OECD ECONOMIC SURVEYS UNITED STATES 1976

65 Pages·1976·4.211 MB·Russian

by  OECD

OECD
ECONOMIC SURVEYS
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UNITED STATES
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JULY 1976
BASIC STATISTICS OF THE UNITED STATES
THE LAND
Area Continental United States plus Populationofmajorcities
HawaTand Alaska(thous.sq,km) includingtheirmetropolitan
areas(1.7.1973estimates):
NewYork 9739000
Chicago 7002000
LosAngclcs-LongBe;ich 6924000
THE PEOPLE
Population,December1975 214400000 Civilianlabourforce 1975 92613000
Numberofinhabitantspersq.kn 23 ofwhich:
Population,annualnetnatural Employedinagriculture 3380000
increase(average 1970-74) Unemployed 7830000
Annualnatural increase 1974, Netcivilianmigration
percent 0.6 (annualaverage 1970-74)
PRODUCTION
Grossnationalproductin 1975 Originornationalincomein 1975
(billionsofUS$) 1498.9 (percentornationalincome1):
GNPperhead in 1975(USI) 6991 Agriculture,forestryandfishing 3.6
Grossfixedcapita]formation: Manufacturing 24.6
PercentofGNPin 1975 13.2 Constructionandmining 6.0
Perheadin 1975(US$) 920 Governmentandgovernment
enterprises 16.0
Other 49.8
THE GOVERNMENT
Governmentpurchasesofgoods Compositionofthe94thCongress
andservices, '975(percentofGNP) 22.1 (March 1976):
RevenueofFederal,stateandlocal Houseof Senat
governments, 1975(percentofGNP) 34.3 Representatives
FederalGovernmentdebtaspercent
ofcashreceiptsfromthepublic, Democrats 289 61
fiscalyear 1975 193.6 Republicans 144 37
Conservative- (cid:9): ]
Independent (cid:9) 1
Vacant 2
Total 435 100
FOREIGN TRADE
Exports: Imports:
Exportsofgoodsandservicesas Importsofgoodsandservicesas
percentofGNPin 1975 9.9 percentofGNPin 1975 8.4
Mainexports 1975 Mainimports 1975
(percentofmerchandiseexports): (percentofmerchandiseimports):
Machinery 26.9 Food,feedsand beverages 9.9
Transportequipment 16.3 Industrialsuppliesandmaterials 52.2
Foodand liveanimals 14.7 Capita]goods 9.9
Crudematerials(inedible) 9.3 Automobilevehiclesandparts 12.1
Chemicals 8.2 Consumergoods(nonfood) 14.0
Othermanufacturedgoods 10.3 Allother 1.9
Allother 14.3
1 Withoutcapitalconsumptionadjustment.
Non- An internationalcomparisonofcertainbasicstatisticsisgiven inanannextable.
OECD ECONOMIC SURVEYS
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UNITED STATES
ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT
The Organisation for Economic Co-operation and Devel¬
opment (OECD) wassetupunderaConventionsignedinParison
14th December, i960, which provides that the OECD shall pro¬
mote policies designed:
to achieve the highest sustainable economic growth and
employment and a rising standard of living in Member
countries, while maintaining financial stability, and thus
tocontribute to thedevelopmentoftheworld economy;
to contribute to sound economic expansion in Member as
well as non-member countries in the process ofeconomic
development;
to contribute to the expansion ofworld trade on a multi¬
lateral, non-discriminatory basis in accordance with inter¬
national obligations.
TheMembersofOECDarcAustralia,Austria,Belgium,Cana¬
da, Denmark, Finland, France, the Federal RepublicofGermany,
Greece, Iceland, Ireland, Italy,Japan, Luxembourg, the Nether¬
lands, New Zealand, Norway, Portugal, Spain, Sweden, Switzer¬
land, Turkey, the United Kingdom and the United States.
The Socialist Federal Republic ofYugoslavia is associated in
certainworkofthe OECD, particularlythat ofthe Economic and
DevelopmentReview Committee.
The annual review of the United Stales
by the OECD Economic and Development Review Committee
took place on 9th July 1976.
© OECD, 1976.
Queries concerning permissions or translation rights should be
addressed to:
Director ofInformation, OECD
2. rueAndré-Pascal. 75775 PARIS CEDEX 16, France.
CONTENTS
Introduction 5
I The 1975/76 recovery 5
The first year of recovery in retrospect 5
(i) Demand behaviour 8
(ii) Employment and productivity 13
(Hi) Income developments 16
Foreign trade and payments 18
II Economic policy 21
Fiscal policy 22
Monetary policy 25
Marked change in financial balances 31
Energy policies 33
III Short-term prospects 34
The economic background 34
(i) Policy shift towards restraint 35
(ii) Favourable financial position of the private sector 36
(Hi) Continued high degree of unutilised resources 36
(iv) Slowdown of inflation 39
(v) The external environment 41
The domestic demand and supply outlook 41
The external balance 43
IV Conclusions 44
Annexes
I Chronology of Main Economic Policy Measures 47
II Fiscal Drag and Changes in the Full Employment Surplus 49
TABLES
Text:
1 Demand and Output 7
2 Demand Contributions to Recovery 9
3 Employment, Output, Productivity and Real Wages 14-15
OECD Economic Surveys
4 Balance of Payments 18
5 Merchandise Trade, Terms of Trade and Effective Exchange Rate
Movements 20
6 Relative Import and Export Performance 20
7 Public Sector Revenue and Expenditure 23
8 Financial Balances 32
9 Wages and Prices 40
10 OECD Forecasts 42
Annex h
Changes in Full Employment Surplus 51
Statistical Annex:
A National product and expenditure in current prices 55
B National product and expenditure in constantprices 56
C Monetary indicators 57
D Balance of payments, OECD basis 58
DIAGRAMS
1 Major Economic Performance Indicators 6
2 Cyclical Comparison of GNP Developments 8
3 Comparative Inventory Cycles 9
4 Indicators of Private Consumption 10
5 Indicators of Residential Construction 11
6 Long-Term Trends in Business Fixed Investment 12
7 Employment and GNP 16
8 Profit Shares 17
9 Federal Budget Balances 24
10 Long-Term Targets and Monetary Aggregates 26
11 Short-Term Tolerance Ranges for Monetary Variables 27
12 Interest Rates and Velocity of Money 29
13 Development of US Government Debt 34
14 Financial Position of Business 37
15 Capacity Utilisation Rates 38
INTRODUCTION
Theperformance cf the US economy over the past twelve months has exceeded
generalexpectations of a year ago. By the firstquarter of 1976 both real GNP and
employment had regained their pre-recession levels and inflation, partly due to
temporary declines in food and energy prices, had been brought down to less than
half the rate recorded in 1975. Given the momentum of the recovery and the
strength cf forward-looking indicators, a continuation of significant output and
employment growth can be expected during the twelve months ahead. Some
acceleration of inflation from the rate experienced in the early months of this year
seems likely since food and energy prices are turning up again, but in the absence
of a sharp upsurge in commodity prices, inflation should remain well below last
year's rate. Reflecting in part the fact that the US economy has been leading the
upturn in OECD economic activity, the large surplus on the current account of the
balance of payments has been replaced by a small deficit.
With prospects for sustained recovery improving, there has been some shift
of policy towards restraint. The stimulus imparted to the economy by the May
1975 tax measures and the FY 1976 budget is subsiding, and budget plans for the
coming fiscal year point to a contractionary swing in the full employment balance.
On the monetary side, despite continued sluggish business demand for bank credit,
the Federal Funds rate has been allowed to rise somewhat and the tolerance ranges
for growth of money supply have been slightly lowered though mainly for technical
reasons.
Part I of this Survey covers recent developments concentrating on particularly
interesting features of the recovery. Part II examines the role of demand manage¬
ment policies during the first year of upswing. It contains a discussion of the
quantitative impact of discretionary fiscal measures, and an analysis of the factors
behind the unexpectedly sharp rise in the velocity of money in conditions of falling
interest rates and rapid growth of output. Part III presents the Secretariat's fore¬
casts up to mid-1977 onthebasis ofpresent policy intentions and some other impor¬
tant "exogenous" parameters. The main conclusions of the Survey are summarised
in Part IV.
I THE 1975/76 RECOVERY
The first year of recovery in retrospect
When the US economy was reviewed a year ago there were indications that
the most severe recession in the US post-war history was bottoming out and that a
recovery was imminent. The Secretariat's assessment at the time, covering the
period to mid-1976, suggested a policy-induced upswing in private consumption
and residential construction assisted by a technical rebound of output as the stock
adjustmentprocessseemed to be comingto an end, but unemployment was expected
OECD Economic Surveys
to decline only slightly. Given the large margin of unused capacity, business fixed
investment was thought likely to remain depressed. A deceleration of inflation
(as measured by the GNP deflator) from an annual rate of 9 per cent in the first
half of 1975 to 6 per cent by the first half of 1976 was expected. As the United
States was likely to lead the international recovery of activity, the current external
account was forecast to shift from a position of large surplus to one of small deficit.
In the event, the economic recovery in the United States has been significantly
stronger than expected, and the deceleration of inflation, helped by special and
partlytemporaryfactors, has been rathermorepronounced thansuggested. During
the year to the first half of 1976 real GNP may have risen by more than 7 per cent,
Diagram 1 Major Economic Performance Indicator*
12 12
11 11
10 10
9 Giow'.hof 9
RealGNP1
8 a
7 7
6 6
5 5
4 4
3 3
2 2
1 1
0 0
-1 -1
-7 -2
-3 -3
-A -4
-5 -5
-t. -6
-7 -7
_S -8
-9 -9
-10 L l -10
1975
1 Annual rate overihe previous quarter. Seasonally adjusted.
2 Seasonally adjusted.
Source: Departmentof Commerce, BusinessConditionsDigest.
Table 1 Demand and Output
Percentage volume changes, seasonally adjusted annual rates
Annual 1974 1975 1976
1972 1974 1975 Ql Q2 Q3 Q4 Ql Q2 Q3 Q4 Ql
Personal consumption 4.5 .9 1.7 2.1 1.8 6.4 4.0 4.1 8.0
Durables 8.7 2.8 4.3 4.5 9.8 23.8 11.1 20.5
Non-durables 3.4 1.2 1.2 2.6 8.3 1.5 3.6 6.6
Services 4.2 2.6 1.8 2.3 3.6 2.2 1.6 .4 3.8 .5 2.4 5.4
Private fixed investment 7.0 16.8 11.1 12.2 12.3
Non-residential 12.4 1.8 14.3 6.0 11.9
Residential 23.3 -^12.0 ^2.0 4.9 56.7 31.6 13.4
Government purchases of goods and services .7 1.3 .8 1.6 2.4 6.0 4.6 0.2
Federal 0 4.4 4.2 11.0 5.0
State and local 3.5 1.9 2.5 2.0 2.3 6.5 2.8 3.2 4.3 1.0
Final domestic demand 3.9 2.7 5.3 5.2 6.8 c:
Inventory investment1 .6 1.1 7.0 4.1 ;-.
Total domestic demand 4.4 2.1 12.8 4.9 11.2 aO-
Net exports' .9 .8 2.2 2.1 .8 1.4 1.2 .2 OS
Exports 20.5 11.4 36.8 5.8 19.5 15.1 &
Imports 5.9 .7 4.6 25.8 39.1 18.4 40.3 0>
C-5
GNP 5.3 3.3 12.0 5.0 8.5
GNP deflator 5.9 9.7 8.8 9.8 10.0 12.5 13.4 7.8 4.3 7.1 6.8 3.5
1 Change aspercentofGNP of previousperiod, annua) rate.
Source: DepartmentofCommerce, Surveyoj CurrentBusiness.
OECD Economic Surveys
against the initial forecast of around 5 per cent, while the GNP deflator during the
second Tialf of this period (January-June 1976) may not have advanced by more
than 4.5 per cent annual rate, i.e. by li percentage points less than predicted a year
ago. The labour market situation has also developed more favourably than envi¬
saged with the unemployment rate falling from its recession peak of 8.9 per cent
in May 1975 to 7.3 per cent by May 1976.
During the first four quarters of recovery the upturn in real GNP was stronger
than in the early 1960s and early 1970s and almost matched the first year growth
rate of the two expansionary episodes in the 1950s. While in terms of overall
growth the current upswing seems quite normal, there are nevertheless a number
of distinguishing features which can partly be related to the violence of the pre¬
ceding downturn. The following paragraphs compare developments in three
main areas the pattern of demand, employment and productivity, and income
developments with earlier cyclical experience.
Diagram 2 Cyclical Comparison of GNP Developments
1972 prices, seasonally adjusted
lnd*s tndm.
(Troughquarts,GNP~ 1Q01 (TroughquorttrGNP= 100)
110 110
109 / :109
>, / /
\/ >'
106 1 A/ 106
107 // ' 107
106 // 106
/ /
105 105
/ /
/ /
104 104
/ /
103 , 103
/
102 __'' \ // - 7956 04 195904 Trough7950 02 102
//
101 (cid:9) 7959 03 7962 °3 Trough196101 101
100 / . . . 7969 02 - 7972 02 Trough197004 100
/
99 // (cid:9) 1973 04 1976 01 Trough197502 99
/
/
/
-6-5-4-3-2-1 0 1 2 3 4 5 6 Ouor,.,,
Troughquorlrr0
Source: Department ofCommerce, Survey oj Current Business.
(i) Demand behaviour
Inventorymovements have been particularly violentduring thepresentbusiness
cycle, explaining a substantial part of the recovery of output. In 1974 there was
a considerable speculative build-up of stocks of raw materials in response to the