Economic Report of the President

More documents

Recommendations

Info

imported energy eventually will reduce real incomes in the UnitedStates. This reduction must be achieved by some combination ofprice inflation, wage moderation, or shrinking profit shares. Wagebargaining aimed at preventing this can only transform the adjustmentinto a more inflationary one.TABLE 21.—Alternative measures of changes in real earnings per hour, 1978-80[Percent change, fourth quarter to fourth quarter]Item 1978 1979 1980 lAverage hourly earnings indexDeflated by:Consumer price index (CPI)CPI with rent substituted for home-ownershipCPI with rent substitution and excluding energy...Fixed-weight price index for personal consumption expenditures (PCE)..Fixed-weight price index for PCE excluding energyCompensation per hour --4.3-2.3.1-1.9=2.6-1.1-.2-1.1-.2Deflated by:Consumer price index (CPI)CPI with rent substituted for home-ownershipCPI with rent substitution and excluding energy....Fixed-weight price index for PCEFixed-weight price index for PCE excluding energy..1 Preliminary: CPI for fourth quarter 1980 based on data through November.2 Data are for the private nonfarm business sector, all persons. Changes for 1980 are third quarter to third quarter.Note.—CPI for all urban consumers used.Fixed-weight price indexes are preliminary and subject to revision.Sources: Department of Commerce (Bureau of Economic Analysis) and Department of Labor (Bureau of Labor Statistics).Incomes policies can help to moderate the inflationary response toan oil-price increase, but only if business and labor cooperate toachieve the necessary adjustment. Such a willingness supported theCouncil on Wage and Price Stability (CWPS) standards programthrough its first year, 1979. In that year, as was noted in the lastReport, evidence suggested that the standards had helped to restrainwage inflation by 1 to IV2 percentage points. Since there was no evidenceof widening profit margins, it appears that the CWPS programcontributed to smoothing the adjustment to higher oil prices. Whilethere is evidence that cooperation with the standards was also high inits second year, a combination of several program features seems tohave reduced but not eliminated its impact. A widening of the allowablerange of wage increase and an undervaluation of cost-of-livingadjustments in multiyear contracts were important factors.ProductivityProductivity growth continued weak in 1980, advancing a tiny 0.1percent over the year ending with the third quarter. In 1979 privatenonfarm business productivity had declined 1.1 percent.During the course of 1980 productivity growth fluctuated sharply.In the first quarter productivity was essentially unchanged. With the-2.7— 9l!6~u-2.5-.8.9154
sharp decline in output in the second quarter, productivity declinedat a rapid 3 percent annual rate. This marked the seventh consecutivequarterly drop. With the resumption of modest economic growthin the third quarter, productivity rebounded sharply, rising at a 4percent rate.The faltering productivity during the first half of 1980, combinedwith a more rapid rise in wages, resulted in an acceleration in unitlabor costs. However, with the improvement in productivity in thethird quarter, the increase in unit labor costs moderated substantially.For the year ending with the third quarter, unit labor costs rose 10percent, a modest improvement from the increase recorded during1979.Distribution of National IncomeThe recession's impact was evident in the shifting distribution ofnational income during 1980 (Table 22). Compensation of employees,which had averaged 74.6 percent of national income over theyears 1976-79, rose to 75.3 percent in 1980. This increase in theshare of national income going to wage earners is the normal patternin a recession. Employer contributions for social insurance continuedto account for a growing share of the compensation total. Corporateprofits and proprietors' income as a share of national income fellsharply to 14.8 percent in 1980, down from the 17.1 percent averageshare during 1976-79. The corporate profits share fell to 8.6 percent.The unusually high level of interest rates was responsible forboosting the net interest share of national income to 8.5 percent, itshighest level in the postwar period. Net farm income fell in 1980from its relatively high level in 1979. After adjusting for changes ininventory, net income from farming was about $24 billion for theTABLE 22.—Shares of national income, 1976-80[Percent of total]Item 761977197819791980 1Third quarter19791980Compensation of employees75.174.574.574.475.374.375.3Wages, salaries, fringe benefits, and otherEmployer contributions for social insuranceProprietors' income 270.05.16.869.45.16.769.25.36.769.05.46.769.85.56.268.95.46.769.85.56.1Nonfarm 2 ..Farm 2Rental income 3Corporate profits 2Net interest5.41.41.710.06.35.51.21.610.76.55.21.51.610.66.65.11.61.610.07.35.11.11.58.68.55.21.51.510.07.45.11.01.58.48.71 Preliminary,2 With inventory valuation and capital consumption adjustments.3 Rental income of persons, with capital consumption adjustment.Note.—Quarterly figures based on seasonally adjusted data.Detail may not add to 100 percent because of rounding.Source: Department of Commerce, Bureau of Economic Analysis.155
Page 3:
Economic Reportof the PresidentTran
Page 7:
ECONOMIC REPORTOF THE PRESIDENT
Page 10 and 11:
We have heard much about American i
Page 12 and 13:
at an approach that took account of
Page 14 and 15:
een due to overall demand in the ec
Page 16 and 17:
to $27.5 billion in the new budget
Page 18 and 19:
ductions would amount to over $27 b
Page 20 and 21:
10 percent inflation rate, keeping
Page 22 and 23:
tutes for petroleum. The Synthetic
Page 24 and 25:
esponse can be so large as to wipe
Page 27:
THE ANNUAL REPORTOF THECOUNCIL OF E
Page 31 and 32:
CONTENTSCHAPTER 1. INFLATION AND GR
Page 33 and 34:
PageChallenges to the International
Page 35 and 36:
CHAPTER 1Inflation and Growth in th
Page 37 and 38:
needed to control inflation by resi
Page 39 and 40:
decline in productivity growth may
Page 41 and 42:
Chart 1Standard Unit Labor CostsPER
Page 43 and 44:
end of 1974 the world price of oil
Page 45 and 46:
price decisions cannot easily be re
Page 47 and 48:
Federal budget achieved a surplus.
Page 49 and 50:
As an abrupt increase in the price
Page 51 and 52:
policies but are based on the wides
Page 53 and 54:
tion, and can policies be designed
Page 55 and 56:
duction and employment to grow only
Page 57 and 58:
Moreover, their actions must indica
Page 59 and 60:
Starting with its 1975 targets as a
Page 61 and 62:
well after the fact whether the mon
Page 63 and 64:
Reserve provides some flexibility i
Page 65 and 66:
in response to circumstances in par
Page 67 and 68:
Although the flexibility of TIPs ma
Page 69 and 70:
ard or that thought the administrat
Page 71 and 72:
given standard, as the reward and t
Page 73 and 74:
large firms. Even among large firms
Page 75 and 76:
cause declining productivity growth
Page 77 and 78:
vanced technology and will therefor
Page 79 and 80:
ather than restoring the growth of
Page 81 and 82:
correct some of the distortions in
Page 83 and 84:
higher than it would otherwise be b
Page 85 and 86:
EXPECTED PRODUCTIVITY GAINSAlthough
Page 87 and 88:
supply of adult men in the work for
Page 89 and 90:
increase demand pressures, especial
Page 91 and 92:
time hours also has drawbacks. For
Page 93 and 94:
eintroduce the problem of changing
Page 95 and 96:
CHAPTER 2Improving the Adaptability
Page 97 and 98:
use less and produce more energy in
Page 99 and 100:
expectation of price controls or fu
Page 101 and 102:
dependence on foreign oil mean that
Page 103 and 104:
While the market solution might pro
Page 105 and 106:
High energy prices and excessive de
Page 107 and 108:
part, the interests of these partie
Page 109 and 110: Federal regulations designed to pro
Page 111 and 112: Agency (EPA) from considering prosp
Page 113 and 114: other things, that federally assist
Page 115 and 116: ing services. Money-market mutual f
Page 117 and 118: holdings of consumer and business l
Page 119 and 120: they once had and thus cannot conti
Page 121 and 122: finding ways around outdated regula
Page 123 and 124: proportion of the existing farms pr
Page 125 and 126: prices for years in the future, reg
Page 127 and 128: derground water resources once thou
Page 129 and 130: comprehensive, actuarial crop insur
Page 131 and 132: duced a decline in the median age o
Page 133 and 134: elude government investments in loc
Page 135 and 136: some of the firms in the chosen sec
Page 137 and 138: CHAPTER 3The Economy: Review and Pr
Page 139 and 140: uild up oil inventories and maintai
Page 141 and 142: Chart 7Selected Interest Ratesand B
Page 143 and 144: had risen just 2 months earlier. By
Page 145 and 146: Chart 8Personal Saving RatePERCENT1
Page 147 and 148: chief cyclical determinant of housi
Page 149 and 150: ment were sharply diminished by the
Page 151 and 152: dropped even faster, in large part
Page 153 and 154: ployment grew more vigorously after
Page 155 and 156: terials fell for a full third of th
Page 157 and 158: 1979, slowed to a 19 percent annual
Page 159: costs of production. The evidence s
Page 163 and 164: ecord high interest rates during th
Page 165 and 166: automatic transfer services (ATS) n
Page 167 and 168: plunged in March, although the only
Page 169 and 170: (FHLB) System increased their borro
Page 171 and 172: THE PROSPECTS FOR 1981 AND 1982In 1
Page 173 and 174: expectations. Of course, if the eco
Page 175 and 176: The uncertainty of developments in
Page 177 and 178: produce a slight decline in the sav
Page 179 and 180: more rapid growth thereafter. Durin
Page 181 and 182: eemergence of modest but sustained
Page 183 and 184: hike would depend on many factors,
Page 185 and 186: major revision of the NIPA occurred
Page 187 and 188: per year. This modest acceleration
Page 189 and 190: THE INDUSTRIAL ECONOMIES: TRENDS AN
Page 191 and 192: Chart 10Labor Costs, Value-Added De
Page 193 and 194: Rather, the German current account
Page 195 and 196: TABLE 30.—Inflation in major indu
Page 197 and 198: THE GLOBAL OIL MARKETTable 31 summa
Page 199 and 200: may be preserved. Stocks are in fac
Page 201 and 202: straint on growth. Finally, policie
Page 203 and 204: outside government, both at home an
Page 205 and 206: ates are high, differences in polic
Page 207 and 208: Japanese trade performance in volum
Page 209 and 210: No "Say's Law" operates in internat
Page 211 and 212:
the cost of the loans, and they may
Page 213 and 214:
At the same time, access to the IMF
Page 215 and 216:
to closer cooperation is to risk a
Page 217 and 218:
While all countries, in attempting
Page 219:
threats of disruption, market-shari
Page 223:
LETTER OF TRANSMITTALCOUNCIL OF ECO
Page 226 and 227:
Past Council Members and their date
Page 228 and 229:
1977 to review selected analyses of
Page 230 and 231:
The Chairman and the Council Member
Page 232 and 233:
University). Kate Stith Pressman, s
Page 235 and 236:
CONTENTSNATIONAL INCOME OR EXPENDIT
Page 237 and 238:
GOVERNMENT FINANCE'—ContinuedB-72
Page 239 and 240:
NATIONAL INCOME OR EXPENDITURETABLE
Page 241 and 242:
TABLE B-2.—Gross national product
Page 243 and 244:
TABLE B-3.—Implicit price deflato
Page 245 and 246:
TABLE B-5.—Implicit price deflato
Page 247 and 248:
Page 249 and 250:
Page 251 and 252:
TABLE B-10.—Gross national produc
Page 253 and 254:
TABLE B-12.—Output, costs, and pr
Page 255 and 256:
TABLE B-14.—Gross private domesti
Page 257 and 258:
TABLE B-16.—Inventories and final
Page 259 and 260:
TABLE B-18.—Relation of national
Page 261 and 262:
TABLE B-19-—National income by ty
Page 263 and 264:
Year orquarter192919331939194019411
Page 265 and 266:
TABLE B-22.—Total and per capita
Page 267 and 268:
Year orquarterTotalTotalCurrencyand
Page 269 and 270:
TABLE B-26.—Population by age gro
Page 271 and 272:
TABLE B-27.—Noninstitutional popu
Page 273 and 274:
Year or monthTABLE B-29.—Selected
Page 275 and 276:
TABLE B-31.—Unemployment rate by
Page 277 and 278:
TABLE B-33.—Unemployment by reaso
Page 279 and 280:
TABLE B-35.—Wage and salary worke
Page 281 and 282:
TABLE B-37.—Average weekly earnin
Page 283 and 284:
TABLE B-39.—Changes in productivi
Page 286 and 287:
TABLE B-42.—Industrial production
Page 288 and 289:
TABLE B-44;—New construction acti
Page 290 and 291:
TABLE B-45.—New housing units sta
Page 292 and 293:
TABLE B-47.—Sales and inventories
Page 294 and 295:
TABLE B-49.—Manufacturers' new an
Page 296 and 297:
TABLE B-51.—Consumer price indexe
Page 298 and 299:
19391940194119421943194419451946194
Page 300 and 301:
TABLE B-54.—Changes in special co
Page 302 and 303:
TABLE B-55.—Producer price indexe
Page 304 and 305:
TABLE B-57.—Producer price indexe
Page 306 and 307:
TABLE B-58.—Changes in producer p
Page 308 and 309:
TABLE B-60.—Components of money s
Page 310 and 311:
TABLE B-62.— Total funds raised i
Page 312 and 313:
TABLE B-63.—Federal Reserve Bank
Page 314 and 315:
TABLE B-65.—Bond yields and inter
Page 316 and 317:
TABLE B-66—Consumer credit outsta
Page 318 and 319:
TABLE B-68.—Mortgage debt outstan
Page 320 and 321:
GOVERNMENT FINANCETABLE B-70.—Fed
Page 322 and 323:
TABLE B-l\.—Federal budget receip
Page 324 and 325:
TABLE B-73.—Government receipts a
Page 326 and 327:
TABLE B-75.—State and local gover
Page 328 and 329:
TABLE B-77,—Interest-bearing publ
Page 330 and 331:
TABLE B-79-—Maturity distribution
Page 332 and 333:
TABLE B-81.—Corporate profits by
Page 334 and 335:
TABLE B-83.—Sales, profits, and s
Page 336 and 337:
TABLE B-85.—Relation of profits a
Page 338 and 339:
TABLE B-87.—Sources and uses of f
Page 340 and 341:
TABLE B-89-—State and municipal a
Page 342 and 343:
TABLE B-91.—Business formation an
Page 344 and 345:
TABLE B-93.—Farm output ami produ
Page 346 and 347:
Year or month1940194119421943194419
Page 348 and 349:
TABLE B-97.—Balance sheet of the
Page 350 and 351:
TABLE B-99— U.S. international tr
Page 352 and 353:
TABLE B-100.—U.S. merchandise exp
Page 354 and 355:
TABLE B-102.—U.S. merchandise exp
Page 356 and 357:
TABLE B-104.— World trade: Export
Page 358 and 359:
TABLE B-106.—International reserv
Page 360 and 361:
• • ' •TABLE B-108.—Industr
Page 362 and 363:
TABLE B-110.—Summary of major U.S
show all

Economic Report of the President

Create successful ePaper yourself

Delete template?

Save as template?