Chart 2 serves two purposes. It depicts on a long-range basis the role of housing and commercial construction combined in the national economy, and also depicts the ominous relative decline since 1955. In 1955, these two elements of investment (investment in housing and investment in commercial construction) came to 6.41 percent of GNP. Even this was lower than the 7.13 percent reached in 1950. But by 1968, with declines in most years since 1955, the ratio was only 4.35 percent. It was only 4.39 percent in the second quarter of 1969, and 4.29 percent in the third quarter 1969. Measured as a percentage of total private domestic investment, the ratio of investment in housing and commercial construction to the total was 40.8 percent in 1954, and 39.4 percent in 1958. In 1968, it was only 29.8 percent, and decreased further to 29.0 percent in the second quarter of 1969, and 28.2 percent in the third quarter 1969. Chart 3 approaches the same problem from another perspective. It shows that, during 1961-1968, measured in 1967 dollars, the average annual rate of growth in our gross national product was 5.2 percent; in personal consumption expenditures, 4.9 percent; in private domestic investment, 6.2 percent; and in Government purchase of goods and services, 6.0 percent. Again broadly speaking, I think that this represented a reasonably good balance in the long-run, except that the private domestic investment sector did not include nearly enough housing and related real estate investment. Instead, it included far too much investment, relatively speaking, in producers' durable equipment and new plant and equipment. (These two separate categories overlap considerably, but are not identical). The average annual rate of growth in producers' durable equipment was 9.9 percent; in new plant and equipment expenditures, 7.5 percent; in commercial structures 4.9 percent; and in non-farm residential structures only 0.5 percent. The relatively excessive rates of advance in the first two categories was due to excesses during subperiods of very strong and advancing prosperity. This contributed greatly to inflationary pressures, and then to severe cut-backs from time to time which impacted adversely upon the overall economy. These excesses were very substantially due to excessive tax cuts and concessions for these two categories, and also to excessive price-profits trends in many key industries. In vivid contrast, the growth rate in commercial structures relative to need lagged, and the growth rate in nonfarm residential structures was lamentably low, averaging annually only 0.5 percent. This does much to explain one of our top domestic problems, urban deterioration. Our cities are becoming obsolescent because they are not being renewed, and these two types of activity are at the heart of such renewal. GOALS FOR HOUSING AND RELATED URBAN CONSTRUCTION Let us now look to the future. Chart 4 depicts balanced growth rate goals for important sectors of the economy. Aside from matters of detail, these goals are consistent with those put forward by many other private and public research organizations, and are explicit in the approved programs of the Government itself. Projected from 1967 to 1977, the indicated goals are an average annual rate of growth of 5.3 percent in GNP, and fairly similar rates of growth for the main components thereof. Considerably lower GNP goals would not appreciably affect the relationships, which are the real significance of the exercise. Compatible with these major-component projections, the average annual rate of growth projected is 6.5 percent for total fixed investment; 4.1 percent for producers' durable equipment, 5.9 percent for commercial structures; and 11.2 percent for residential structures. The higher-than-GNP rate of growth for commercial structures, and the extraordinarily high rate of growth for residential structures, are designed to compensate for the lag in these two areas during the past years under review, to make the relative growth rates in these two sectors compatible and mutually reinforcing, and to fulfill objectives for urban renewal almost universally shared. They are, for example, entirely consistent with recent housing and urban renewal legislation, and in fact are derived largely therefrom. Chart 5 is designed to portray the immense importance of investment in residential and commercial structures, relative to total fixed investment. This facilitates contrast between these magnitudes and the tiny share of tax and subsidy benefits received by the housing and real estate categories, as later portrayed. In 1961, residential and commercial structures preempted 41.9 percent of total fixed investment. By 1968, this had dropped to 31.1 percent, another dramatic illustration of a gravely deteriorating situation. The goals for 1977, |