Economic Report of the President

We have heard much about American industry losing its competitiveedge in international markets and about the "deindustrialization"of America. In fact, during the 3 years prior to the onset of the 1980recession—and the effects of that recession will be transient-^thegrowth of industrial production in the United States was larger thanit was in Germany, France, or the United Kingdom. The volume ofAmerican nonfarm exports rose by 35 percent between 1977 and themiddle of 1980, and the share of U.S. exports among the total exportsof the industrial countries rose by about 1 Vi percentage points,reversing a declining trend that had been underway since the 1950s.America's balance of payments is strong in large part because of itssuperior export performance. Despite a massive $40-billion annualdrain of funds to pay for the oil-price increases of 1979 and 1980, ourexports of goods and services now exceed our imports. Unlike thesituation in most other oil-importing nations, our country's externalbalance is in surplus.The dollar is also strong. After a period of weakness in its valueabroad, we took decisive action 2 years ago to stabilize the dollar.Since then, in a world of sharply changing circumstances and disruptionsof oil supply, the dollar has remained strong, and has risen invalue compared to most major currencies.While it is imperative that our country increase the share of its nationaloutput devoted to investment, the reason is not that investmenthas been weak in recent years. Between 1976 and 1980, realbusiness investment grew almost 6 percent a year, substantially fasterthan GNP as a whole. Because of that rapid growth the share of businessinvestment in GNP during the past 3 years exceeded that of anyother 3-year period in the last three decades.There are other areas where the Nation has made more progressthan we sometimes realize. While we are properly concerned to limitthe growth in Federal spending and voice our impatience with thewaste and inefficiency that often exist in government programs, weshould not forget the good that has been accomplished with theseprograms. Examples abound. In the early 1960s, for instance, infantmortality in the United States was scandalously high compared toother countries, and most of that high mortality was concentratedamong the poor. Due in large part to programs like Medicaid, infantmortality has fallen sharply. More generally, we have dramatically improvedaccess to medical care for the poor and the aged. ThroughFederal grants we have strengthened the mass transit systems of ourmajor cities and helped our municipalities install critically neededwaste treatment plants. We have helped millions of young people,who could not otherwise have afforded it, get a college education.