Economic Report of the President

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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
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CONTENTSPageECONOMIC REPORT OF THE
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ECONOMIC REPORT OF THE PRESIDENTTo
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Monetary policy will play a critica
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Interest Rates and the U.S. Trade D
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THE ANNUAL REPORTOF THECOUNCIL OF E
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CONTENTSPageCHAPTER 1. FROM RECESSI
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PageConclusions 122CHAPTER 6. REVIE
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CHAPTER 1From Recession to Recovery
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slowed somewhat in the 1970s regard
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nal GNP growth is reflected in a sl
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inflation. More specifically, the A
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inflation rate, or with a 12 percen
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1988, an increase of about one-four
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CHAPTER 2The Dual Problems of Struc
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frequently associated with poor hea
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Chart 2-2Distribution of Unemployme
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Chart 2-4Distribution of Unemployme
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These findings suggest several conc
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Wage RigidityA number of studies sh
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that these measures may have caused
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Most young people find jobs or leav
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to employers who hire youths. Tax c
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defined broadly to include individu
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ship between incomplete experience
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CHAPTER 3The United States in the W
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with 2.6 percent in the other Organ
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TABLE 3-1 .—Structure ofthe U.S.
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TABLE 3-2.—Trade balances by comm
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concentrate on doing what it does r
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the United States will depress pric
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Chart 3-3Real Exchange Rates Of Maj
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AN UNDERVALUED YEN?The explanations
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arily reduced the international com
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nancial markets. These transactions
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TABLE 3-6.—Economic performance b
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were undoubtedly a highly favorable
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of lenders that some debtors will n
Page 83 and 84: CHAPTER 4Increasing Capital Formati
Page 85 and 86: ate of net investment was required,
Page 87 and 88: able share in Japan and 56 percent
Page 89 and 90: During the 1970s, productivity grow
Page 91 and 92: MEASURING NATIONAL SAVINGDomestic s
Page 93 and 94: TAX RULES AND PERSONAL SAVINGMany e
Page 95 and 96: on consumption taxation might also
Page 97 and 98: Nevertheless, a number of economic
Page 99 and 100: tion permitted businesses to deprec
Page 101 and 102: A final problem under current tax l
Page 103 and 104: fleeted efforts to deal with proble
Page 105 and 106: egulation was probably not applicab
Page 107 and 108: Aeronautics Board, for example, the
Page 109 and 110: system resulted. Price controls, wh
Page 111 and 112: NGPA, both controlled and decontrol
Page 113 and 114: Price and allocation controls only
Page 115 and 116: nications industries through the re
Page 117 and 118: Several major pieces of legislation
Page 119 and 120: tempt to set cartel rates would be
Page 121 and 122: computer information and advertisin
Page 123 and 124: of computer technology to the payme
Page 125 and 126: trend by widening the sources and u
Page 127 and 128: changes. That is, members can arbit
Page 129 and 130: ceived to be a consequence of exces
Page 131 and 132: lowest point in the post-World War
Page 133: ing. Partly in response to the drop
Page 137 and 138: Chart 6-4RATIO1.85Real Inventory/Sa
Page 139 and 140: percent increase in real defense pu
Page 141 and 142: 8.8 percent in 1981. These declines
Page 143 and 144: housing. Borrowing by the nonfinanc
Page 145 and 146: orous competitor for credit as usur
Page 147 and 148: 1982 their share had risen to over
Page 149 and 150: TABLE 6-9.—Economic outlook for 1
Page 151: A critical element in achieving hea
Page 155 and 156: LETTER OF TRANSMITTALCOUNCIL OF ECO
Page 157 and 158: Report to the President on the Acti
Page 159 and 160: ety of interagency and internationa
Page 161: ence J. Kotlikoff (Yale University)
Page 165 and 166: CONTENTSNATIONAL INCOME OR EXPENDIT
Page 167 and 168: B-70. Mortgage debt outstanding by
Page 169 and 170: NATIONAL INCOME OR EXPENDITURETABLE
Page 171 and 172: TABLE B-2.—Gross national product
Page 173 and 174: 19291933193919401941194219431944194
Page 175 and 176: TABLE B-5.—Changes in GNP and GNP
Page 181 and 182: TABLE B-ll.—Gross national produc
Page 183 and 184: TABLE B-13.—Output, costs, and pr
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TABLE B-14.—Personal consumption
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TABLE B-16.—Gross and net private
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TABLE B-18.—Inventories and final
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TABLE B-20.—Relation of national
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TABLE B-21.—National income by ty
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TABLE B-22.—Sources of personal i
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TABLE B-24.—Total and per capita
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Year or quarterTotalTotalTABLE B-26
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POPULATION, EMPLOYMENT, WAGES, AND
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TABLE B-29.—Noninstitutional popu
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TABLE B-31.—Selected employment a
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TABLE B-33.—Civilian unemployment
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TABLE B-35.—Unemployment by reaso
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TABLE B-37.— Wage and salary work
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TABLE B-39.—Average weekly earnin
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TABLE B-41.—Changes in productivi
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TABLE B-43-—Industrial production
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TABLE B-45.—Capacity utilization
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TABLE B-46.—New construction acti
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TABLE B-48.—Nonfarm business expe
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TABLE B-50.—Manufacturers' shipme
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Year or monthAllitemsPRICESTABLE B-
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TABLE B-53.—Consumer price indexe
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TABLE B-55.—Changes in consumer p
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TABLE B-57.—Producer price indexe
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MONEY STOCK, CREDIT, AND FINANCETAB
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TABLE B-63.—Commercial bank loans
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TABLE B-64.—Total funds raised in
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TABLE B-66.—Aggregate reserves of
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TABLE B-67 .—Bond yields and inte
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TABLE B-69.—Consumer installment
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TABLE B-71-—Mortgage debt outstan
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TABLE B-72.—Federal budget receip
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TABLE B-74.—Relation of Federal G
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TABLE B-76.—Federal Government re
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TABLE B-78.—State and local gover
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TABLE B-80.—Estimated ownership o
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CORPORATE PROFITS AND FINANCETABLE
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Year or quarterTABLE B-84.—Corpor
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TABLE B-86.—Relation of profits a
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TABLE B-88.—Determinants of busin
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TABLE B-9Q.~Current assets and liab
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TABLE B-92.—Common stock prices a
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AGRICULTURETABLE B-94.—Farm incom
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TABLE B-96.—Farm input use, selec
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TABLE B-98.—U.S. exports and impo
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INTERNATIONAL STATISTICSTABLE B-100
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TABLE B-101.—U.S. international t
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TABLE B-103.—U.S. merchandise exp
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TABLE B-105.—International invest
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TABLE B-107.— World trade balance
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TABLE B-109.—Growth rates in real
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TABLE B-lll.—Unemployment rate, a
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