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LETTER OF TRANSMITTALTHE WHITE HOUSE,January 20, 1958.To the Congress of the United States:I present herewith my Economic Report, as required by Section 3 (a)of the Employment Act of 1946. In preparing this Report, I have receivedthe assistance and advice of the Council of Economic Advisers. I havealso had the advice of the heads of the executive departments and independentagencies of the Government.I set forth below, in condensed form, what I consider to be the majorconclusions and recommendations of the Report.The Economy in 1957The past year was a prosperous one, despite a decline in the closingmonths. Over 65 million people were employed, 300,000 more than in1956. The Nation's output of goods and services totaled $434 billion, andpersonal income was $343 billion. Both were 5 percent larger than in thepreceding year. A considerable part of these increases, however, reflectedhigher prices.In the final quarter of the year, gross national product was about 1 J/i percentbelow the peak reached in the third quarter. Personal income aftertaxes declined one-half of 1 percent, and personal consumption expendituressomewhat less. In December, however, unemployment amounted to5.2 percent of the civilian labor force, compared with 4.3 percent inSeptember.This change in economic conditions called for adjustments in economicpolicies. During much of the year, the task of restraining inflationary pressureswas paramount, and policies were directed to this end. In the closingmonths of the year, and currently, the task has been to facilitate readjustmentsin the economy essential to the resumption of sustainable economicgrowth, but to do so without reviving inflationary pressures.The Current Economic Situation and OutlookAs we look ahead in 1958, there are grounds for expecting that the declinein business activity need not be prolonged and that economic growth can beresumed without extended interruption. The policies of Government willbe directed toward helping to assure this result.in