REAL PRODUCT PER MAN-HOUR PAID IN PRIVATE ECONOMY, 1947-59

Next we have the productivity factor.

(The chart referred to appears on following page.)

Mr. CLAGUE. This chart shows the figures from 1947 to date. You will see that we have increased the output per man-hour in the private economy almost 50 percent from 1947 through 1959. Agriculture shows much greater gains than that. It is more than double.

There has been a tremendous technological revolution in agriculture and that is why there is a persistent shift of people out of agriculture during the past 12 years. This annual rate of increase has averaged about 6 percent in agriculture and 32 percent in the total economy. This is output per man-hour. But vacations, holidays, sickness, parttime and unemployment all operate to cut it down. This 32 percent has given us about a 2 percent rate per man-year. That 2 percent is about the improvement in total productivity of the total economy.

1947 48 49 50 51 52 53 54 55 56 57 58 59 1960

UNITED STATES DEPARTMENT OF LABOR

BUREAU OF LABOR STATISTICS

CONSUMER PRICE INDEX

This next chart shows the consumer price index in recent years. (The chart appears on p. 35.)

I want to call attention to the index as a whole. It has been rising about 12 percent per year in the last 3 years. The services make up about one-third of the index-haircuts, gas rates, electric rates, taxes, and so forth. Food goes up and down in cycles. It went down in 1956, then we had a cycle up and now we are on a downward cycle again except that food prices recovered in 1960. The durables consist of automobiles and household appliances. We have never had greater discounts on automobiles than we have right now.

GROSS NATIONAL PRODUCT

This last chart shows the gross national product.

(The chart appears on p. 37.)

I would like to show you the analysis for the coming year. We are now at about $503 billion. That is the gross national product we have at the present time.

The first thing that will happen with the business recovery, is increased hours of work. I guess about $4 billion of the gross national product would be achieved by that method. Next we must allow for productivity at about 2 percent a year. Interpreting that in terms of jobs, I would estimate that to be about 14 million jobs displaced for the whole economy. We would need about $10 billion in new gross national product to allow for that displacement. Next we come to the new workers.

By this time next year we should have at least 1 million new workers in the labor force. I would allow $8 billion of gross national product for that. Add all these together, and we would have a gross national product of $525 billion next winter to take care of what I have given so far. But what I want to emphasize is that, if that is the best we do, you will have the same unemployed next winter as we do now. There will be no reduction in the volume of unemployment. Then if we have a 112 percent rise in the Consumer Price Index that adds another $8 billion in the form of price increases. That would put the economy up to $533 billion in the first quarter of 1962, an increase of $30 billion in a year, and yet we would have the same unemployment as we have now.

In order to reduce unemployment I have estimated a gain of one and one-half million jobs which would add $12 billion more to the GNP. We would then have about $545 billion. This is no forecast of what is actually going to happen. The reason I cite these figures is to show that we have to get about a $30 billion increase in order to keep unemployment down to present levels, and about $40 billion to reduce it to prosperity levels.

Now how is this actually going to work out in practice? Well, we can rise this fast. We have done it twice before in 1955 and again from the spring of 1958 to the spring of 1959. So it has been done. But our judgment is that unemployment will be a serious problem on to the end of 1961 and into the summer of 1962.

HIGH AND LOW POINTS OF EMPLOYMENT 1929 TO DATE

Mr. MARSHALL. Mr. Clague, I would be interested in having the high and low point during the period 1929 to date for each of the statistical series you have discussed. Could you prepare such a table for the record?

Mr. CLAGUE. We would be glad to do so, Mr. Marshall.

(The information appears at page 38.)