Savings and investment in the United States have been substantially higher in recent years than previously estimated, according to revised estimates of the gross national product released yesterday by the Commerce Department.
The revisions also indicate that inflation in the last 10 years has been slightly less severe than thought. From 1969 to 1979, prices as measured by the GNP deflator rose 87.9 percent, 1.7 percentage points less than the earlier figures showed.
In 1979 business investment in plants and equipment and other productive assets totaled $279.7 billion instead of $253.9 billion, a 9.8 percent increase in the previous estimate.Over the decade of the 1970s, investment was 6.1 percent higher than thought. It accounted for 10.7 percent of GNP instead of 10.2 percent.
Personal saving in 1979 was $12.4 billion, or 16.8 percent, more than thought earlier.
The revisions raise some question about the need to stimulate added savings and investment through tax cuts, a proposition accepted by many conservative and liberal economists alike. For instance, the shift toward investment as a share of GNP shown in the revisions is of the same order of magnitude that likely would flow from the large business tax cuts proposed this year by President Carter or the smaller ones suggested by President-elect Ronald Reagan in his campaign. t
However, some economists said that, while the revisions clearly suggest an improved investment picture, more is needed. Charles Schultze, chairman of the Council of Economic Advisers, was one. "I don't think the revisions change the fundamental story," he said.
Schultze noted that investment as a proportion of GNP now is estimated to have been higher in 1978 and 1979 than it was during the 1965-70 period, regarded as a hey-day of investment for the American economy. But the difference is small -- 10.8 percent for the latter two years compared with 10.6 percent in the earlier period -- and a number of circumstances have changed, including the need to invest in more energy-efficient equipment, in energy production itself, and to meet new pollution control requirements.
The upward revisions in real GNP also will mean small upward revisions in estimates of labor productivity but will by no means erase the sharp slowing of productivity gains experienced since 1973. For one thing, Schultze said, the labor force is growing more rapidly than it was in the 1960s, meaning more investment is needed to provide jobs.
For all those reasons, he said, a strong case can be made for stimulating additional investment.
For 1980, the revisions indicate GNP grew, after adjustment for inflation, at a 3.1 percent annual rate in the first quarter instead of a 1.2 percent rate. The second-quarter decline was at a 9.9 percent rate instead of 9.6 percent, and in the third quarter output was rising at a 2.4 percent rate compared with the earlier estimate of 0.9 percent.
In each of the quarters, inflation was lower than previously estimated. The first-quarter figure was lowered from 9.5 percent to 9.3 percent, the second quarter from 10.7 percent to 9.8 percent and the third quarter from 9.8 percent to 9.2 percent.