Business Cycles and National Income

Business Cycles and National Income

Business Cycles and National Income

Business Cycles and National Income

Excerpt

This edition (1964) of Business Cycles and National Income includes the whole of the 1951 edition (Parts I-IV) in unaltered form and adds five new chapters (Part V). This new material presents a survey and analysis of the four recessions and recoveries which we have witnessed in the American economy in the period 1948-1963.

The first two recoveries were buoyant; the second two anemic. The first two cyclical upswings carried the economy close to the full-employment ceiling; the last two lacked "steam," leaving the economy, even at the "peak" levels, considerably below the country's growth potential.

One of the two full-fledged recoveries came in the Truman Administration; the other in the first Eisenhower Administration. One of the two weak recoveries came in the second Eisenhower term, and one in the Kennedy Administration. But the Kennedy recovery has turned out to be a long recovery though well below full employment levels.

Public policy was not the main factor. Spontaneous forces, rather than deliberate policy, account for the high level employment and rapid growth in the first two recoveries. These automatic, expansionist forces exhausted themselves and remained at a low ebb throughout the period of the last two cycles. So long as the expansionist forces dominated, unemployment averaged over the entire period of the first two cycles only 4 per cent of the labor force. Once these forces subsided, however, the unemployment rate rose to an average of 6 per cent in the two-cycle period 1957-1963.

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