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> A tax cut, the U.S.'s largest during a period of peacetime expansion, which not only put more spending money in the consumer's pockets but proved that such a cut can be a potent Government weapon in handling the swings of the economy.
> The absence of inflation, which many economists had feared might be one of the undesirable results of the tax-cut stimulus. The cost of living rose only 1.3% during the year, a fact that enabled the consumer to buy more for his money, prevented undue stockpiling and kept the U.S. competitive in world markets.
> The courting of the business community by President Johnson, which healed many of the wounds left from previous Democratic Administrations and proved anew that when Government and business act like the natural allies they are, the whole economy benefits. The President's attitude encouraged businessmen to increase their spending, and the businessman's confidence in turn increased consumer confidence in a rising economy.
> A percentage increase in consumer spending on goods over services for the first time since 1960, which slowed the trend toward a predominantly service economy. The 7.1% increase in goods v. 6.4% for services was a significant shift because spending for goods creates more jobs and material wealth than money spent for services.
The result of these events was an orderly, well-balanced expansion. Productivity rose faster than wages, and personal incomes rose much faster than prices. For the first time, consumer spending reached the $400 billion mark, personal income topped $500 billion, and the gross national product exceeded $600 billion, having risen during the year by $40 billion—half as much as the total gross national product of prospering France.
Corporate profits before taxes jumped to $58 billion, up $7 billion from 1963. A record 70 million Americans were at work, and unemployment, which hovered close to 6% a year ago, dipped below 5% for the first time since 1960. Most impressive of all, the nation's per capita income from wages, dividends and pensions jumped 6% to $2,264, a rise that meant that the average family of four had an income of about $9,000, or $536 more than it did twelve months ago.
The Big Decision. The steady upward march of prosperity is a result not only of the consumer's increased income, but a change in how and on what he spends it. Despite pockets of poverty in Appalachia and city slums, the U.S. has become the first society on earth in which people spend less for needs than for wants. The average urban family now spends only 48% of its after-tax income on the food, clothing and shelter that it needs; it has 52% left over to spend or not to spend, as it pleases, on expanding those basic necessities (to a bigger house, more eating out, an extra suit) or adopting more of life's amenities.