ECONOMIC

percent and much less during the year 1973. Productivity growth has acyclical pattern, tending to be greatest in the period of most rapid expansion,then to slow down as output nears its peak and during the early period ofcontraction, but to revive before the recession ends.Some decline in the rate of productivity growth in 1973 was anticipatedas the economy passed beyond its period of most rapid expansion. Thedegree of the slowdown was unexpectedly great, however, considering thatoutput at the beginning of the year was still more than 2 percent belowits conventionally estimated potential. A number of relevant factors wereat work:1. Many industries had trouble achieving large output gains becauseit was hard to obtain raw and intermediate materials, such aschemicals, steel, paper, and copper. Capacity utilization in basic materials-producingindustries was pushed to a postwar high as a consequenceof surging demand after several years in which additions tocapacity had been low. Capacity utilization in fabricating industrieswas not so high. Estimates of capacity utilization in manufacturingvary, but in any case output was limited by the lack of materials(Table 10). The shortage of some materials was aggravated by largeexports which resulted from the foreign boom, the depreciation of thedollar, and the maintenance in the United States of price ceilingsbelow world price levels.The shortages of basic materials apparently did not prevent a largerise of manufacturing output and of productivity in manufacturing.We say "apparently" because the manufacturing figures are derivedin a different way from that used for the nonfarm output figures, andthe two may not be consistent. Nevertheless, the basic materials shortagesmay have prevented a still further rise of output and employmentin manufacturing; and it may have diverted a higher proportion ofthe enlarged number of workers into nonmanufacturing industries,where productivity was lower and where the influx of workers depressedproductivity further. As noted earlier, inventory accumulation was lowmost of last year, and a larger rise in manufacturing output might havepermitted more normal ratios of stocks to sales.2. The 1973 work force consisted to an unusual degree of new entrantsto the labor force and reentrants—chiefly women and youngpeople, all of whom on the average tend to work in less productiveoccupations than adult males with work experience.3. An unusually high rate of turnover of workers occurred during1973. A large number of people quit each month, and a large numberof people were newly hired. This meant that a high proportion of thepeople in each job category were new to that work, if not to the laborforce, and required training and experience before they became normallyproductive. Furthermore, this would give employers an incentive63