ECONOMIC

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Chart 3Changes in Selected Price MeasuresPERCENT CHANGE FROM PRECEDING YEAR6 - PRIVATE GNP PRICE DEFLATOR4 -2 -_ PRIVATE NONFARMGNP PRICE DEFLATORVTA11 1IP111 1 1II1 1^§1 16 -CPI-ALL ITEMSCPI-ALL ITEMS LESS FOOD4 -2 -1I i 11 m II I 1I - -12 -10 -Qo6 -420II 1 I111 1 1i----—-1969 1970 1971 1972 1973 1969 1970 1971 1972 197314 _ WPI-ALI. COMMODITIESWPI-INDUSTRIAL COMMODITIESSOURCES: DEPARTMENT OF COMMERCE AND DEPARTMENT OF LABOR.66
deflator. The rate during 1973 was substantially above the high rates during1969 and 1970, but the differences between 1973 and 1969-70 are greatlynarrowed when attention is focused on the private nonfarm deflator alone(Table 11). Similarly, because farm and food prices have greater weightsin the wholesale and consumer price indexes, the latter show larger increasesfrom 1972 to 1973 than the private nonfarm deflator (Chart 3).TABLE 11.—Changes in gross national product price deflators, selected periods, 1948 to 1973[Percent change; seasonally adjusted annual rates]PeriodTotalGNPPrivateGNPPrivatenonfarmGNPNonfinancialcorporations1948 to 1973 average 12.72.42.52.11968 IV to 1969 IV1969 IV to 1970 IV1970 IV to 1971 IV . . .1971 IV to 1972 IV1972 IV to 1973 IV15.35.33.63.37.15.04.83.13.27.14.85.32.92.55.52.85.11.62.924.41 Preliminary.2 Estimate by Council of Economic Advisers.Source: Department of Commerce, Bureau of Economic Analysis (except as noted).Table 12 brings together changes during 1972 and 1973 for the majorindexes and some of their components. The acceleration in the advance ofprices is evident throughout the indexes, but the sharp advances in prices offarm products, food, and energy products dominate the extraordinary pricebehavior of last year.The role of import prices is also noteworthy. The price deflator for importsrose 26 percent during 1973. If these rising import prices were merelypassed through dollar for dollar to final purchasers in the United States,they would have accounted for about one-fourth of the rise in prices paidby U.S. purchasers in 1973.The farm deflator rose 54 percent from the fourth quarter of 1972 to thecorresponding quarter of 1973, reflecting exceptional increases in the first 3quarters of the year. The great increase in U.S. farm and food prices beganin 1972 as a reaction to the reduced world output caused by adverse weatherin several parts of the world. The single most important shortfall occurredin the Soviet Union and led that country to enter world markets for extremelylarge quantities of food and feed grains. Poor weather in other countriesalso contributed to the tightening of world food markets, and the UnitedStates, as the major source of additional supplies, was faced with a hugeincrease in demand.The sharp increase in demand continued in 1973. Rising incomes in thiscountry contributed to an increase in the demand for food, especially duringthe first part of the year. International events again added to the demandpressures on U.S. food supplies. Two devaluations of the dollar in a 15-month period, followed by further depreciation in the dollar exchange rateafter February, added to the export demand for U.S. food commodities, as67
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ECONOMICTRANSMITTEDTO THE CONGRESSF
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CONTENTSPageECONOMIC REPORT OF THE
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ECONOMIC REPORT OF THE PRESIDENTTo
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of the inflation rate of 1973, and
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or permit incentives—including hi
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people of an easy time. Like our pa
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THE PRESIDENT:LETTER OF TRANSMITTAL
Page 22 and 23: CHAPTER 3. INFLATION CONTROL UNDER
Page 24 and 25: Page7. Unemployment Rates by Sex an
Page 26 and 27: Page53. Maximum Percent Change in E
Page 28 and 29: We have specific problems, too, asi
Page 30 and 31: This curtailment of supply does, of
Page 32 and 33: consumption we would not have chose
Page 34 and 35: outside the food and fuel sectors a
Page 36 and 37: about $14 billion from deficit to s
Page 38 and 39: 8 percent, at annual rates. Continu
Page 40 and 41: A third method, which seems to have
Page 42 and 43: DEVELOPMENT OF LOW-COST ENERGY FOR
Page 44 and 45: would otherwise have been invested
Page 46 and 47: TRANSPORTATION REFORMLast year the
Page 48 and 49: constraints. Restrictions on entry
Page 50 and 51: In early 1974 the Commerce Departme
Page 52 and 53: Consumer SpendingConsumer expenditu
Page 54 and 55: Chart 1Changes in GNP, Real GNP, GN
Page 56 and 57: During the fourth quarter the downt
Page 58 and 59: A number of points may be noted abo
Page 60 and 61: income do not appear to have played
Page 62 and 63: Chart 2Changes in Real GNPPERCENTUN
Page 64 and 65: of essentially declining participat
Page 66 and 67: The unemployment rate for adult mal
Page 68 and 69: from job losers, the remainder of t
Page 70 and 71: to maintain a somewhat larger work
Page 74 and 75: TABLE 12.—Changes in selected pri
Page 76 and 77: production workers, and it is sensi
Page 78 and 79: the profits that companies report a
Page 80 and 81: Two measures of changes in income t
Page 82 and 83: About $8 billion of the growth in e
Page 84 and 85: effect of covered wage and employme
Page 86 and 87: Since these apparent stabilization
Page 88 and 89: MONETARY POLICY AND FINANCIAL MARKE
Page 90 and 91: lation requiring ceilings on all CD
Page 92 and 93: TABLE 19.—Offerings of new securi
Page 94 and 95: CHAPTER 3Inflation Control Under th
Page 96 and 97: (A more detailed presentation of th
Page 98 and 99: ate of advance in grocery store foo
Page 100 and 101: to the economy but also in the sens
Page 102 and 103: were imposed, limiting prices to th
Page 104 and 105: spurring of domestic inflation by e
Page 106 and 107: was more than twice as high in 1973
Page 108 and 109: wage increases in many cases, const
Page 110 and 111: TABLE 26.—Behavior of items in co
Page 112 and 113: Chart 6Changes in RelatedWholesale
Page 114 and 115: and natural gas. A complex set of f
Page 116 and 117: CHAPTER 4Energy and AgricultureFOR
Page 118 and 119: al gas have contributed to the low
Page 120 and 121: TABLE 30*—Wholesale prices, all i
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tion sector, which in 1972 accounte
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United States on oil imports, OPEC
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of old oil and prices of imported a
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LONG-TERM PROSPECTSThe price of imp
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important that the higher costs be
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improving the environment. The fund
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pollutants into the atmosphere will
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of research and rapid mechanization
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lion in fiscal 1972. Actually the a
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a minimum income. Unless prices fal
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The Administration supports the exa
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and estimates of some of these effe
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Since families typically pool their
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ability were not perfectly correlat
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Farm wages and farm income received
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TABLE 37.—Average usual weekly ea
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Chart 9Real Incomes for Men in Diff
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ecause they have acquired more expe
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whose owners or white workers have
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Several factors can be mentioned to
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y social pressures, however, which
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TABLE 42.—Relation of wage and sa
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ferences in their mix of occupation
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for public housing may be valued by
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8 to 20 percent for black females.
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sufficiently high to cover the addi
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TABLE 45.—Federal Government tran
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given to the problems of poverty du
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TABLE 47.—Trends in the employmen
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enefit increases greater than the i
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(Table 45). Medicare is chiefly des
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Public assistance is specifically d
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Then, subtracting equation (4) from
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policies, and the tensions among co
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In the fourth quarter the dollar ro
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which include trade, grants and oth
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tarily by foreign central banks, ev
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ply of oil, and by domestic price c
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in the United States. In view of th
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TABLE 52.—U.S. balances on intern
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esult from changes in market value
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TABLE 54.—Major changes in capita
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attempt was made to agree on a code
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The official price of gold was rais
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system, these demand changes were a
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What Pressures Should Be Exerted on
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The composition of reserves among d
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prices of approximately the same or
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tained, they would probably be felt
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Reducing Nontariff BarriersIn order
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Structural problems. Agreements on
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arrangements which are designed to
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capital and the means of putting th
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Canada and four smaller countries u
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currencies have appreciated relativ
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Effective Changes in Other Currenci
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Activities of the Advisory Committe
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Appendix BREPORT TO THE PRESIDENT O
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Report to the President on the Acti
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govern the exploitation of the reso
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Manpower and Social Affairs Committ
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Junior Staff EconomistsJames S. Fac
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Appendix CSTATISTICAL TABLES RELATI
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PRODUCTION AND BUSINESS ACTIVITY:Pa
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NATIONAL INCOME OR EXPENDITURETABLE
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TABLE C-2.—Gross national product
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TABLE C-3.—Implicit price deflato
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Page 263 and 264:
Page 265 and 266:
TABLE C—8.—Gross national produ
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TABLE C-10.—Gross national produc
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TABLE C-12.—Personal consumption
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TABLE C-14.—Relation of gross nat
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TABLE C—16.—Relation of nationa
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TABLE C-18.— Total and per capita
Page 277 and 278:
TABLE C-19.—Sources of personal i
Page 279 and 280:
TABLE C-21.—Saving by individuals
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POPULATION, EMPLOYMENT, WAGES, ANDP
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TABLE C-24.—Noninstitutional popu
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TABLE C-26.— Selected unemploymen
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TABLE C—28.—Unemployment insura
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TABLE C-29.—Wage and salary worke
Page 291 and 292:
TABLE C-31.—.•Average weekly ea
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TABLE C-33.—Changes in output per
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TABLE C—35.—Industrial producti
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TABLE C-37.—Capacity utilization
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TABLE C—38.—New construction ac
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TABLE C-39.—New housing starts an
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TABLE C-41.—Sales and inventories
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TABLE C-43.—Manvjacturers* new an
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TABLE O45.—Consumer price indexes
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TABLE C—47.—Consumer price inde
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TABLE C~49.—Wholesale price index
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TABLE C-50.—Wholesale price index
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194819491950.,1951195219531954Yearo
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TABLE C-53.—Commercial bank loans
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TABLE G-54.—Total funds raised in
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TABLE C-56.—Federal Reserve Bank
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TABLE C-58.—Bond yields and inter
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TABLE C-59.—Short- and intermedia
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TABLE C-61.—Mortgage debt outstan
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TABLE C-63.—Net public and privat
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TABLE C-65.—Federal budget receip
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TABLE C-66.—Relation of the Feder
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TABLE C-68.—Receipts and expendit
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TABLE C-10.—State and local gover
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TABLE C-72.—Estimated ownership o
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CORPORATE PROFITS AND FINANCETABLE
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TABLE C-76.—Relation of profits a
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TABLE C-77.—Sources and uses of f
Page 347 and 348:
TABLE C-79.—State and municipal a
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TABLE C-81.—Business formation an
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Year1929...1933...1939...1940...194
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TABLE C-85.—Indexes of prices rec
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TABLE G-87.—Comparative balance s
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TABLE G-88.— U.S. balance of paym
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TABLE C-90.— U.S. merchandise exp
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TABLE C-92.—International reserve
Page 363 and 364:
TABLE G-94.—International investm
Page 365:
TABLE C-96.—Consumer price indexe
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ECONOMIC

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