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ECONOMIC REPORT OF THE PRESIDENT
To the Congress of the United States:
A healthy and productive economy is a bulwark of freedom.
Around the world and here at home, our trials of strength, our works of peace, our quest for justice, our search for knowledge and understanding, our efforts to enrich our environment are buttressed by an amazing productive power.
Americans have confronted many challenges in this century. The ones we face in 1967 are as trying of men's spirits as any we have known. But the overwhelming majority of us face our challenges in comfort, if not affluence. The sacrifices required of most of today's generation are not of income or security; rather we are called on to renounce prejudice, impatience, apathy, weakness, and weariness.
In purely material terms, most Americans are better off than ever before. That fact expands our responsibilities, as it enlarges our resources to meet them.
RECENT ECONOMIC GAINS
An average of 74 million persons were at work in 1966—2 million more than in 1965. Nonfarm payrolls averaged 64 million, a gain of 3 million. On the whole, these jobs were better paying than ever, and more regular and more secure than most workers can remember.
The value of our total production of goods and services in 1966 was $740 billion—$58 billion, or 8/2 percent, higher than in 1965. More of the increase than we wanted represented higher prices. Still, the gain was nearly 51/2 percent after correction for price changes.
Labor, business, and the farmer all contributed to this major gain in production, and they rightly shared the benefits.
Aggregate compensation of employees rose 10.3 percent. Average compensation per man-hour in the private economy rose 6.5 percent, reflecting increased wages and fringe benefits, more overtime, the shift to higher-paying jobs, and increased employer contributions to Social Security. Corporate profits after taxes advanced more than 8 percent; per dollar of sales they were roughly unchanged from the high rate of 1965. Net income per farm rose more than 10 percent.
The single most meaningful measure of economic well-being is real disposable income per person——the after-tax purchasing power in stable dollars, available on the average to every man, woman, and child. It rose 31/2 percent or $89 per person in 1966. Although this advance was somewhat smaller than in 1965, it was still three times as large as the average yearly gain in the 1950's.
February 1961 launched the strongest and most durable economic expansion in our economic annals, and it still continues.
Almost 9 million jobs have been added in the last 6 years.
the number of Americans in poverty declined 51/2 million, and
capital-machines, buildings, transportation equipment, land improvements, and inventories—is valued at $220 billion. American families have added $470 billion to their accumulated financial assets. They have added $150 billion to their debts. So their net financial position is $320 billion stronger than 6 years ago.
OUR ECONOMIC PROBLEMS
Prosperity is everywhere evident. But prosperity is never without problems, and—in 1966—some of them were serious.
SOME LEADING PROBLEMS
Economic progress still left far too many behind.
at the end of 1966.
Perhaps two-thirds of them were “frictionally" unemployed: new entrants to the labor force in the process of locating a job; persons who quit one job to seek another; workers in the "off” months of seasonal industries; those temporarily laid off but with instructions to return. Their unemployment will be temporary;
many were drawing unemployment insurance.
job. They are the "hard-core" unemployed—lacking the neces-
any search for a job. Some had never tried.
earned incomes insufficient to support a minimum standard of
decent subsistence. • And 6/2 million families were poor because the heads of their
households were unable to work: either aged, severely handi
capped, or a widowed or deserted mother with young children. Those left behind used to be called the "invisible poor.” But an awakened public conscience has sharpened the vision of most Americans.
2. Price increases—although less than in many comparable periods still were greater than we wanted or should long tolerate.
It is tempting to blame the creep of prices on the greed of producers or the irresponsibility of labor-or Government policies—or bad weather-or economic disturbances abroad. Some of the price rise may have been due to each. But the main causes lay elsewhere:
• Some can be traced to imbalances created by the special pressures
of Vietnam procurement and booming private investment. • The spurt of demand—partly real, partly psychological—that fol
lowed the step-up of our Vietnam effort in mid-1965 simply exceeded the speed limits on the economy's ability to adjust. Our resources were sufficient for the task; but the sheer speed of the advance strained the ability of industrial management to mobilize resources at the required pace.