In 1974, there was a large rise in oil prices which gave a large amount of
purchasing power to the oil-producing companies. "Inflation, strong demands for
credit, and the unwillingness of the monetary authorities to underwrite a continued
acceleration of inflation drove interest rates upward, causing a slump in
housing."(The Economic Report of the President 1975) Another weakening effect of
the higher and "variable" rate of inflation was how uncertain the nation was
regarding future rates of price increase.
When 1975 began, the unemployment rate was at the highest level it had
been in seventeen years. Production and unemployment were declining very fast.
To increase business and industry and to create new jobs, Ford proposed a one year
tax reduction of $16 billion. He said that three-quarters would go to individuals and
one-quarter would be used to promote business investment. Ford said in his 1975
State of the Union Address that "cutting taxes now is essential if we are to turn the
economy around. He also proposed a program that he said would "begin to restore
our country's surplus capacity in total energy. In this way we will be able to assure
ourselves reliable and adequate energy and help foster a new world energy stability
In 1976, the unemployment rate had declined by one percentage point, but it
was still too high and must be reduced further. There was a 3.2 percent increase in
employment in 1976. Real gross national product (GNP) rose by 6.2 percent, and
employment rose by almost 3 million people.
In President Ford's 1976 State of the Union Address, he asked for additional
housing assistance for 500,000 families. He felt that those programs would expand
housing opportunities, stimulate construction, and help to house moderate-income
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