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Bureau of Mines / Minerals yearbook: Metals and minerals 1977
Year 1977, Volume 1 (1977)

Klein, Barry W.; Greene, Steven C.; Hanks, Kenneth P.
Review of the mineral industries,   pp. 1-35 ff. PDF (3.4 MB)

Page 1

Review of the Mineral 
By Barry W. Klein,1 Steven C. Greene,1 and Kenneth P. Hanks1 
 The performance of the U.S. economy in 1977 was similar to that in 1976
which, in turn, had been a considerable improvement over 1974-75. In 1977
real gross national product (GNP) showed a similar, but somewhat slower,
growth pattern compared with 1976. Real GNP increased sharply in the first
quarter of the year followed by smaller increases for the remaining three
quarters. With only two exceptions, the monthly unemployment rate declined
or remained steady throughout 1977, falling to a low for the year in December.
The inflation rate in 1977 was slightly higher than in 1976, but the rate
still remained far below that of 
 Total U.S. output as measured by GNP in current dollars rose 10.8% in 1977.
Real GNP in constant 1972 dollars increased 4.9%, and inflation, as measured
by the implicit price deflator, rose 5.6%. In real terms, gross private domestic
investment for residential structures increased 19.3% in 1977, only slightly
below the 22.9% rise in 1976; State and local government expenditures increased
1.1% in 1977; and personal consumption expenditures for services rose 4.5%.
 The unemployment rate continued to decline for the second straight year,
falling to 7% in 1977 compared with 7.7% in 1976. The unemployment rate,
except for February and August, declined or remained steady throughout the
year. Therefore, the drop in the unemployment rate during 1977 was more than
the 7% yearly average might otherwise indicate because the December rate
of 6.4% was the low for the year. 
 The Consumer Price Index (C?!) rose 
6.5% in 1977, slightly above the 5.8% in- 
crease in 1976. Food prices rose 6.3% in 
1977, (about double the growth in 1976). 
Prices of all nonfood commodities increased 5.4%. The Wholesale Price Index
rose 6.1% in 1977 compared with 4.6% in 1976. Farm products and processed
foods and feed increased 3.1% (farm products alone increased 0.7%) and industrial
commodities rose 7%. As previously stated, in 1977 the implicit price deflator
increased 5.6%. 
 In 1977, as in recent years, the Federal Reserve Board (FRB) followed a
monetary policy with the objective of promoting fmancial conditions that
would further economic growth. In carrying out this policy, the FRB tried
to avoid excessive expansion of money and credit that would tend to increase
inflationary pressures. The money supply Ml, defined as currency plus demand
deposits, rose 8.0% in 1977, up from 6.2% in 1976. M2, defined as Ml plus
time and savings deposits, grew 9.3% in 1977, down from 11.4% in 1976. 
 Fiscal policy in 1977 was intended to increase the growth in real output
through additional Federal spending and tax cuts, thereby resulting in reduced
unemployment. Owing to the time lag before the fiscal policy of the new Administration
was implemented, the new measures had no effect until the beginning of the
summer. Thus for the first quarter of 1977, fiscal policy was contractive
because of slow growth in Federal spending coupled with a sharp increase
in revenues. Fiscal policy was more expansive for the balance of the year,
however, as expenditures returned to their usual growth levels and the stimulative
measures started taking effect. The stimulus package enacted included approval
of public works, public service employment, and other employment and training
programs as well as passage of the Tax Reduction and Simplification Act of
1977 in late May, one provision of which was an 

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