ECONOMIC

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TABLE 12.—Changes in selected price measures, 1971IV to 1973IV[Percent; seasonally adjusted annual rates]Price measure1971 IVto1972 IV1972 IVto1973 IV1II19731IIIIVImplicit GNP price deflator:Total GNP2....3.33 7.16.17.37.03 7.9Private nonfarm GNPFarm GNP2.5?2.93 5.554.24.350.66.075.84.5107.43 7.03.0Consumer price index:All items3.58.46.18.49.19.9FoodNonfood itemsEnergy *Other nonfood5.22.92.93.019.45.212.84.518.63.28.22.520.25.111.64.124.64.45.74.714.58.227.06.8Wholesale price index:All commodities5.617.317.422.718.810.7Farm products and processed foodsand feeds.Industrial commoditiesEnergy sOther industrials11.43.55.63.331.012.046.08.249.16.512.85.941.215.241.312.649.96.522.24.9-6.820.5133.211.31 Changes from preceding quarter.2 Includes general government not shown separately.3 Preliminary.* Includes gasoline and motor oil, fuel oil and coal, and gas and electricity.a Includes fuels and related products and power.Sources: Department of Commerce (Bureau of Economic Analysis) .and Department of Labor (Bureau of Labor Statistics)did the widespread and strong economic expansion abroad. Exports of agriculturalcommodities rose sharply from $9.4 billion during 1972 to $17.5billion in 1973, a development which was instrumental in the sharp increasein U.S. farm commodity prices.Last year saw a continuation of the major changes in agricultural policythat were initiated during 1972 to further the expansion of supplies andthus restrain price increases. Farm and food product prices, nevertheless,reached new highs during the year. Wholesale farm product prices inDecember, although 12.4 percent below the August peak, were 36 percentabove their level a year earlier, while retail food prices were 20 percenthigher. Although the expansion in acreage lifted gross farm-food production,the production of livestock products declined slightly, and with exportshigher, there was a 2.5 percent reduction in food supplies reaching consumers.Disruptions in the pattern of supplies occasioned by the controlscreated serious shortages during the third quarter of the year.COMPENSATION AND UNIT LABOR COSTSThe slowdown in productivity growth during 1973 was accompanied bya quickening of the rate of increase in compensation per man-hour. As aresult, unit labor costs rose sharply and contributed to substantial price increasesin the private nonfarm economy (Chart 4). Nevertheless, preliminarydata suggest that these price increases fell short of the increase of unit68
Chart 4Productivity, Compensation, and Unit LaborCosts in the Private Nonfarm EconomyINDEX, 1970 IV=100130125RATIO SCALE120115COMPENSATIONPER MAN-HOUR110105UNIT LABOR COSTS100j L1970 1971 1972 1973NOTE.-DATA RELATE TO ALL PERSONS.SOURCE: DEPARTMENT OF LABOR.labor costs in the same sector. This is true even though real compensationper man-hour—money compensation deflated by the consumer price index—is likely to have suffered a small decline instead of having risen as it usuallydoes.Wage rate adjustments under major collective bargaining agreementswere substantially lower in 1973 than in 1972. For the first year of thecontract, increases averaged 5.8 percent, down from 7.3 percent in 1972;the slowdown for wages and benefits combined was a little smaller. (SeeChapter 3 for further treatment of wage rates.)Wage changes under such bargaining agreements are limited in scopebecause only one-fourth of all workers are unionized and only one-halfof these are covered by large contracts. A useful indicator of wage ratebehavior is the Labor Department's index of adjusted average hourlyearnings, which is applicable to all private nonfarm industries. The indexholds constant overtime hours in manufacturing and industry mix, but itdoes not cover fringe benefits or compensation of employees other than69
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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
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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 72 and 73: Chart 3Changes in Selected Price Me
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
Page 122 and 123: 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
Page 259 and 260:
TABLE C-3.—Implicit price deflato
Page 261 and 262:
Page 263 and 264:
Page 265 and 266:
TABLE C—8.—Gross national produ
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TABLE C-10.—Gross national produc
Page 269 and 270:
TABLE C-12.—Personal consumption
Page 271 and 272:
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
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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
Page 283 and 284:
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
Page 301 and 302:
TABLE C-39.—New housing starts an
Page 303 and 304:
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
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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
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TABLE G-94.—International investm
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TABLE C-96.—Consumer price indexe
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ECONOMIC

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