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OCR Page 1 of 32P HW
THE CHAIRMAN OF THE
COUNCIL OF ECONOMIC ADVISERS
WASHINGTON
THE PRESIDENT HAS SEEN
October 17, 1972
MEMORANDUM FOR THE PRESIDENT
Subject: Third Quarter 1972 GNP
The real growth of the economy slowed down in the
third quarter of 1972 but the rate of inflation remained
quite low according to GNP estimates that will be re-
leased by the Commerce Department on Thursday. These
figures are preliminary and subject to revisions.
In current dollars, GNP increased by $22.8 billion
or 8.3 percent (annual rate) from the second to the
third quarter, as compared to a rise of $30.3 billion
or 11.4 percent in the second quarter. The third quarter
increase reflected a rise in real GNP (physical volume)
of 5.9 percent and an inflation rate of 2.2 percent. A
comparison with earlier quarters appears below.
4thQ1971
lstQ1972
2ndQ1972
3rdQ1972
GNP $ Change (billions)
21.2
31.0
30.3
22.8
Percent Change:
GNP
8.3
12.0
11.4
8.3
Real GNP
6.7
6.5
9.4
5.9
Price
1.5
5.1
1.8
2.2
Federal purchases, which had grown rapidly in the first
half of the year, showed an absolute decline in the third
quarter, but all other components of demand increased.
Consumer spending and business investment rose less rapidly
than in the second quarter. In contrast, there was a step-
up in State and local government spending, while the balance
between exports and imports was less adverse than in the
second quarter.
The question may be raised as to whether the expansion
is petering out. We definitely do not think SO. The second
quarter gain in real GNP was extraordinarily large and was
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