Economic Report of the President

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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
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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
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CHAPTER 4Increasing Capital Formati
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ate of net investment was required,
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able share in Japan and 56 percent
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During the 1970s, productivity grow
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MEASURING NATIONAL SAVINGDomestic s
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TAX RULES AND PERSONAL SAVINGMany e
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on consumption taxation might also
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Nevertheless, a number of economic
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tion permitted businesses to deprec
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A final problem under current tax l
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fleeted efforts to deal with proble
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egulation was probably not applicab
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Aeronautics Board, for example, the
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system resulted. Price controls, wh
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NGPA, both controlled and decontrol
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Price and allocation controls only
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nications industries through the re
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Several major pieces of legislation
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tempt to set cartel rates would be
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computer information and advertisin
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of computer technology to the payme
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trend by widening the sources and u
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changes. That is, members can arbit
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ceived to be a consequence of exces
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lowest point in the post-World War
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ing. Partly in response to the drop
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Chart 6-3Ratio of Consumer Installm
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Chart 6-4RATIO1.85Real Inventory/Sa
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percent increase in real defense pu
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8.8 percent in 1981. These declines
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housing. Borrowing by the nonfinanc
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orous competitor for credit as usur
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1982 their share had risen to over
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TABLE 6-9.—Economic outlook for 1
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A critical element in achieving hea
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LETTER OF TRANSMITTALCOUNCIL OF ECO
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Report to the President on the Acti
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ety of interagency and internationa
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ence J. Kotlikoff (Yale University)
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CONTENTSNATIONAL INCOME OR EXPENDIT
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B-70. Mortgage debt outstanding by
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NATIONAL INCOME OR EXPENDITURETABLE
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TABLE B-2.—Gross national product
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19291933193919401941194219431944194
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TABLE B-5.—Changes in GNP and GNP
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TABLE B-ll.—Gross national produc
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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
Page 195 and 196: TABLE B-22.—Sources of personal i
Page 197 and 198: TABLE B-24.—Total and per capita
Page 199 and 200: Year or quarterTotalTotalTABLE B-26
Page 201 and 202: POPULATION, EMPLOYMENT, WAGES, AND
Page 203 and 204: TABLE B-29.—Noninstitutional popu
Page 205 and 206: TABLE B-31.—Selected employment a
Page 207 and 208: TABLE B-33.—Civilian unemployment
Page 209 and 210: TABLE B-35.—Unemployment by reaso
Page 211 and 212: TABLE B-37.— Wage and salary work
Page 213 and 214: TABLE B-39.—Average weekly earnin
Page 215 and 216: TABLE B-41.—Changes in productivi
Page 217 and 218: TABLE B-43-—Industrial production
Page 219 and 220: TABLE B-45.—Capacity utilization
Page 221 and 222: TABLE B-46.—New construction acti
Page 223 and 224: TABLE B-48.—Nonfarm business expe
Page 225 and 226: TABLE B-50.—Manufacturers' shipme
Page 227 and 228: Year or monthAllitemsPRICESTABLE B-
Page 229 and 230: TABLE B-53.—Consumer price indexe
Page 231 and 232: TABLE B-55.—Changes in consumer p
Page 233 and 234: TABLE B-57.—Producer price indexe
Page 239 and 240: MONEY STOCK, CREDIT, AND FINANCETAB
Page 241 and 242: TABLE B-63.—Commercial bank loans
Page 243 and 244: TABLE B-64.—Total funds raised in
Page 245: TABLE B-66.—Aggregate reserves of
Page 249 and 250: TABLE B-69.—Consumer installment
Page 251 and 252: TABLE B-71-—Mortgage debt outstan
Page 253 and 254: TABLE B-72.—Federal budget receip
Page 255 and 256: TABLE B-74.—Relation of Federal G
Page 257 and 258: TABLE B-76.—Federal Government re
Page 259 and 260: TABLE B-78.—State and local gover
Page 261 and 262: TABLE B-80.—Estimated ownership o
Page 263 and 264: CORPORATE PROFITS AND FINANCETABLE
Page 265 and 266: Year or quarterTABLE B-84.—Corpor
Page 267 and 268: TABLE B-86.—Relation of profits a
Page 269 and 270: TABLE B-88.—Determinants of busin
Page 271 and 272: TABLE B-9Q.~Current assets and liab
Page 273 and 274: TABLE B-92.—Common stock prices a
Page 275 and 276: AGRICULTURETABLE B-94.—Farm incom
Page 277 and 278: TABLE B-96.—Farm input use, selec
Page 279 and 280: TABLE B-98.—U.S. exports and impo
Page 281 and 282: INTERNATIONAL STATISTICSTABLE B-100
Page 283 and 284: TABLE B-101.—U.S. international t
Page 285 and 286: TABLE B-103.—U.S. merchandise exp
Page 287 and 288: TABLE B-105.—International invest
Page 289 and 290: TABLE B-107.— World trade balance
Page 291 and 292: TABLE B-109.—Growth rates in real
Page 293: TABLE B-lll.—Unemployment rate, a
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