Economic Report of the President

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LETTER OF TRANSMITTALCOUNCIL OF ECONOMIC ADVISERS,Washington, D.C, December 31, 1980.MR. PRESIDENT:The Council of Economic Advisers submits this report on its activitiesduring the calendar year 1980 in accordance with the requirementsof the Congress, as set forth in section 10(d) of the EmploymentAct of 1946 as amended by the Full Employment and BalancedGrowth Act of 1978.Cordially,CHARLES L. SCHULTZE, ChairmanGEORGE C. EADSSTEPHEN M. GOLDFELD217
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Economic Reportof the PresidentTran
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ECONOMIC REPORTOF THE PRESIDENT
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We have heard much about American i
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at an approach that took account of
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een due to overall demand in the ec
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to $27.5 billion in the new budget
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ductions would amount to over $27 b
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10 percent inflation rate, keeping
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tutes for petroleum. The Synthetic
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esponse can be so large as to wipe
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THE ANNUAL REPORTOF THECOUNCIL OF E
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CONTENTSCHAPTER 1. INFLATION AND GR
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PageChallenges to the International
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CHAPTER 1Inflation and Growth in th
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needed to control inflation by resi
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decline in productivity growth may
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Chart 1Standard Unit Labor CostsPER
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end of 1974 the world price of oil
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price decisions cannot easily be re
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Federal budget achieved a surplus.
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As an abrupt increase in the price
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policies but are based on the wides
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tion, and can policies be designed
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duction and employment to grow only
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Moreover, their actions must indica
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Starting with its 1975 targets as a
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well after the fact whether the mon
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Reserve provides some flexibility i
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in response to circumstances in par
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Although the flexibility of TIPs ma
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ard or that thought the administrat
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given standard, as the reward and t
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large firms. Even among large firms
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cause declining productivity growth
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vanced technology and will therefor
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ather than restoring the growth of
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correct some of the distortions in
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higher than it would otherwise be b
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EXPECTED PRODUCTIVITY GAINSAlthough
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supply of adult men in the work for
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increase demand pressures, especial
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time hours also has drawbacks. For
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eintroduce the problem of changing
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CHAPTER 2Improving the Adaptability
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use less and produce more energy in
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expectation of price controls or fu
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dependence on foreign oil mean that
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While the market solution might pro
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High energy prices and excessive de
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part, the interests of these partie
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Federal regulations designed to pro
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Agency (EPA) from considering prosp
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other things, that federally assist
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ing services. Money-market mutual f
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holdings of consumer and business l
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they once had and thus cannot conti
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finding ways around outdated regula
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proportion of the existing farms pr
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prices for years in the future, reg
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derground water resources once thou
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comprehensive, actuarial crop insur
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duced a decline in the median age o
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elude government investments in loc
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some of the firms in the chosen sec
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CHAPTER 3The Economy: Review and Pr
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uild up oil inventories and maintai
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Chart 7Selected Interest Ratesand B
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had risen just 2 months earlier. By
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Chart 8Personal Saving RatePERCENT1
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chief cyclical determinant of housi
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ment were sharply diminished by the
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dropped even faster, in large part
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ployment grew more vigorously after
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terials fell for a full third of th
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1979, slowed to a 19 percent annual
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costs of production. The evidence s
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sharp decline in output in the seco
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ecord high interest rates during th
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automatic transfer services (ATS) n
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plunged in March, although the only
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(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
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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 225 and 226: Report to the President on the Acti
Page 227 and 228: In the final months of each year, d
Page 229 and 230: A Member of the Council represents
Page 231 and 232: Elizabeth J. JensenStephen A. O'Con
Page 233: Appendix BSTATISTICAL TABLES RELATI
Page 236 and 237: POPULATION, EMPLOYMENT, WAGES, AND
Page 238 and 239: INTERNATIONAL STATISTICS—Continue
Page 240 and 241: TABLE B-2.—Gross national product
Page 242 and 243: TABLE B-3.—Implicit price deflato
Page 244 and 245: TABLE B-4.—Fixed-weighted price i
Page 252 and 253: TABLE B-ll.—Gross domestic produc
Page 254 and 255: TABLE B-13.—Personal consumption
Page 256 and 257: TABLE B-15.—Inventories and final
Page 258 and 259: TABLE B-17.—Relation of gross nat
Page 260 and 261: TABLE B-19.—National income by ty
Page 262 and 263: TABLE B-20.—Sources of personal i
Page 264 and 265: TABLE B-21.—Disposition of person
Page 266 and 267: TABLE B-23.—Gross saving and inve
Page 268 and 269: TABLE B-25.—Money income (in 1979
Page 270 and 271: TABLE B-27.—Noninstitutional popu
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TABLE B-28.—Civilian employment a
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TABLE B-30..—Civilian labor force
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TABLE B-32.—Unemployment by durat
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TABLE B-34.—Unemployment insuranc
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TABLE B-36.—Average weekly hours
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TABLE B-38.—Productivity and rela
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PRODUCTION AND BUSINESS ACTIVITYTAB
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TABLE B-43.—Capacity utilization
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TABLE B-44.—New construction acti
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TABLE B-46.—Nonfarm business expe
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TABLE B-48.—Manufacturers' shipme
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PRICESTABLE B-50.—Consumer price
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TABLE B-51.—Consumer price indexe
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TABLE B-53.—Changes in consumer p
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TABLE B-55.—Producer price indexe
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TABLE B-56—Producer price indexes
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TABLE B-57.—Producer price indexe
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MONEY STOCK, CREDIT, AND FINANCETAB
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TABLE B-61.—Commercial bank loans
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TABLE B-62.—Total funds raised in
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TABLE B-64.—Aggregate reserves an
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TABLE B-65.—Bond yields and inter
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TABLE B-67—Consumer installment c
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TABLE B-69-— Mortgage debt outsta
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TABLE B-70.—Federal budget receip
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TABLE B-72.—Relation of Federal G
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TABLE B-74.—Federal Government re
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TABLE B-76.—State and local gover
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TABLE B-78.—Estimated ownership o
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CORPORATE PROFITS AND FINANCE4. ABL
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TABLE B-82.—Corporate profits of
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TABLE B-84.—Relation of profits a
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TABLE B-86.—Determinants of busin
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TABLE B-88.—Current assets and li
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TABLE B-90.—Common stock prices a
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AGRICULTURETABLE B-92.—Farm incom
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TABLE B-94.—Farm input use, selec
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TABLE B-96.—U.S. exports and impo
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INTERNATIONAL STATISTICSTABLE B-98
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TABLE B-99.—U.S. international tr
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TABLE B-101.—U.S. merchandise exp
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TABLE B-103.—International invest
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TABLE B-I05.— World trade balance
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TABLE B-107.—Growth rates in real
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TABLE B-109.—Consumer prices and
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TABLE B-110.—Summary of major U.S
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