We expect that the proportion of those 15 and over who are in the active labor force will be slightly higher in the projected years than it was in 1955: 59.5 percent compared with 59.2 percent. On the basis of present trends, a larger proportion of married women and older persons can be expected to take jobs, even though many of them will be parttime jobs.
Civilian employment will consist of the total labor force, less those who are in the Armed Forces or unemployed. The military forces are assumed to be cut about 300,000 in each 5-year period. It is our understanding that military plans for the future will place an increasing emphasis on complex weapons and less on numbers of men. Unemployment is assumed to be 4 percent of the labor force, which we would regard as essentially "full employment." On these assumptions, civilian employment will be 67.9 million in 1960, 73.9 million in 1965, and 80.5 million in 1970.
Chart 3 shows our estimates of output per manhour and average hours of work. In past years, our economy has had remarkable success in producing a steadily larger output, while reducing the hours of work and increasing average output per manhour. We assume this sort of success will continue.
In the two decades 1930-40 and 1940-50, the average hours of work in industry, agriculture and Government declined about 3% hours per decade. It is expected that average hours of work will continue to decline but at a somewhat slower rate: about 2 hours per decade. By 1970 it is expected that the average work week will fall to 36 hours per week.
The rate of increase in output per manhour from the early 1900's to date has averaged about 2 percent per year. Since 1930 this rate has been somewhat higher, close to 2.9 percent per year. We have projected a rate of increase somewhere between these two rates. We are using an increase of 2% percent per year in our projection. This projection of output per manhour was made on the basis of overall national output. We did not refine the projections of output per manhour to show the individual trends in productivity in nonagricultural industry, agriculture, and government. We are not yet certain that these refinements add very much to the overall picture, except to spell out some of the details. We have, of course, considered the various productivity trends of all these groups in making our overall projection.
Charts 4 through 6, which are largely self-explanatory, are presented by way of amplification of our expectation, that continued increases in output per manhour are reasonably to be anticipated. The estimate of the prospective increase in business capital investment takes account of the Nation's population growth, the demand on the part of the consumer for new and better products and business' desire to lower costs and increase profits through more efficient operations. The projected increase in capital spending will provide for a necessary increase in capacity, as well as modernization and replacement of obsolescent plant and equipment.
The division of the gross national product into its three major sectors—consumers, business, and government—is based on past ratios of these sectors to the total, and on anticipated shifts in importance of each of the sectors. The growth shown for each sector is therefore consistent with the overall projections of gross national product.
Consumer spending on goods and services is expected to rise from $254 billion in 1955 to $297 billion in 1960, $358 billion in 1965, and $434 billion in 1970. All of these figures are expressed in 1955 prices. Higher wages, larger payments to retired persons, the increasing variety of goods and services—and the leisure in which to enjoy them—will, we think, cause the consumer sector of the economy to grow somewhat faster than the other sectors.
The division of total consumer expenditures between goods and services was made by projecting each of these groups in terms of past trends and expected shifts in trends in the future. Thus expenditures on nondurable goods are expected to rise from $126 billion in 1955 to $145 billion in 1960, $172 billion in 1965 and $204 billion in 1970, all in 1955 prices. Consumer spending on durable goods in 1955 prices is expected to be $40 billion in 1960, $48 billion in 1965, and $59 billion in 1970 compared with $35.7 billion in 1955. And spending on services is expected to go up from $92 billion in 1955 to $112 billion in 1960, $138 billion in 1965, and $171 billion in 1970. The increase in services is especially large, and the increase for durables is slightly larger than for nondurables, because this seems to be the changing pattern of expenditure as income rises and people acquire more leisure.