52,908= 10,505-10,268-10,485-11,519-12,405-13,441-13,865-13,198-14,029-14,874-14,46229,91033,0379,4395,7487,3637,3588,1238,2018,1838,5296,8617,6887,418-2,471-1,541•=931-514-286-742=-48758761-528167247527-940-231-436= 216-114-174-495-139200203-66-=319-2017,1447,7021,6441,8081,8101,8791.8381,9811,9601,9242,0342,0502.1408,30311,079373064,8243,1314,6672,9092,5599433,1233,9712,574=6,783-6,608= 1,837-1,306-1,444-2,195-1,422-1,510-1,808= 1,870-2,048-1,740-1,6531,5204,471-1,800-1,0003,3809363,2451,399751-9271,0752,231-4,2271 Excludes military.8 Adjusted from Census data for differences in valuation, coverage, and timing.o Fees and royalties from U.S. direct investments abroad or from foreign direct investments in the United States are excluded frominvestment income and included in other services, net.4 In concept balance on goods and services is equal to net exports and imports in the national income and product accounts (andthe sum of balance on current account and allocations of special drawing rights is equal to net foreign investment in the accounts),although the series differ because of different handling of certain items (gold, extraordinary military shipments, etc.), revisions, etc.6 Includes extraordinary U.S. Government transactions with India.See next page for continuation of table.276

TABLE B-101.—U.S. international transactions, 1946-82—Continued[Millions of dollars; quarterly data seasonally adjusted, except as noted]Year orquarterTotalU.S. assets abroad, net[increase/capital outflow 43-5,126-5,137-1,438-1,143-1,390-1,1545,144-5,2354,623-5,9868,0505,336-6,347-7,386-7,833-8,20610,22912,940-12,92520,388-33,643-35,38044,498-30,717-57,20259,469-72,74698,982-8,21024,32117,136-23,0792,2942,7051,9113,2173,6437423,6617,3799,92812,7026,35922,97021,46118,38834,24115,67036,51851,31964,03638,46054,48477,9217,8658,61612,64725,3561,4737651,2701,9861,660134-6723,451-774-1,3016,90826,87910,4756,02610,5467,02717,69336,81633,678-13,69715,4424,7857,4217,6447,5417,6788211,9396411,2311,9836074,3333,92810,70314,002-550-3,90910,98612,36223,6968,64318,82614,50330,35852,15739,04273,13615,2869725,10617,6778677177101,1*39"1,1521,0931,152-1019-989-1,124-360-907-458629-205438-1,516-219-9,779-1,879-2,654-1,6205,75310,367-2,46511,86625,21228,87025,8095,70017,3463,6082,219-643795-2,7542,6051981:1IIIllIV1982:1II|||p-22,796-21,566-17,257-47,677-31,201-37,790-26,364-4,529-905262-1,089-1,132-794-1,375-1,518-1,257-987-904-1,547-2,41816,892-19,143-15,996-46,952-29,20835,111-23,1528,47013,46416,88039,10725,08029,61916,0545,361-2,861-5,8358,119-3,1221,9982,1023,10916,32422,71530,98828,20227,62113,9521.0939,9886,703-3749,4975,0455,94014,537-=829503-2,1442,474-899574-1,973e Consists of gold, special drawing rights, convertible currencies, and the U.S. reserve position in the International Monetary Fund(ItVlrJ.Note.—Quarterly data for U.S. official reserve assets and foreign assets in the United States are not seasonally adjusted.Source: Department of Commerce, Bureau of Economic Analysis.277

TABLE B-102,—U.S. merchandise exports and imports by principal end-use category, 1965-82[Millions of dollars; quarterly data seasonally adjusted]ExportsImportsNonagriculturalNonpetroleurrYear or quarterTotalAgriculturalTotalOthergoodsTotalCapitalgoodsexceptautomotivePetroleumandproductsTotalIndustrialsuppliesandmaterialsOthergoods1965 .. .196619671968196926,46129,31030,66633,62636,4146.3056,9496,4536,2976,09620,15622,36124,21327,32930,3188,0528,9079,93411,11112,36912,10413,45414,27916,21817,94921,51025,49326,86632,99135,8072.0342,0782,0912,3842,64919,47623,41524,77530,60733,1589,12310,2359,95612,02711,79810,35313,18014,81918,58021,3601970197119721973197442,46943,31949,38171,41098,3067,3747,8319,51317.97822,41235,09535,48839,86853,43275,89414,65915,37216,91421,99930,87820,43620,11622,95431,43345,01639,86645,57955,79770,499103,6492,9273,6504,6508,41526,60936,93941,92951,14762,08477,04012,41613,79416,30819,63627.81924,52328,13534,83942,44849,22119751976197719781979107.088114,745120,816142,054184,47322,24223,38124,33129,90235,59484,84691,36496,485112,152148,87936,63939,11239,76746,47058,84248,20752,25256,71865,68290,03798,041124,051151,689175,813211,81927,01734,57344,98342,31260,48271,02489,478106,706133,501151,33724.01329,75935,67042,54249,88047,01159,71971,03690,959101,45719801981224,237236.25442,15644,264182,081191,99074,17881,666107,903110,324249,575264,14379,41477,579170,161186,56455,63260,281114,529126.2831980:1||IllIV54,75255.84355,78657.85610,15910,15910,70611,13244,59345,68445,08046,72417,07018,45818,96519,68527,52327,22626,11527,03964,43162,36359,73563,04621,04920,83417,73519,79643,38241,52942,00043,25015,33113,62413,16713,51028,05127,90528,83329,7401981:|||IIIIV60,68360,28457,69457,59312,57511,1519,94710,59148,10849,13347,74747,00220,12221,10720,23620,20127,98628,02627,51126,80164,99566,83165,53966.77820,53320,79818,15818,09144,46246,03447,38248,68714,47415,20515,49815,10229,98830,82931,88433,5851982:III|[|P55,78055,17452,48010,51010.6738,49645,27044,50143,98419,35419,31018,57125,91625,19125,41361,65360,86964,93815,65213,41616,45346,00147,45348,48514,23013,42213,48531,77134,03135,000Note,- Data are on an international transactions basis and exclude military shipments.Source: Department of Commerce, Bureau of Economic Analysts.278

TABLE B-103.—U.S. merchandise exports and imports by area, 1973-82[Millions of dollars]Item 1973 1974 1975 1976 1977 1978 1979 1980 19811982 first3 quartersat annualrate*Exports71,41098,306 107,088114,745120,816142,054184,473224,237236,254217,912Industrial countries48,52964,48766,49672,33576,97087,948115,930137,152141,134130,069CanadaJapanWestern EuropeAustralia, New Zealand,and South Africa16,7108,35621,2162,24721,84210,72428,1643,75723,5379,56729,8843,50826,33610,19631,8833,92028,53310,56634,0943,77731,22912,96039,5464,21338,69017,62954,1775,43441,62620,80667,6037,11745,25021,79665,0908,99840,09920,83960,9528,180Other countries, exceptEastern Europe20,83432,08237,34338,28740,95150,21362,63082,94290,63683,820OPEC 2 ...Other 3 ..3,41417,4206,21925,8639,95627,38711,56126,72612,87728,074Eastern Europe2,047 1,737 3,249 4,1232,895Imports70,499 103,649 98,041 * 124,051451,689Industrial countries... 48,985 61,092 55,973 67,48879,228Canada17,694 22,392 21,710 26,475 29,645Japan9,665 12,414 11,257 15,531 18,565Western Europe 19,774 24,267 20,764 23,003 28,226Australia, New Zealand,and South Africa 1,852 2,019 2,242 2,479 2,79214,84635,3673,893'175,81399,15133,55224,54136,6184,44014,53748,0935,913'211,819112,60039,02026,26141,8265,49317,36465,5784,1431 249,575 •264,143127,70242,69731,21747,2556,53321,09369,5434,461143,39547,31637,59852,8735,60821,10362,7174,023-•249,947145,68148,86338,77552,9555,089Other countries, exceptEastern Europe...20,91341,58041,33455,37970,68074,40296,137119,142119,196103,102OPEC 2...Other'...5,09715,81617,23424,34618,89722,43727,40927,97035,77834,90233,28641,11645,03951,09855,60263,54049,93469,26232,43370,669Eastern Europe... 601 977 734 875 1,127 1,508 1,896 1,444 1,5521,1321 Preliminary; seasonally adjusted.2 Algeria, Ecuador, Gabon, Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, United Arab Emirates, and Venezuela.3 Latin American Republics, other Western Hemisphere, and other countries in Asia and Africa, less members of OPEC.4 Trade with international organizations is included in totals for 1976-82, but not in area detail. This includes imports ofnonmonetary gold from International Monetary Fund in 1976-80; an export of tin to International Tin Council (ITC) in 1981; and animport of tin from ITC in 1982.Note.—Data are on an international transactions basis and exclude military.Source: Department of Commerce, Bureau of Economic Analysis.279

TABLE B-104.—U.S. merchandise exports and imports by commodity groups, 1960-82[Millions of dollars; monthly data seasonally adjusted]Year ormonthMerchandise exports 1Domestic exportsTotaldomesticandFood,foreign Total 23exports 3andtobaccoF.a.s. value 8Crudematerialsandfuels 4ManufacturedgoodsTotal 3Merchandise importsFood,beverages,andtobaccoGeneral imports"Crudematerialsandfuels*Customs valueManufacturedgoodsTotal,elf.value 7Merchandise trade balanceExportslessimports,customsvalueExportslessimports,f.a.s.Exportslessimports,elf.I960..1961..1962..1963..1964..1965..1966..1967..1968..1969..1970..1971..1972..1973..1974..1974*1975*1976*1977*1978*1979*1980198119821981:JanFebMar....June..July...Aug.,.Sept..oeSNov...Dec...1982:JanFebMar...tpJune..July...Aug...Sept..OclNov...Dec...,19,65920,22620,98622,46725,83226,74229,49031,03034,06337,33242,65943,54949,19970,82397,99898,092 96,679107,652 106,161115,223 113,549121,232 119,024143,681 141,142181,860 178,633220,630 216,515233,677 228,899212,193 207,07618,90219,78821,27819,78618,89919,75019,28919,03119,55119,16319,15318,88518,73718,70418,60217,84318,21818,82218,02717,49817,38716,69815,69316,33519,45919,98220,71722,18225,47926,39929,05430,64633,62636,78842.02542,91148,39969,73096,63418,53619,46520,84319,37718,52819,34018,91918,72019,10818,73318,75118,37718,35018,34118,12717,44117,80718,38617,63817,17716,65116,31015,31715,9023,1673,4663,7434,1884,6374,5195,1864,7104,5924,4465,0585,0766,56912,93815,23315,23316,79317,23415,96320,60424,58730,40733,20626,9772,9342,9433,3042,8912,6672,5732,5492,4702,7722,9202,6752,5152,2792,4822,6732,5062,4782,4211,8962,1621,9092,1322,0861,9433,9423,8643,3563,7754,3374,2734,4044,7264,8655,0066,6926,4417,09110,73515,80215,80215,19716,09518,57920,95728,22233,71933,02233,5182,8152,9583,2192,5302,5262,3422,4302,6622,7952,8632,8722,9343,0763,4343,1512,8982,9122,7972,6172,6422,8322,6652,3612,42012,58312,78413,66814.29716,52917,43319,21820,84423,81826,78529,34430,44333,74044,73163,52363,52370,95177,24180,15194,473116,587143,891154,283139,71612,06512,81313,55813,27612,61913,45613,06012,99112,94712,45812,59012,31812,46311,87611,82211,42811,83712,56312,59011,88211,33410,98710,36910,66015,07314,76116,46417,20718,74921,42725,61826,88933,22636,04339,95145,56355,58369,476101,394102,55998,503123,477150,390174,757209,458244,871260,982243,95222,61621,91621,02922,24921,23222,00520,11423,24221,27423,07722,50819,74622,82919,09020,34917,38720,55821,31019,55923,49420,64421,09618,93718,8653,3923,4553,6743,8634,0224,0134,5904,7015,3655,3086,2306,4047,3799,23510,701F.a.s. value 84,4184,3344,6914,7555,0295,4405,7185,3676,0316,3916,5427,2688,83813,44631,8426,8636,5377,6498,0709,10611,24414,44615,75620,62423,01125,90730,41437,76745,00156,20210,709 32,064 55,2239,923 32,596 51,08011,891 41,474 64,77514,227 53,554 76,55415,743 51,901 100,31717,735 71,390 112,22618,551 93,973 125,122Customs value18,35017,8171,7361,5891,6121,4711,6651,4721,3901,4791,3931,5831,4131,5421,3401,1541,5291,4351,5691,5671,3891,6171,5811,6671,4981,46992,87374,4048,9769,0997,4718,8787,1468,2496,5767,7797,4117,6427,4686,1748,2695,8455,7175,0334,9066,1986,6457,1685,9686,7115,7706,181142,475.144,02211,27810,75011,37911,32511,81611,64511,62213,36111,97113,12712,82611,41412,58411,52712,40210,33713,21912,89910,98214,11112,43412,02811,03810,62128,74535,32038,24142,42948,34258,86273,573108,392110,875105,880132,498160,411186,045222,228256,984273^352254,88523,67922,91721,98323,26622,24823,03321,07424,39822,31724,19423,56820,69923,87019,90021,23718,16521,50922,25920,44924,57821,58022,02419,78319,7014,5865,4654,5225,2607,0835,3113,8724,1418371,2892,708-2,014-6,3841,348-3,39627,30531,759-3,714-2,127249-2,463-2,333-2,255-825-4,212-1,724-3,914-3,356-86141,7474562,3402,4881,5325,9963,2574,3983,2442,529-4,4679,149-8,254-29,158-31,076-27,599=24,2412,283-1,257-909230-4,793-9,6632,752-10,395-12,7831,772-17,274-39,179-42,364-40,368=36,354=39,675=42,691-4,777=3,129-7053,480-3,349-3,283-1,784=5,367= 2,766-5,031=4,415-1,814= 5.134-1,197= 2,635-322=3,291-3,437=2,422-7,080-4,192=5,326-4,090-3,3661 Beginning 1960, data have been adjusted for comparability with the revised commodity classifications effective in 1965.2 Department of Defense shipments of grant-aid military supplies and equipment under the Military Assistance Program are excludedfrom total exports.9 Total includes commodities and transactions not classified according to kind.4 Includes fats and oils.5 Includes machinery, transportation equipment, chemicals, metals, and other manufactures. Export data for these items includemilitary grant-aid shipments through 1977 and exclude them thereafter.8 Total arrivals of imported goods other than intransit shipments.7 C.i.f. {cost, insurance, and freight) import value at first port of entry into United States. Data for 1967-73 are estimates.6 F.a.s. (free alongside ship) value basis at U.S. port of exportation for exports and at foreign port of exportation for imports.Trade in gold is included beginning 1974. Export statistics cover all merchandise shipped from the U.S. customs area, except suppliesfor the US. Armed Forces. Exports include shipments under Agency for International Development and Food for Peace programs as wellas other private relief shipments.Data for 1980 and 1981 include trade of the U.S. Virgin Islands, except that for 1980 Virgin Islands exports are reflected only in thefigures for domestic and foreign exports combined, total domestic exports, and trade balance.*Data for 1974=79 for domestic and foreign exports combined, total domestic exports, total general imports, and trade balanceInclude trade of the Virgin Islands.Source: Department of Commerce (Bureau of the Census and International Trade Administration, Office of Trade Investment andAnalysis, Trade Performance Division).280

TABLE B-105.—International investment position of the United States at year-end, selected years, 1970-81[Billions of dollars]Type of investment 1970 1972 1974 1976 1978 1979 1980 1981Net international investment position of the United States..U.S. assets abroadU.S. official reserve assets..GoldSpecial drawing rights (SDRs)Reserve position in the International MonetaryFund (IMF)Foreign currency reservesOther U.S. Government assets..U.S. loans and other long-term assetsU.S. short-term assets other than reservesU.S. private assetsDirect investments abroad (book value)Foreign securitiesClaims on foreigners reported by U.S. banks, notincluded elsewhereClaims on unaffiliated foreigners reported byU.S. nonbanksForeign assets in the United States-Foreign official assetsU.S. Government securities lOther U.S. Government liabilitiesLiabilities reported by U.S. banks, not includedelsewhereOther official assetsOther foreign assetsDirect investments in the United States (bookvalue)Liabilities reported by U.S. banks, not includedelsewhereU.S. Treasury securitiesOther U.S. securities 2Liabilities to unaffiliated foreigners reported byU.S. nonbanks58.6165.514.511.1.91.9.632.129.72.5118.875.521.013.88.5106.826.117.71.76.7.080.713.322.71.234.78.837.1199.013.210.52.0.5.236.134.12.0149.789.927.620.711.4161.863.252.91.68.5.298.714.921.21.250.710.758.8255.715.911.72.41.9.038.436.32.1201.5110.128.246.217.0196.979.858.12.618.4.6117.125.141.81.734.913.683.8347.218.711.62.44.4.346.044.11.9282.4136.844.281.120.3263.4104.272.68.817.25.6159.130.853.57.054.913.076.2447.918.711.71.61.04.454.252.31.9375.0162.753.4130.828.1371.6173.0128.512.723.38.5198.742.577.78.953.616.094.9510.619.011.22.71.33.858.456.51.9433.2187.956.8157.031.5415.7159.7106.612.630.59.9256.054.5110.314.258.618.4121.6606.926.811.22.62.910.163.561.91.7516.6215.662.5203.934.7485.3175.8118.213.130.414.1309.468.4121.116.174.129.8160.3717.430.111.24.15.19.868.567.21.3618.8227.362.9293.535.0557.1180.1125.113.126.315.6377.189.8164.718.575.328.91 Includes Treasury and agency issues of securities.2 Corporate and other bonds and corporate stocks.Source: Department of Commerce, Bureau of Economic Analysis.281

TABLE B-106.— World trade: Exports and imports, 1965, 1970, 1975, and 1979-82[Billions of U.S. dollars]Area and country1965 1970 1975 1979 1980 19811982 lExports, f.o.b. *Developed countries'.130.1226.7585.71,085.71.283.91.258.91,199.7United StatesCanadaJapan27.58.48.543.216.719.3108.134.155.7182.058.3102.3220.867.7130.4233.772.6151.5212.971.1140.3European Community 465.2113.6300.6577.2665.8612.8599.3FranceWest GermanyItalyUnited Kingdom..,10.217.97.213.818.134.213.219.653.190.234.844.5100.7171.872.286.4116.0192.977.7110.1106.4176.175.3102.796.4175.777.395.5Other developed countries..20.533.787.1165.8199.1188.2176.1Developing countries40.261.7226.5452.8608.8606.1525.9Oil exporting countries 8OtherCommunist countries 0 ..10.529.623.217.544.234.9113.6113.090.5214.3238.5170.4301.2307.6203.1276.4329.6213.2212.8313.1215.6U.S.S.REastern Europe....China8.211.82.012.818.22.233.445.37.364.977.913.576.487.518.979.491.121.480.990.123.0TOTAL...193.5323.3902.71,708.92,095.82,078.21,941.2Developed countries 3 ..United States..CanadaJapanEuropean Community 4FranceWest GermanyItalyUnited KingdomOther developed countries..Developing countriesOil exporting countries 8OtherCommunist countries 0 ..TOTAL..U.S.S.REastern Europe..China137.523.28.78.270.510.417.67.416.127.043.56.437.222.58.011.61.8203.5237.842.714.318.9118.919.129.915.022.043.167.89.957.934.111.718.52.2339.7618.1105.936.257.8306.454.074.938.453.3111.8221.652.8168.9100.837.151.37.4940.5Imports, c.i.f. 71,182.7222.257.0109.8611.1107.0159.677.999.6182.6408.0100.1307.8170.958.083.015.71,761.61,427.1257.062.8141.3729.2134.9188.099.5115.8236.8540.1137.2402.9202.8$8.593.120.92,170.01,358.3273.470.0142.9644.2121.0163.991.1102.0227.9595.2162.0433.2211.273.297.319.62,164.71,290.4261.460.8132.0628.1116.6154.990.5100.1208.1562.4163.9398,5209.380.189.219.12,062.11 Preliminary estimates.2 Free-cn-board ship value.3 Includes the OECD countries, South Africa, and non-OECD Europe.4 Includes Belgium-Luxembourg, Denmark, Greece, Ireland, and the Netherlands, not shown separately.6 Includes Algeria, Ecuador, Gabon, Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Oman, Qatar, Saudi Arabia, United Arab Emirates, andVenezuela.•Includes North Korea. Vietnam, Albania, Cuba, Mongolia, and Yugoslavia, not shown separately.'Cost, insurance, and freight value; except Eastern Europe (except Hungary) and U.S.S.R., which are f.o.b (free on board).Sources: International Monetary Fund, Organization for Economic Cooperation and Development, and Council of Economic Advisers.282

TABLE B-107.— World trade balance and current account balances, 1965, 1970, 1975, and 1979-82[Billions of U.S. dollars]Area and country 1965 1970 1975 1979 1980 1981 1982»World trade balance 2Developed countries 3-7.4-11.2-32.5-97.1-143.2-99.4-90.7United States....CanadaJapan4.3-.2is2.2-2.1-2.1-40.21.3-7.5-36.24.9-10.9-39.62.68.6-48.510.38.3European Community 4-5.3-5.2-5.7-33.9-63.3-31.4-28.8FranceWest GermanyItalyUnited Kingdom....Other developed countriesDeveloping countriesOil-exporting countries 5Other ..-.2-2-2.3-6.4-3.34.2-7.5-1.04.3-1.8-2.4-9.4-6.17.6-13.6152-3.6-8.8-24.74.960.8-55.9-6.312.2-5.7-13.2-16.844.8114.2-69.4-18.94.9-21.8-5.7-37.768.6164.0-95.4-14.512.2-15.8-39.710.8114.4-103.6-20.220.8-13.2-4.6-32.0-36.548.9-85.4Communist countries 6 ...«-10.3-.5.32.06.3U.S.S.REastern Europe..China.2'21.1~!o-3.7-6.06.9-5.1-2.27.9-5.6-2.06.2-6.11.8.8.83.9TOTAL 7 ...-10.0-16.4-37.8-52.7-74.2-86.5-120.9Developed countries 3 ..United States..CanadaJapanEuropean Community 4FranceWest GermanyItalyUnited Kingdom....Other developed countries ,Developing countriesOil exporting countries 5 ..Other.. *Communist courTOTAL..U.S.S.REastern Europe..China3.25.4-1,1.4-1.62.2-.1-2.94.72.32!o2.8-.1.9.92.0-3.1-1,8-.1Current account balances 8-2.718.3-4.7-.62.51.64.0-.6-3.4-18.2-16.519.4-35.9-11.2-4.7-6.4-30.4-29.8-A2-8.7-8.75.2-6.15.4-1.7-7.7-18.327.9-46.2-4.93.8-7.6-1.1-53.0-70.61.5-.9-10.7-37.3-3.6-16.4-9.86.9-23.2-1.372.1-73.4-3.03.5-5.5-1.0-74.9-40.14.2-4.45.1-14.2-3.0-7.1-8.512.4-30.7-25.056.5-81.52.72.7-3.53.5-62.4-43.8-8.81.06.5-17.0-11.5-"sis4,5-25.5-61.02.0-63.06.71 Preliminary estimates.2 Exports f.o.b. (free-on-board ship value) less imports c.i.f. (cost, insurance, and freight).3 Includes the OECD countries. South Africa, and non-OECO Europe.4 Includes Belgium-Luxembourg, Denmark, Greece, Ireland, and the Netherlands, not shown separately.* Includes Afgeria, Ecuador, Gabon, Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Oman, Qatar, Saudi Arabia, United Arab Emirates, andVenezuela.• Includes North Korea, Vietnam, Albania, Cuba, Mongolia, and Yugoslavia, not shown separately.7 Asymmetries arise in global payments aggregations because of discrepancies in coverage, classification, timing, and valuation in therecording of transactions by the countries involved.8 OECD basis.Sources: International Monetary Fund, Organization for Economic Cooperation and Development, and Council of Economic Advisers.3.1-2.05.6-98.1283

TABLE B-108.—International reserves, selected years, 1952-82[Millions of SDRs; end of period]Area and country1952196219721979198019811982NovemberAll countries *.Industrial countries 3United States....CanadaAustraliaJapanNew ZealandAustriaBelgiumDenmark...FinlandFranceGermanyIcelandIrelandItalyNetherlandsNorwaySpainSwedenSwitzerlandUnited Kingdom..Oil-exporting countries..AlgeriaIndonesiaIranIraqKuwaitLibyaNigeriaOmanQatarSaudi Arabia..United Arab Emirates..VenezuelaNon-oil developing countries..AfricaAsiaEuropeMiddle EastWestern Hemisphere..a 49,39138,58224,7141,9449201,1011831161,13315013268696083187229531641345041,6671,9561,699314177131505004438,5761,2023,4079668252,17562,85152,53517,2202,5611,1682,0212511,0811,7532562374,0496,958323594,0681,9433041,0458022,9193,3082,03018610821119397962892685838,1711,6352,5501,3469401,700147,443110,28212,1125,5725,65616,9167672,5053,5647876649,22421,908781,0385,6054,4071,2204,6181,4536,9615,20110,0714545318857203352,694346149562,3031,59526,1323,1686,6406,4282,4027,494306,995180,77515,1702,9511,35915,6673443,8325,3072,5141,20416,21243,2251251,69316,1497,3013,24110,5502,88015,39115,62656,3182,2143,09311,6822,2684,9024,23544522814,7901,1075,95868,7034,28623,2057,4007,44226,370358,706211,49021,4793,1591,60320,1642774,8797,3302,7121,50124,30140,9761382,25520,47710,6694,7839,8132,89315,19016,85173,6013,1534,3113,16910,3728,04969228618,5361,6005,57971,7764,44424,9478,0608,31126,014375,793212,73225,5023,7551,71325,0835805,2795,4512,2461.31921,99140,8921992,29019,6319,5625,4149,7943,30614,92513,75781,4283,3704,4163,5837,8603,37198833927,8552,7757,41575,3034,17527,4418,1599,00126.527364,589207,39630,4153,3965,53922,1505235,1575,0862,0041,25415,23043,5801322,15114,60510,0566,808* 7,6753,49915,44812,77076,9892,5113,0415,2636,2391,128• 1,04926,929* 2,9576,72173,0354,21832,6286,9728,75320,4641 Includes Taiwan, not shown in area detail.8 Includes Cuba.3 Includes Luxembourg.4 Data are for October 1982.Note.—International reserves is comprised of monetary authorities' holdings of gold, special drawing rights (SDRs), reserve positionsin the International Monetary Fund, and foreign exchange. Data exclude U.S.S.R., other Eastern European countries, and Cuba (after1960).U.S. dollars per SDR (end of period) are: 1952 and 1962—1.00000; 1972—1.08571; 1977—1.21471; 1978—1.30279; 1979—1.31733; 1980=1.27541; 1981-1.6396; and November 1982-1.07953.Source: International Monetary Fund, "International financial Statistics,"284

TABLE B-109.—Growth rates in real gross national product, 1960-82[Percent change]Area and country1960-73annualaverage1974-81annualaverage1978 1979 1980 1981 1982 iU.S. dollarvalue in1981(billions) 2Developed countries 3 ..5.12.74.13.51.21.4-.57,020United States..Canada4.15.610.42.72.64.44.83.75.13.23.05.6-.2.04.22.03.02.9-1.8-5.02.52,9262801,150European Community 44.71.93.13.41.3-.4.32,420FranceWest Germany....ItalyUnited Kingdom..Other developed countries..Developing countriesOil exporting countries 8OtherCommunist countries 7 ..5.84.75.23.15.15.85.22.52.22.1.91.94.43.74.62.73.73.62.73.32.14.36.73.34.23.54.34.91.4-1.74.13.24.51.61.61.84.0-1.74.04.52.05.61.9.3-.3-.2-.85.22.7-.53.11.21.5-1.3.8.51.21.45776872995022451,9655401,4252,740U.S.S.REastern Europe..China5.24.16.52.31.85.93.43.012.31.36.91.5.46.91.8-1.03.01.61,587671328TOTAL..5.22.93.82.81.81.8211,7251 Preliminary estimates.2 Estimates based on conversion at average rates of exchange for 1980, except for those of the Communist countries, which wereconverted at U.S. purchasing power equivalents.3 Includes the OECD countries, South Africa, and non-OECD Europe.4 Includes Belgium-Luxembourg, Denmark, Greece, Ireland, and the Netherlands, not shown separately.• Not available .6 Includes Algeria, Ecuador, Gabon, Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Oman, Qatar, Saudi Arabia, United Arab Emirates, andVenezuela.7 Includes North Korea, Vietnam, Albania, Cuba, Mongolia, and Yugoslavia, not shown separately.Sources: Department of Commerce, International Monetary Fund, Organization for Economic Cooperation and Development (OECD), andCouncil of Economic Advisers.285

TABLE B-110.—Industrial production and consumer prices, major industrial countries, 1960-82[1967-100]Year or quarterUnitedStatesCanadaJapanEuropeanCommunity1FranceWestGermanyItalyUnitedKingdomI9601961 • ...196219631964196519661967196819691970197119721973197419751976197719781979198019811982 p1981:IIIIllIV1982:|IIHI .IV »i96019611962196319641965....1966....1967....1968196919701971197219731974197519761977197819791980198119821981:IIV1982:ll'ZIIIIIV66.266.772.276.581.789.897.8100.0106.3111.1107.8109.6119 7129.8129.3117.8130.5138.2146.1152.5147.0151.0138.6151.8152.5153.0146.3141.8139 4138.2135.188.789.690.691.792.994.597.2100.0104.2109.8116.3121.3125.3133.1147.7161.2170.5181.5195.4217.4246.8272.4289.1262.9269.0276.7280.7283.0287.3292.8293.463.165.671.275.782.689.796.2100.0106.4113.7115.3121.5130.7144.6149.2140.3148.5152.2157.8167.4164.6167.3167.8172.8168.1160.7156.1151.9147.785.986.787.789.290.993.196.5100.0104.0108.8112.4115.6121.2130.3144.5160.1172.1185.9202.5221.0243.5273.9303.4262.0270.2278.2285.0292.2301.2307.6312.643.051.255.461.771.474.283.8100.0115.2133.4151.8155.7167.0190.5183.1163.9182.0189.7201.1217.7232.5239.5235.4236.1241.1245.9243.6239 7243.568.371.876.782.585.891.696.3100.0105.3110.9119.3126.5132.3147.9184.0205.8224.9243.0252.3261.3282.2296.2291.4296.3296.9300.130O.3303.5304.8Industrial production 274.778.181.384.891.094.798.4100.0107.4117.6123.3126.1131.7141.4142.3132.8142.6145.9149.7156.8155.6152.3151.5152.1152.1151.8151.9151.5148.6Consumer prices77.081.184.587.690.894.297.5100.0103.7108.0113.3120.3127.6138.3156.4176.7195.2214.7229.9250.7281.6314.1300.7310.4317.8326.3333.9344.3348.2707378869093981001041141201281351451481391491521551631601571581601611611581591513 78.03 80.685.489.592.594.897.4100.0104.5111.3117.1123.5131.1140.7160.0178.9196.1214.5233.9259.1294.2332.7315.7326.1338.9349.9359.8371.0376.078.482.886.188.996.6102.1103.0100.0109.2123.2131.1133.6138.7147.7145.1137.1149.1152.0154.1161.8162.3159.916216016116016215915482.984.887.489.992.095.098.4100.0101.6103.5107.1112.7119.0127.2136.1144.2150.4155.9160.2166.8175.9186.3182.2185.5187.8190.0192.7195.4197.659.265.571.978.479.282.893.3100.0106.4110.5117.6117.5122.7134.6140.6127.6143.5145.1147.9157.6166.5162.7157.7160.1152.3159.8161.0158.6146.674.175.779.285.190.194.296.4100.0101.4104.1109.2114.4121.0134.0159.7186.8218.1255.2286.2328.5398.0472.4448.4468.0482.1504.9523.7539.6562.784.484.385,188.195.097.799.2100.0106.7110.3110.9110.6113.2123.0120.0114.3117.4122.9126.9132.2123.6118.8117.8118.5118.6120.0119.2119.8119.879.081.685.186.889.693.997.6100.0104.8110.3117.4128.5137.7150.2174.3216.5252.4292.4316.6359.0423.6473.9514.7450.4472.3480.5492.3500.5516.6518.9522.71 Consists of Belgium-Luxembourg, Denmark, France, Greece, Ireland, Italy, Netherlands, United Kingdom, and West Germany Industrialproduction prior to July 1981 excludes data for Greece, which joined the EC in 1981.8 All data exclude construction. Quarterly data are seasonally adjusted.» Data for 1960 and 1961 are for Paris only.Sources: Department of Commerce (International Trade Administration, Office of Trade Investment and Analysis, Trade PerformanceDivision) and Department of labor (Bureau of Labor Statistics).286

TABLE B-lll.—Unemployment rate, and hourly compensation, major industrial countries, 1960-82[Quarterly data seasonally adjusted]Year or quarterUnitedStatesCanada Japan FranceWestGermanyItalyUnitedKingdomUnemployment rate (percent) 1I9601961196219631964196519661967196819695.56.75.55.75.24.53.83.83.63.5707.15.95.54.73.93.43.84.54.4171.51.31.31.21.21.41.31.21.1161.4131.21.3141.81.82.42.211.6.6A.3131.1.6383.2282.42.6353.83.43.43.32 11.9273.32.4212.2323.23.0197019711972 . ..19731974197519761977197819791980198119821981:II „IllIV1982:|||IIIIV4.95.95.64.95.68.57.77.16.15.87.17.69.77.47.47.48.38.89.410.010.75.76.2625.55.36.97.1818.47.57.57.611.07.37.27.68.48610.212.112.71.21.3141.31.4192.0202.32,12.02.22.22.42.22.2232.42.42.42.7282.72.9424.6505.46.16.57.77.07.77.97.9838.68.7'.B.71.63.53.53.53.43.03.04.23.53.94.44.95.35.86.23.13.1363.42.8323.6363.73.93.94.24.63.94.34.14.54.64.64.54.53.139423.23.1466.0646.35.77311.310.311.111.512.512.812.913.0I96019611962196319641965 .. .1966196719681969197019711972197319741975197619771978197919801981198236.737.739.140.342.042 844.847.050.453.957.661.164.469.076.385.492.3100.0108.3118.9132 8146.4158.829.929428.729.430.632134.637.340.043.047.853.158.163 475.082.497.1100.099.4106.6116 4126.1Hourly compensation (1977 = 100) 26.6778.89.811.012 413.615.317.921.325.430.340.155 067.177.182.3100.0136.1138.5142 6157.016.217 819.621.723.325126.728.932.632.333.938.046.260 066.288.590.6100.01231148.2174 2158.310.512.313.914.9 -16.117.619.020.121.323.629.534.742.056.967.179.483.5100.0125.6147.5161.7139.911.913.115.518.320.421822.825.427.130.736.843.152.366.474.095.089.5100.0119.1143.1164.8152.424.926.828.329.531.634 737.638.235.638.844.351.860.065.578.296.591.8100.0128.1168.5228.2230.8'Unemployment rates, approximating U.S. concepts. Data for United Kingdom exclude Northern Ireland. Quarterly data for France.West Germany, and United Kingdom should be viewed as less precise indicators of unemployment under U.S. concepts than the annualdata. Beginning 1977, changes in the Italian survey resulted in a large increase in persons enumerated as unemployed. However, manyalso reported that they had not actively sought work in the past 30 days. Such persons have been provisionally excluded forcomparability with U.S. concepts; their inclusion would more than double the rates shown for Italy.2 Hourly compensation in manufacturing, U.S. dollar basis. Data relate to all employed persons (wage and salary earners and the 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.287