Message to the Congress Transmitting the Cost of Living Council's Quarterly Report on the Economic Stabilization Program.

To the Congress of the United States:

I herewith transmit to the Congress the most recent quarterly report of the Economic Stabilization Program, covering the period July 1, 1973 through September 30, 1973.

The third quarter of 1973 was a time of strong continued growth for the American economy. Our gross national product grew to $1304 billion, an increase of $32 billion over the previous quarter, representing a growth rate of 3.4 percent in real terms. Unemployment dropped to 4.8 percent, its eighth consecutive quarterly decline, as the number of people employed increased by over 450,000. The dollar strengthened internationally, gaining by fully one percent against the trade weighted average for currency of other members of the Organization for Economic Cooperation and Development.

The picture was not as bright as we would have liked in the third quarter as far as inflation was concerned. Consumer prices continued to climb, reflecting increasing worldwide competition for products. A freeze was imposed in mid-June to arrest the inflationary spiral and to provide time for the development of a more effective system of controls with tighter standards and compliance procedures than those which characterized Phase III. This fourth phase of the Economic Stabilization Program was launched in July. Its introduction was staggered so that any price increases which followed the freeze would be spread over several months.

Phase IV was designed to provide a tough program of controls that would enable this country to return to the free market system as soon as possible. Since its introduction, Phase IV has made admirable progress toward reducing the dangers of inflation, demonstrating that the public and private sectors of our economy can work cooperatively and effectively together to enhance our Nation's economic future.

Unprecedented developments in all parts of the world have created extraordinary pressures on our economy. We can be proud, however, of the way in which we have responded to these problems. We are proving that a dynamic and resilient people can meet the challenge of inflation without sacrificing the ideal of a free market system. If we continue our recent progress--and if we respond to new challenges, including the current energy shortage, with this same sense of poise and flexibility--then we can look forward with assurance to a prosperous New Year.

RICHARD NIXON

The White House,

January 22, 1974.