THE LONG-RANGE ECONOMIC ASSUMPTIONS 

FOR THE 2023 TRUSTEES REPORT 

OFFICE OF THE CHIEF ACTUARY 

SOCIAL SECURITY ADMINISTRATION 

March 31, 2023 

 

 
PRINCIPAL ECONOMIC ASSUMPTIONS 

OVERVIEW

Sections

1 PRODUCTIVITY

2 PRICE INFLATION

3 REAL GROWTH IN AVERAGE OASDI COVERED WAGE

4 UNEMPLOYMENT RATE

5 ANNUAL TRUST FUND NEW-ISSUE REAL INTEREST RATE

6 RATIO OF OASDI TAXABLE PAYROLL TO COVERED EARNINGS
Overview, Page 1 

OVERVIEW 

Each year, the Board of Trustees of the Federal Old-Age and Survivors Insurance (OASI) and 

Disability Insurance (DI) Trust Funds provides an annual report to the Congress on the financial 

and actuarial status of the Old-Age, Survivors, and Disability Insurance (OASDI) program. For 

this report, the Office of the Chief Actuary (OCACT), on behalf of the Board of Trustees, 

projects future cost and income based on three separate sets of long-range (75-year) assumptions 

for key economic variables. The intermediate (alternative II) set of assumptions represents the 

Trustees’ best estimate for future experience, while the low cost (alternative I) and high cost 

(alternative III) sets of assumptions represent more and less favorable scenarios, respectively, 

from the perspective of program cost and income as a percent of taxable payroll. The 

intermediate assumptions are also used as the point of comparison for sensitivity analysis and the 

central tendency for the stochastic projections presented in the OASDI annual report of the 

Board of Trustees (the “Trustees Report”). 

This memorandum presents the economic assumptions used for the last 65 years of the 75-year 

long-range projection period in the 2023 Trustees Report. 

At this time, there is no consensus on what the lasting effects of the COVID-19 pandemic on 

long-term trends will be. The Trustees continue to assume that the pandemic will have no net 

effect on the individual long-range ultimate assumptions.

On June 8, 2020, the Business Cycle Dating Committee of the National Bureau of Economic 

Research determined that a peak in quarterly economic activity occurred in the fourth quarter of 

calendar year 2019.1 The peak marks the end of an economic cycle, which began in the fourth 

quarter of calendar year 2007. Consequently, the analysis that follows includes the latest 

complete economic cycle ending in 2019 as well as the period since the last cycle peak (2019 to 

2021). As usual, the majority of the analysis is based on long-term trends, which are not 

significantly affected by the most recent two years of data. 

The key economic variables include the average annual percentage changes in total-economy 

productivity, the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), 

the gross domestic product (GDP) deflator, and the average OASDI covered wage, as well as the 

unemployment rate, the annual trust fund new-issue real interest rate, and the OASDI taxable 

ratio. Total-economy productivity is the ratio of real GDP to total hours worked. The OASDI 

taxable ratio is the share of OASDI covered earnings that is subject to the payroll tax. 

Table A.1, below, lists the assumed long-range future values for these key economic variables in 

the 2023 Trustees Report alternatives I, II, and III. The only change from the long-range 

assumptions in the 2022 report is a slight increase in the average percentage change in the 

average OASDI covered wage.

1

 See https://www.nber.org/cycles/june2020.html. 
Overview, Page 2 

Table A.1: Key Economic Assumptions and Summary Measures for the Last 65 Years of the 75-Year Long-Range 

Projection Period (except as noted) 

 2023 Trustees Report 

Alternative 

2022 Trustees Report 

Alternative 

2023 Trustees Report Less 

2022 Trustees Report 

I II III I II III I II III

Average Percentage Change In: 

Productivity 

(Total-Economy) 1.93 1.63 1.33 1.93 1.63 1.33 0.00 0.00 0.00 

Prices (CPI-W) 3.00 2.40 1.80 3.00 2.40 1.80 0.00 0.00 0.00 

Prices (GDP Deflator) 2.75 2.05 1.35 2.75 2.05 1.35 0.00 0.00 0.00 

Average OASDI Covered 

Wage (adjusted for the 

change in CPI-W) 2

1.74 1.14 0.54 1.72 1.12 0.52 0.02 0.02 0.02 

Unemployment Rate (Percent) 3.50 4.50 5.50 3.50 4.50 5.50 0.00 0.00 0.00 

Annual Trust Fund New-Issue 

Real Interest Rate (Percent) 2.80 2.30 1.80 2.80 2.30 1.80 0.00 0.00 0.00 

OASDI Taxable Ratio (in tenth 

projection year) 0.840 0.825 0.810 0.840 0.825 0.810 0.000 0.000 0.000 

The remainder of this section provides brief descriptions and summary information for the key 

economic variables, as well as the assumed values for alternative II. 

Productivity: The rate of growth in total-economy productivity is the fundamental component 

contributing to the real growth rate of GDP and average earnings. OCACT uses a weighted 

average of the productivity growth rates in economic sectors, where the weights are the shares of 

each sector in total GDP. The economic sectors include the nonfarm business sector, the farm 

sector, the household sector, the nonprofit institutions sector, and the general government sector. 

In the long-range period, OCACT assumes that the sector weights are approximately fixed at 

recent levels. Based on an analysis of the data and future trends, the ultimate assumed growth 

rates for the sectors are as follows: 2.00 percent for the non-farm business sector, 2.00 percent 

for the farm sector, 1.63 percent for the household sector, 0.00 percent for the nonprofit sector, 

and 0.00 percent for the government sector. The weighted average of the assumed sector 

productivity growth rates is equal to the Trustees’ assumed ultimate average annual rate of 

growth in total-economy productivity of 1.63 percent, which is the same ultimate rate used in the 

2022 report. 

2

 In the 2022 and earlier Trustees Reports, the assumption representing a measure of average OASDI 

covered wage growth was presented as the real wage differential. The real wage differential for a year is defined as 

the annual percentage change from the prior year in the average OASDI covered wage minus the annual percentage 

change from the prior year in the CPI-W. The average real wage differential over any period is the arithmetic mean 

of annual real wage differentials over that period. The assumed average real wage differentials for the period 2032 

through 2096 in the 2022 Trustees Report (equivalent to the average percentage change in the average real OASDI 

covered wage, shown in the 5th row of the middle panel of Table A.1) were 1.77 percent for alternative I, 1.15 

percent for alternative II, and 0.53 percent for alternative III. 
Overview, Page 3 

Price Inflation: The rate of growth in the CPI-W is used to determine the cost-of-living 

adjustment (COLA). The average annual growth rate in the CPI-W (adjusted for past changes in 

computation methodology) was 3.63 percent over the last six complete economic cycles, from 

1969 to 2019, and 2.20 percent over the last three complete economic cycles from 1990 to 2019.3

OCACT expects that monetary policy will continue to target relatively low inflation, but will not 

be able to prevent occasional bursts of inflation caused by demand and supply shocks over the 

long-range period. Accordingly, the ultimate average annual percentage change in the CPI-W is 

assumed to be 2.4 percent, which is unchanged from the 2022 report. 

The GDP deflator is another measure of price inflation. It is used in projecting the level of 

aggregate nominal GDP and wages and, therefore, OASDI tax revenues. The ultimate assumed 

long-range average annual growth rate in the GDP deflator is 2.05 percent, or 0.35 percentage 

point below the 2.4 percent assumed ultimate average annual growth rate in the CPI-W. The 

difference, or “price differential,” of -0.35 percentage point is the sum of -0.3 percentage point 

due to computational difference and -0.05 percentage point due to coverage differences between 

the two indexes. The GDP deflator and the price differential assumptions are the same as those 

used in the 2022 report. 

Average Real Growth Rate in the Average OASDI Covered Wage: Annual real wage growth 

varies to a small degree over the last 65 years of the 75-year projection period (i.e., from 2032 to 

2097), averaging 1.14 percentage points, 0.02 percentage point higher than assumed in the 2022 

report. 

The Trustees assume that after the first ten years of the long-range projection period, the average 

annual rate of change in the average OASDI covered wage will be approximately the same as for 

(1) average U.S. wages and (2) average U.S. earnings (which include earnings from selfemployment). The average annual real growth rate in average U.S. earnings is assumed to be 

1.14 percent over the 65-year period. This reflects average annual changes of 1.63 percent for 

total-economy productivity, -0.35 percent for the price differential, -0.09 percent for the ratio of 

earnings to compensation, 0.00 percent for the ratio of compensation to GDP, and -0.05 percent 

for the average hours worked per week. 

Unemployment Rate and Labor Force: Unemployment rates and the labor force together 

determine employment, which is fundamental to projecting GDP and aggregate levels of 

earnings and compensation. The aggregate civilian unemployment rate, adjusted for the 2011 

age-sex distribution of the labor force, averaged about 5.6 percent over both the last six complete 

economic cycles from 1969 to 2019 and the last three cycles from 1990 to 2019. As noted in the 

2021 and 2022 reports, the Trustees believe that there has been a structural shift in the 

determinants of employment, such that the future age-sex-adjusted unemployment rates will 

average somewhat lower than they did over the last six complete economic cycles. Therefore, the 

3

 Consecutive NBER defined peak years are used to define each economic cycle, except that OCACT uses 

the 1979 through 1990 period as an economic cycle. NBER identified January 1980 as a peak month, but 1979 is 

more representative of a peak on an annual basis. NBER also identified a peak in July of 1981. This brief 18-month 

economic cycle is merged to the 1981 to 1990 cycle to form the 1979 to 1990 cycle. 
Overview, Page 4 

ultimate civilian age-sex adjusted unemployment rate is assumed to be 4.5 percent, which is the 

same as in the 2022 report. 

For the 2021 Trustees Report, OCACT also updated the labor force model, which is now 

estimated based on data including the latest complete economic cycle. The relationship between 

unemployment and labor force in the updated model is in closer alignment with the structural 

shift in the relationship between unemployment rates and labor force participation rates, 

mentioned above. 

Annual Trust Fund New-Issue Real Interest Rate: The real interest rate (real effective annual 

yield) on the special public debt obligations issuable to the trust funds for a given year is defined 

as the nominal effective annual yield adjusted for the increase in the CPI-W for the first year 

after issue. Real ex-post (actual) interest rates on long-term Treasury securities averaged 2.70 

percent over the last six economic cycles (from 1969 to 2019) and 2.38 percent over the last 

three complete cycles (1990-2019). However, real interest rates have been substantially lower 

recently, averaging just 0.83 percent for the last complete cycle (2007-2019). The extreme low 

rates appear to be due in part to the weak economy in most of the developed world. 

The assumed ultimate real interest rate for new issues is 2.3 percent, which is the same as in the 

2020-2022 reports, and 0.4 percentage point lower than was assumed for the 2018 report. This 

ultimate assumption is consistent with a sustainable domestic fiscal policy over the long-range 

period and a gradual return to the sustainable rate of economic growth throughout the developed 

world. 

OASDI Taxable Ratio: The OASDI taxable ratio is the share of OASDI covered earnings that is 

subject to the payroll tax. It is a fundamental component of projections of taxable payroll. This 

ratio declined substantially between 1983 and 2000, with the decline slowing or ceasing since 

then. After reaching a low point of 82.7 percent for 2000, the ratio has been largely at or above 

that level, roughly stabilizing since 2012. The ratio for 2020 and 2021 was low in part due to the 

differential effects on workers at different pay levels during the pandemic. The ratio is assumed 

to reach 82.5 percent in the tenth projection year (2032 for the 2023 report), which is the same 

ratio assumed for the 2022 report, and remain near this level thereafter. 
Productivity, Page 1 

1. PRODUCTIVITY 

THE 2023 TRUSTEES REPORT 

OFFICE OF THE CHIEF ACTUARY, SOCIAL SECURITY ADMINISTRATION 

TABLE OF CONTENTS PAGE 

1 PRODUCTIVITY................................................................................................................... 2 

1.1 SUMMARY ...................................................................................................................................................... 2

1.2 RECENT BEA AND BLS DATA REVISIONS ...................................................................................................... 2

1.3 PRODUCTIVITY GROWTH RATES FOR MAJOR SECTORS AND OVER LONG TIME PERIODS AND ECONOMIC 

CYCLES ...................................................................................................................................................................... 3

1.3.1 Sector Productivity Growth Rates .......................................................................................................................... 6

1.3.1.1 Nonfarm Business (NFB) ................................................................................................................................... 6

1.3.1.2 Farm ................................................................................................................................................................... 6

1.3.1.3 Nonprofit Institutions (NI) ................................................................................................................................. 7

1.3.1.4 General Government (GOV) .............................................................................................................................. 8

1.3.1.5 Households ......................................................................................................................................................... 8

1.3.2 Total-Economy Productivity Growth Rate............................................................................................................ 10

1.4 FUTURE EXPECTATIONS ............................................................................................................................... 11

1.5 PROJECTIONS FROM OTHER SOURCES ........................................................................................................... 13

1.6 APPENDIX ..................................................................................................................................................... 18

TABLE OF TABLES PAGE 

TABLE 1.1: ASSUMED ULTIMATE ANNUAL RATES OF INCREASE IN TOTAL-ECONOMY PRODUCTIVITY ......................... 2

TABLE 1.2: HISTORICAL AVERAGE ANNUAL RATES OF INCREASE IN TOTAL-ECONOMY PRODUCTIVITY AND ITS 

COMPONENTS (%) .................................................................................................................................................. 4

TABLE 1.3: ULTIMATE AVERAGE ANNUAL RATES OF INCREASE IN TOTAL-ECONOMY PRODUCTIVITY AND ITS 

COMPONENTS FOR THE 2021 TRUSTEES REPORT .................................................................................................... 4

TABLE 1.4: TOTAL-ECONOMY PRODUCTIVITY: COMPOUND ANNUAL RATES OF GROWTH (%) BASE YEAR = 2012 .... 14

TABLE 1.5: NONFARM BUSINESS PRODUCTIVITY: COMPOUND ANNUAL RATES OF GROWTH (%) BASE YEAR = 2012 16
Productivity, Page 2 

1 Productivity 

1.1 Summary 

For the 2023 Trustees Report, the assumed ultimate annual rates of increase in total-economy 

productivity are 1.93 percent, 1.63 percent, and 1.33 percent for alternatives I, II, and III, 

respectively, as shown in Table 1.1. These rates of increase are unchanged from those used in the 

2022 Trustees Report. The assumed rates of increase for total-economy productivity are 

consistent with assumed ultimate annual rates of increase in nonfarm business productivity of 

2.36 percent, 2.00 percent, and 1.63 percent for alternatives I, II, and III, respectively. 

Table 1.1: Assumed Ultimate Annual Rates of Increase in Total-Economy Productivity 

 2023 Trustees Report 

Alternative 

2022 Trustees Report 

Alternative 

2023 Trustees Report Less 

2022 Trustees Report 

I II III I II III I II III

 Total-Economy Productivity 1.93 1.63 1.33 1.93 1.63 1.33 0.00 0.00 0.00 

Total-economy productivity is defined as the ratio of real gross domestic product (GDP) to total 

hours worked by all workers in the U.S. economy. The Bureau of Economic Analysis (BEA) 

estimates historical values for real GDP in its National Income and Product Accounts (NIPA). 

The Bureau of Labor Statistics (BLS) provides total hours worked based mostly on data from its 

Current Employment Statistics (CES) Survey.4

This section is divided into four subsections. The first reviews recent BEA and BLS revisions to 

real GDP and total hours worked. The second decomposes total-economy productivity by major 

sector and analyzes differences in sector productivity growth over time. The third discusses 

various views in the economic literature on the possible future paths of productivity growth. A 

final subsection describes alternative long-run projections from private forecasters. 

1.2 Recent BEA and BLS Data Revisions 

BEA made a regular annual update of the NIPA data on September 29, 2022.5

 This update 

affected historical nominal GDP levels and real GDP growth rates back to 2017. Compared to 

the values published in July 2021, the estimated level of nominal GDP was revised very slightly 

for 2017 through 2019, revised up by 0.8 percent for 2020, and up by 1.39 percent for 2021. The 

4

 The analysis in this memo is based on total hours worked published in September 2022. Beginning with 

the November 2022 release, BLS applies a new methodology to estimation of aggregate hours. The new method 

estimates hours worked, while the old method estimated hours paid. The estimated levels of the two measures differ, 

so levels of labor productivity estimated based on hours worked will not be directly comparable to levels estimated 

based on hours paid. There is, however, no indication of systematic and persistent differences in trends between the 

two measures, so the change in methodology should not affect assumed long-range rates of change. For details of 

BLS methodological change, see https://www.bls.gov/productivity/technical-notes/labor-productivity-hours-workedmethod-using-ces-all-employee-hours-nov-2022.htm. 

5

 See https://www.bea.gov/news/2022/gross-domestic-product-third-estimate-gdp-industry-and-corporateprofits-revised-2nd. 
Productivity, Page 3 

level of real GDP was revised similarly to nominal GDP: very slightly for 2017 through 2019, up 

by 0.68 percent for 2020, and up by 0.94 percent for 2021. The annual growth rate of real GDP 

was revised down by 0.1 percent for 2017, and up by 0.6 percent for 2020. 

BLS also revised its estimates of total hours worked for year 2010 and later. Total hours were 

revised down slightly, by less than 0.1 percent for any given year, although the revisions to the 

hours in various sectors of the economy are more substantial. For the entire period from 2010 to 

2020, the revisions to real GDP and total hours resulted in the average annual growth rate of 

productivity being higher by about 0.08 percentage point. 

1.3 Productivity Growth Rates for Major Sectors and Over Long Time Periods and 

Economic Cycles6

Table 1.2 lists the average annual rates of increase in productivity for the total economy and its 

major sectors over several different time periods and economic cycles.7

 The major sectors 

include nonfarm business, farm, households, nonprofit institutions, and general government. 

Listed in Table 1.3 are the assumed ultimate average annual rates of increase in productivity for 

the total economy and its major sectors for alternatives I, II, and III. For these ultimate 

assumptions, the Trustees assume that the relative size of employment by sector will stabilize. 

 

6

 Peaks in economic cycles roughly follow the NBER cycle dating, except for short recoveries such as 

1980-1981, which are not counted as separate cycles. 

7

 Historical productivity growth rates in this section are based on the published real GDP data from BEA, 

without adjustments to pre-1978 data used in Sections 2 and 3. While the adjusted data are more consistent with 

current inflation measurement methods (see Section 2.6 for the description of the adjustments), they are available 

only for the aggregate GDP and not by sector. Therefore, in this section unadjusted data are used for consistency 

between the aggregate rate of change and the rates of change in each sector. With the adjustments, the annual growth 

rates for years before 1978 would be about 0.1 percentage point higher. 
Productivity, Page 4 

Table 1.2: Historical Average Annual Rates of Increase in Total-Economy Productivity and Its Components (%) 

 Total 

Economy 

Nonfarm 

Business 

Farm Households Nonprofit 

Institutions 

General 

Government 

Long-Term Historical Averages: 

 1956-2021 (65 years) 1.84 2.07 3.93 4.12 0.55 0.22 

 1971-2021 (50 years) 1.56 1.87 3.25 3.37 0.29 0.09 

 1971-1996 (25 years) 1.41 1.62 3.68 3.96 0.40 0.13 

 1996-2021 (25 years) 1.71 2.11 2.81 2.79 0.17 0.04 

By Economic Cycle: 

 1969-1973 2.66 2.99 4.35 7.03 1.32 0.43 

 1973-1979 1.07 1.25 3.91 3.06 0.36 -0.44 

 1979-1990 1.41 1.50 6.03 3.23 0.32 0.69 

 1990-2001 1.85 2.26 3.98 6.26 -0.25 -0.26 

 2001-2007 2.18 2.62 3.90 0.71 0.41 0.23 

 2007-2019 1.09 1.38 1.19 0.58 0.47 0.11 

 2019-2021 (incomplete cycle) 2.40 2.88 -2.96 12.99 0.60 0.49 

By Multiple Complete Cycles: 

 Last Six: 1969-2019 (50 years) 1.58 1.86 3.76 3.21 0.32 0.13 

 Last Five: 1973-2019 (46 years) 1.49 1.76 3.71 2.89 0.24 0.11 

 Last Four: 1979-2019 (40 years) 1.55 1.84 3.68 2.86 0.22 0.19 

 Last Three: 1990-2019 (29 years) 1.60 1.97 2.80 2.72 0.18 0.00 

 Last Two: 2001-2019 (18 years) 1.45 1.79 2.09 0.62 0.45 0.15 

Table 1.3: Ultimate Average Annual Rates of Increase in Total-Economy Productivity and Its Components for the 

2023 Trustees Report 

Alternative Total 

Economy 

Nonfarm 

Business Farm Households Nonprofit Institutions 

General 

Government 

I 1.93 2.36 2.36 1.93 0.00 0.00 

II 1.63 2.00 2.00 1.63 0.00 0.00 

III 1.33 1.63 1.63 1.33 0.00 0.00 

The annual growth rate in productivity generally varies from its trend growth rate over an 

economic cycle, assuming employers are slow to adjust labor to changes in output. Going into a 
Productivity, Page 5 

recession, the growth rate in productivity may drop below trend, as employers reduce output 

faster than labor. During an economic recovery, the growth rate in productivity may rise above 

trend, as employers increase output using their existing stock of labor. The recession that began 

abruptly in 2020 due to the COVID-19 pandemic is clearly an exception. 

Productivity growth rates also exhibit periods of high or low growth not necessarily related to 

economic cycles. For example, the growth rate in total-economy productivity was 2.80 percent 

over the 25-year period from 1948 to 1973, 1.30 percent over the 22-year period from 1973 to 

1995, 2.48 percent over the 10-year period from 1995 to 2005, and 1.24 percent over the 16-year 

period from 2005 to 2021. Hence, it seems reasonable to analyze productivity growth rates over 

longer periods, such as the 50-year period from 1971 to 2021 or a 65-year period from 1956 to 

2021.8 

Data on productivity for earlier historical periods, beyond the latest 65 years, are less useful for 

several reasons. First, the NIPA data are less reliable in earlier periods.9

 BEA began measuring 

income in the mid-1930s, and output in the early to mid-1940s.10 It then “backcasted” both 

measures to 1929. According to BEA analysts, the agency did not introduce the more modern 

methods of sampling, collecting, and processing of data until 1948, and did not simultaneously 

collect and balance income and output data until the early 1950s. Consequently, it seems 

reasonable to limit the use of historical data to the last 65 years. Compound annual rates of 

growth for total-economy labor productivity for approximately the past five decades are shown 

in Table 1.4. 

A second important consideration in the use of historical data on productivity is that a significant 

portion of the total historical average annual rate of increase in total-economy productivity 

occurred because of reallocation of employment from relatively low- to high-productivity jobs. 

For example, over the 50-year period from 1971 to 2021, the ratio of agricultural to 

total-economy hours worked declined from about 0.039 to 0.016, and the ratio of agricultural to 

total nominal GDP declined from about 0.022 to 0.007. Furthermore, although farm productivity 

grew faster than total economy productivity over those 50 years, the average level of productivity 

for agricultural workers in the ten years from 2012 to 2021 was about 63 percent of the average 

level of productivity for all workers. 

This reallocation complicates the consideration of historical experience. The assumed ultimate 

value for the annual rate of increase in total-economy productivity should be consistent with the 

average value over a long-range historical period with adjustment for differences between 

conditions of the past and conditions expected for the future. The average long-range historical 

value is inflated due to sectoral shifts in employment that are not expected to continue into the 

8

 Ferguson, Roger W. and William L. Wascher. “Distinguished Lecture on Economics in Government: 

Lessons from Past Productivity Booms,” Journal of Economic Perspectives. Volume 18, Number 2 (Spring 2004), 

pp. 3-28. 

9

 NIPA data for the most recent years are also less reliable, because they are subject to revisions. 

10 BEA, “GDP: One of the Great Inventions of the 20th Century,” Survey of Current Business, January 

2000, p. 7. 
Productivity, Page 6 

future.11 This problem can be resolved by removing the effects of sectoral shifts in employment 

from the historical record or, more simply, by setting the ultimate value for the annual rate of 

increase in total-economy productivity to a weighted average of the expected ultimate values for 

the annual rate of increase in productivity for each sector. 

1.3.1 Sector Productivity Growth Rates 

1.3.1.1 Nonfarm Business (NFB) 

The average annual growth rate in NFB productivity was 1.38 percent over the last complete 

economic cycle (i.e., a 12-year period from 2007 to 2019), 1.79 percent over the last two 

economic cycles (18-year period from 2001 to 2019), and 1.97 percent over the last three 

economic cycles (29-year period from 1990 to 2019). 

Looking at longer periods, the average annual growth rate in NFB productivity was 1.84 percent 

over the last four economic cycles (40-year period from 1979 to 2019), 1.76 percent over the last 

five economic cycles (46-year period from 1973 to 2019), and 1.86 percent over the last six 

economic cycles (50-year period from 1969 to 2019). These productivity growth rates include 

the effects of a relatively low growth rate period from 1973 to 1995. The 1973-1995 slowdown 

has been attributed to a shift in employment from relatively high-productivity manufacturing 

jobs to low-productivity service jobs, and to the influx of new unskilled baby-boomers into the 

workforce. Historical compound annual rates of growth in labor productivity for the nonfarm 

business sector are shown in Table 1.5. 

The 1.86 percent average annual growth rate for NFB productivity over the last six economic 

cycles (1969 to 2019) is a reasonable starting point for estimating the ultimate growth rate. 

Although productivity growth in the last cycle was slower, the average over the longest available 

period of good data points to a somewhat higher long-range rate of growth. (The growth rate in 

NFB productivity over the 65 years from 1956 to 2021 was 2.07 percent and would be somewhat 

higher if pre-1978 inflation adjustments were consistent with today’s methodology.) Therefore, 

the Trustees assume an ultimate rate of increase in NFB productivity of 2.00 percent. 

1.3.1.2 Farm 

The average annual growth rate in farm productivity was about 3.25 percent from 1971 to 2021. 

A significant portion of the relatively high growth rate in farm productivity was due to a shift in 

farm operation and ownership from smaller farms run by the self-employed to larger, more 

efficient, and capital-intensive farms run by corporations. For example, based on BLS’ Current 

Population Survey (CPS) data, the ratio of self-employed to all paid workers in the agricultural 

sector fell from about 0.52 in 1971 to 0.32 in 2021. For the long-range future, this shift is 

expected to slow and the difference in the productivity growth rates between the farm and 

nonfarm sectors is expected to decline to zero. Thus, the assumed ultimate rate of increase in 

11 For example, the 0.023 decline (i.e., from 0.039 to 0.016) in the ratio of agriculture to total-economy 

hours worked over the 50 years from 1971 to 2021 cannot be repeated in the future since the level of the ratio in 

2021 is only 0.016 and it cannot become negative. 
Productivity, Page 7 

farm productivity is 2.00 percent, equal to the assumed ultimate average annual growth rate in 

NFB productivity. 

1.3.1.3 Nonprofit Institutions (NI) 

The average annual rate of change in NI productivity was 0.40 percent over the 25-year period 

from 1971 to 1996, 0.17 percent over the 25-year period from 1996 to 2021, and 0.29 percent 

over the combined 50-year period from 1971 to 2021. The pattern of growth rates in NI 

productivity, with periods of positive and negative values, is largely due to shifts in employment 

within the NI sector. 

In the NIPA, NI labor compensation accounts for about 83 percent of NI nominal GDP. NI 

compensation is summed from five subsectors including education, health, social, religious, and 

business services. For each subsector, the level of real output is defined as the product of the 

level of average compensation per hour in a base year (currently 2012) and the level of hours 

worked. This means that the level of productivity in each subsector is a constant (i.e., the average 

compensation per hour in a base year), and that the growth rate in productivity in each subsector 

is zero. However, this also means that the level of productivity for the total NI sector is a 

weighted average of the levels of productivity in the subsectors, and that the growth rate in total 

NI productivity may be positive (or negative), due to shifts in employment from subsectors with 

relatively low (high) average compensation to sectors with relatively high (low) compensation. 

In fact, BEA data indicate that the average annual compensation in health services has been 

higher than the average annual compensation in other service subsectors since the mid-1970s, 

and that the growth in employment in health services over the 25-year period from 1971 to 1996 

was higher than the growth in employment in other service subsectors. The NIPA include data on 

compensation and full-time equivalent employment in health care, educational services, and 

social assistance.12 These three subsectors are mostly composed of NI workers.13 The data show 

that the level of average annual compensation for full-time equivalent employment in 2021 was 

$87,300, $65,400, and $40,800 in health care, educational services, and social assistance, 

respectively. The data also show that the ratio of full-time equivalent employment in the health 

subsector to the total for all three subsectors rose from about 0.48 in 1969 to 0.61 in 1986, 

declined to 0.57 in 2000, and remained relatively stable thereafter.14

Thus, the data indicate that the relative increase in employment in health services significantly 

contributed to the average annual rate of increase in NI productivity of 0.40 percent over the 

25-year period from 1971 to 1996. The data also indicate that the subsequent relative stability in 

the growth rates in employment across NI subsectors significantly contributed to the decline in 

12 BEA, NIPA, Tables 6.2B through 6.2D and Tables 6.5B through 6.5D. 

13 BEA, “Income and Outlays of Households and of Nonprofit Institutions Serving Households,” Survey of 

Current Business, April 2003, p. 14, http://www.bea.gov/scb/pdf/2003/04april/0403household.pdf. 

14 NIPA categories of services changed in 1998, so present ratios are not directly comparable with the old 

ratios. The ratio declined from 0.61 in 1982-1987 to 0.57 in 2000 (the data for 1998-2000 are available both under 

the old and the new categorization) and remained roughly constant between 0.71 and 0.72 under the new 

categorization from 2000 to 2011. However, it has since declined to 0.68 for 2021. 
Productivity, Page 8 

the NI productivity growth rate to 0.13 percent over the 25-year period from 1996 to 2021. In the 

future, it seems reasonable to assume that the more recent historical trend in employment will 

continue, and that the ultimate growth rates in employment in the NI subsectors will be roughly 

equal.15 Thus, the assumed ultimate growth rate in NI productivity is zero. 

1.3.1.4 General Government (GOV) 

The average annual rate of increase in GOV productivity was 0.13 percent over the 25-year 

period from 1971 to 1996 and 0.04 percent over the 25-year period from 1996 to 2021. These 

relatively small growth rates in GOV productivity are due to shifts in employment within the 

GOV sector. 

GOV labor compensation accounts for about 78 percent of GOV nominal GDP.16 GOV 

compensation is the total of compensation from three primary subsectors: federal civilian, federal 

military, and state and local government. As with the NI sector, the level of productivity in each 

GOV subsector is a constant (i.e., the average compensation per hour in a base year), and the 

growth rate in productivity in each subsector is zero. However, this also means that the level of 

productivity for the total GOV sector is a weighted average of the levels of productivity in the 

subsectors, and that the growth rate in total GOV productivity may be positive (negative), due to 

shifts in employment from subsectors with relatively low (high) average compensation to 

subsectors with relatively high (low) compensation.17 

The relatively small, positive growth rate in GOV productivity over some historical periods is 

due to reallocation of employment among subsectors. In the future, the growth rate in GOV 

productivity could be negative, reflecting a reversal of historical trends. For the future, however, 

it seems reasonable to assume that the ultimate growth rates in employment in the GOV 

subsectors will be about equal and that the assumed ultimate growth rate in GOV productivity 

will be zero.18

1.3.1.5 Households 

In the NIPA, nominal GDP in the household sector is the sum of the nominal compensation of 

private household workers and the nominal imputed output of owner-occupied housing (IOH). In 

2021, the nominal compensation of private household workers made up only about 1.4 percent of 

the total nominal GDP in the household sector. Though this component is relatively small, it is 

useful to analyze each component of GDP in the household sector. 

15Given that the overall assumptions reflect a continued growth in the health sector as a percent of GDP, 

this faster growth is assumed to occur in the for-profit sector of the economy. 

16 BEA, NIPA, Table 3.10.5. 

17 BEA, “Government Transactions, Methodology Papers: U.S. National Income and Product Accounts,” 

September 2005, http://www.bea.gov/national/pdf/mp5.pdf. 

18 Beginning with the 2017 report, OCACT estimates that the number of active military will remain 

constant rather than grow in proportion to civilian employment. This implies a gradual shift in the weights of 

civilian government and the military, and a resulting small decrease in average productivity of the government 

sector, but the effect is small. 
Productivity, Page 9 

Compensation of Household Workers - As with NI and GOV compensation sectors, BEA sets 

the real growth rate in GDP in this sector equal to the growth rate in hours worked. Hence, the 

growth rate in productivity is, by definition, zero. 

Imputed Output of Owner-Occupied Housing (IOH) - Renters of apartments and homes pay rent 

and receive streams of housing services. BEA includes these business transactions in the NIPA. 

Although the owners of homes pay no rent and have no business transactions, they receive 

similar streams of housing services. Hence, for consistency, BEA estimates the real and nominal 

values of housing services received by those who own their own homes (i.e., real and nominal 

IOH) and includes these amounts in the NIPA. 

BEA’s inclusion of IOH in GDP creates a problem. Since IOH has no associated measure of 

labor hours worked, it is not clear how it should be included when estimating historical and 

projecting future growth rates in sector and total-economy productivity. There are two possible 

approaches to handle IOH in projections of total-economy productivity for the long range. 

First, total real GDP could be projected as the sum of projections for real IOH and real GDP less 

IOH. Real GDP less IOH would be the product of the total-economy-less-IOH productivity and 

total hours worked. The ultimate average annual growth rate in total-economy-less-IOH 

productivity could be set to the weighted average of the assumed ultimate average annual growth 

rates in sector productivity.19 Real IOH could be projected as a fixed ratio to total real GDP less 

IOH. 20 Total real GDP could then be constructed as the sum of real IOH and real GDP less IOH. 

As a second and equivalent approach, household productivity could be defined as the ratio of the 

sum of real IOH and real output of private household workers to the total hours worked of 

private household workers (as in Table 1.2). Using this definition, the average annual rate of 

increase in productivity for private household workers over the 50-year period from 1971 to 

2021 was about 3.37 percent. 

 

19 Sector weights would be defined as the ratio of sector to total nominal GDP less IOH. 

20 Over the 35-year period from 1986 through 2021, the ratio of real IOH to real GDP less IOH has been 

fairly constant and averaged 0.075. 
Productivity, Page 10 

In the future, however, the average annual growth rate in productivity for private household 

workers is expected to equal the average annual growth rate of total-economy-less-IOH 

productivity, as described in the first approach.21 The ultimate average annual growth rate in 

total-economy productivity could be set to the weighted average of the assumed ultimate average 

annual growth rates in sector productivity.22 Finally, total real GDP would be the product of 

total-economy productivity and hours worked. 

1.3.2 Total-Economy Productivity Growth Rate 

The assumed ultimate growth rate in total-economy productivity is equal to a weighted average 

of the growth rates in sector productivity and employment (see Section 1.5 Appendix). This 

relationship is simplified by assuming that the ultimate future growth rate in employment in each 

of the sectors of the economy will be about equal, and that the ultimate growth rates in 

productivity for the nonprofit institution and general government sectors will be zero. Given 

these assumptions, the ultimate growth rate in total-economy productivity is equal to the 

weighted average of the ultimate growth rates in productivity in the farm, nonfarm business, and 

household sectors of the economy. 

Sector weights are defined as the ratio of sector to total nominal GDP. This “nominal output” 

weight for the farm sector declined from about 0.022 in 1971 to 0.007 in 2021, and it averaged 

about 0.008 over the last complete business cycle from 2007 to 2019. The nominal output weight 

for the nonfarm business sector was much more stable. It averaged 0.751 over the 25-year period 

from 1972 through 1996, 0.749 over the 25-year period from 1997 through 2021, and 0.745 over 

the last complete business cycle. For the future, the ultimate values for the nominal output 

21 If, 

Pph = Real IOH / Hph 

Pxph = Real GDP less IOH / Hxph 

 Then, 

 . . . 

 Pph = Real IOH – Hph 

 . . . 

 Pxph = Real GDP less IOH – Hxph 

Assuming, 

 . . 

 Real IOH = Real GDP less IOH 

 . . 

 Hph = Hxph 

Then, 

 . . 

 Pph = Pxph 

Where, 

 Pph = Productivity, private household 

 Pxph = Productivity, total economy less private household 

 Hph = Hours worked, private household 

 Hxph = Hours worked, total economy less private household 

 .

 Y = Rate of change in Y

22 In this second approach, sector weights would be defined as the ratio of sector to total nominal GDP. 
Productivity, Page 11 

weights are assumed to remain at 0.75 for the nonfarm business sector and 0.01 for the farm 

sector. 

The nominal weight for the household sector rose from about 0.053 in 1977-1979 to the 

historically high value of 0.079 in 2009, largely because the GDP deflator for IOH grew faster 

than the GDP deflator for all other goods over the period. More recently, the weight has fallen to 

0.069 in 2015 and has remained at or close to that value through 2019. In 2020, owing to the 

unusual nature of the pandemic-induced recession, the weight of the household sector in nominal 

GDP rose to 0.073, but declined back to 0.068 in 2021. In the future, OCACT expects the GDP 

deflator for IOH will grow at about the same rate as the GDP deflator for all other goods and that 

therefore the nominal weight for the household sector should stabilize at 0.07, close to its recent 

historical average. 

Sector weights can also be defined as the ratio of sector to total nominal GDP excluding IOH. In 

this case, the ultimate values for the nominal output weights will be 0.0108 (i.e., 0.01 / (1.0 –

0.07)) for the farm sector, and 0.8065 (i.e., 0.75 / (1.0 – 0.07)) for the nonfarm sector. 

This analysis indicates that the long-range future growth rate in productivity for the total 

economy excluding IOH will be about 1.63 percent (i.e., 2.00 * (0.8065 + 0.0108)). It also 

indicates that the long-range future growth rate in productivity for the total economy including 

IOH will be about 1.63 percent (i.e., 2.00 * (0.75 + 0.01) + 1.63 * 0.07). Thus, for the 2023 

Trustees Report, the assumed annual rates of increase in total-economy productivity are 1.93 

percent, 1.63 percent, and 1.33 percent for alternatives I, II, and III, respectively. These rates of 

increase are unchanged from those used in the 2022 Trustees Report. 

1.4 Future Expectations 

Growth in total economy labor productivity has been unusually slow during the last complete 

economic cycle. From 2007 to 2019, total economy productivity grew 1.09 percent per year on 

average, while nonfarm business productivity grew 1.38 percent per year on average. This is 

significantly slower than the historical average growth rate over the 65-year period (1956-2021) 

of 1.84 percent for total economy productivity and 2.07 percent for the nonfarm business 

productivity. 

The reasons for the recent productivity slowdown (through 2019) are being debated by the 

economic profession. One view, proposed by Borio et al. (2015), holds that recessions 

precipitated by credit booms followed by financial crises have persistent negative effects on 

productivity growth stemming from misallocation of labor to sectors with lower productivity 

growth.23 The recession of 2007-2009 was one such recession, and thus low productivity growth 

over roughly a decade in its aftermath was to be expected, but is not necessarily predictive of 

much longer periods such as 75 years into the future. Considerations of more traditional factors 

23 See Borio, Claudio, Enisse Kharroubi, Christian Upper, and Fabrizio Zampolli, 2015. “Labour 

reallocation and productivity dynamics: financial causes, real consequences”, Bank for International Settlements 

Working Paper No. 534, https://www.bis.org/publ/work534.pdf. 
Productivity, Page 12 

also lead to a debate as to whether the productivity slowdown of recent years is a temporary 

phenomenon that will be reversed, or a more fundamental change that is likely to persist. 

The position that future productivity growth is likely to be slower than the historical average 

observed prior to 2007 rests primarily on the argument that the pace of technological innovation 

has slowed. Its main proponent, Robert J. Gordon, has argued that the unusually rapid pace of 

technological innovation observed in 1920-1970 period resulted from the invention of several 

general-purpose technologies, such as electricity and the internal combustion engine, that 

dramatically boosted productivity. He argued that similarly powerful general-purpose 

technologies have not been invented since the 1970s and are not likely to be invented in the near 

future. This explains the productivity slowdown in recent decades and suggests slower 

productivity growth in the future. 24 

Additionally, Robert J. Gordon, Dale W. Jorgenson, and others contend that some of the past 

productivity growth was driven by improvements in labor quality owning to the rising 

educational attainment of the labor force. However, as Jorgenson noted, “average levels of 

educational attainment remain high for people entering the labor force, but will no longer 

increase.” As a result, rising average educational attainment will gradually disappear as a source 

of productivity growth.25

The opposing view holds that productivity growth will rebound in the future owing to new 

technologies evolving at a pace at least as fast as in the past. Proponents of this view, primarily 

Erik Brynjolfsson and his co-authors, have pointed to artificial intelligence and machine learning 

as the new general-purpose technology that will result in a return to faster productivity growth in 

the future. They contend that slow productivity growth in the recent past is not a predictor of 

future productivity growth. In fact, as new technology is being developed, new investments 

required to fully realize the transformative potential of the new technology are being made, and 

complementary innovations are being undertaken, one should expect productivity growth to be 

slow—until the effects of the new technology begin to spread across the economy.26 

The future rate of technological innovations and their effects on productivity are extremely 

difficult to foresee. OCACT believes that it is reasonable to base the productivity assumption on 

the analysis of long historical trends, with adjustments for foreseeable differences between future 

and past conditions, such as a slower rate of change in educational attainment. 

24 See Gordon, Robert J. 2016. The Rise and Fall of American Growth: The U.S. Standard of Living Since 

the Civil War. Princeton: Princeton University Press, and Gordon, Robert J. 2012 “Is U.S. Economic Growth Over? 

Faltering Innovation Confronts the Six Headwinds”, NBER working paper 18315, 

http://www.nber.org/papers/w18315.pdf. 

25 Jorgenson, Dale W., Mun S. Ho, and Jon D. Samuels. “Educational Attainment and the Revival of U.S. 

Economic Growth.” In Education, Skills, and Technical Change: Implications for Future U.S. GDP Growth. 

Chicago: University of Chicago Press, 2017. 

26 Brynjolfsson, Erik, Daniel Rock, and Chad Syverson, 2017. “Artificial Intelligence and the Modern 

Productivity Paradox: A Clash of Expectations and Statistics” NBER working paper No. 24001, 

http://www.nber.org/papers/w24001. 
Productivity, Page 13 

The developments since the last economic cycle ended in 2019, with the massive changes in the 

economy precipitated by the COVID-19 pandemic, have caused many to speculate on the 

possibility that the pandemic will have lasting or permanent effects on the structure of the 

economy. There might be a permanent shift in the level of future productivity as in many past 

recessions. But would a potential change in structure also affect the growth rate, even after the 

pandemic is behind us? At this time, there is no consensus about what the lasting effects on longterm productivity growth might be, if any. There is no consensus on the magnitude of such 

effects or even on their direction. The pandemic-induced changes in the patterns of employment 

and consumption resulted in large increases in productivity in mid-2020, while there were large 

declines in productivity in the first half of 2022. Debates continue about the long-term effects of 

the pandemic on productivity, ranging from the impact of increased business investment to the 

potential consequences of “the lost year” of education stemming from pandemic-related 

disruptions to schooling. 

Given the unprecedented level of uncertainty, OCACT believes that at this time there is no firm 

basis for reflecting such effects in the ultimate assumption for productivity growth. Basing the 

ultimate assumption for productivity growth on the analysis of long historical trends remains the 

best strategy. 

1.5 Projections from Other Sources 

At the time assumptions were developed, the following projections from other sources were 

available. 

IHS Markit provided projections through 2052 in its August 2022 30-year trend forecast (see The 

30-Year Focus, Third Quarter, August 2022). For the 20-year period from 2032 through 2052, 

IHS Markit projected that the average annual rate of increase in productivity for the nonfarm 

business sector would be about 2.1 percent. Moody’s Analytics provided projections through 

2052 in its September 2022 forecast. For the 20-year period from 2032 to 2052, Moody’s 

Analytics projected the average annual growth rate in productivity would be about 1.97 percent 

for the nonfarm business sector. 

The Office of Management and Budget (OMB) Mid-Session Review to the Fiscal Year 2023 

Budget included projections through 2032. The OMB annual growth rate for total-economy 

productivity was 1.76 percent for 2032. The Congressional Budget Office (CBO) July 2022 

report, The 2022 Long-Term Budget Outlook, included projections through 2052. CBO’s annual 

growth rate for total-economy productivity was 1.3 percent for the period 2032 through 2052 

The Social Security Advisory Board’s 2019 Technical Panel on Assumptions and Methods 

recommended an assumed ultimate annual rate of increase in total-economy productivity of 1.55 

percent, compared to the 2019 Trustees Report alternative II assumption of 1.63 percent. The 

prior technical panel, which met in 2015, recommended no changes to the ultimate annual rate of 

increase in total-economy productivity of 1.68 percent that had been assumed in the 2015 

Trustees Report, alternative II.
Productivity, Page 14 

 Table 1.4: Total-Economy Productivity: Compound Annual Rates of Growth (%) Base Year = 2012 

From

To Variable 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 

1961 39.011962 40.38 3.521963 41.81 3.53 3.541964 43.08 3.37 3.29 3.051965 44.36 3.27 3.18 3.01 2.971966 45.68 3.21 3.13 3.00 2.97 2.981967 46.42 2.94 2.83 2.65 2.52 2.29 1.611968 47.84 2.96 2.87 2.73 2.65 2.55 2.33 3.061969 48.17 2.67 2.55 2.39 2.26 2.08 1.78 1.87 0.681970 49.13 2.60 2.48 2.33 2.21 2.06 1.83 1.91 1.33 1.991971 50.98 2.71 2.62 2.51 2.43 2.34 2.22 2.37 2.14 2.87 3.771972 52.26 2.69 2.61 2.51 2.44 2.37 2.27 2.40 2.23 2.75 3.14 2.511973 53.50 2.67 2.59 2.50 2.44 2.37 2.28 2.39 2.26 2.66 2.88 2.45 2.381974 53.02 2.39 2.30 2.18 2.10 2.00 1.88 1.92 1.73 1.94 1.93 1.32 0.73 -0.901975 54.48 2.41 2.33 2.23 2.16 2.07 1.98 2.02 1.87 2.07 2.09 1.67 1.40 0.91 2.751976 55.77 2.41 2.33 2.24 2.17 2.10 2.02 2.06 1.94 2.12 2.14 1.82 1.64 1.40 2.57 2.381977 56.38 2.33 2.25 2.16 2.09 2.02 1.93 1.96 1.84 1.99 1.99 1.69 1.53 1.32 2.07 1.73 1.091978 56.89 2.24 2.17 2.07 2.01 1.93 1.85 1.87 1.75 1.87 1.85 1.58 1.43 1.24 1.78 1.46 1.00 1979 57.04 2.13 2.05 1.96 1.89 1.81 1.72 1.73 1.61 1.71 1.67 1.42 1.26 1.07 1.47 1.16 0.75 1980 57.12 2.03 1.95 1.85 1.78 1.70 1.61 1.61 1.49 1.56 1.52 1.27 1.12 0.94 1.25 0.95 0.60 1981 58.28 2.03 1.95 1.86 1.79 1.72 1.64 1.64 1.53 1.60 1.56 1.35 1.22 1.07 1.36 1.13 0.88 1982 58.29 1.93 1.85 1.76 1.69 1.62 1.53 1.53 1.42 1.48 1.44 1.23 1.10 0.96 1.19 0.97 0.74 1983 59.87 1.97 1.89 1.81 1.75 1.68 1.60 1.60 1.51 1.57 1.53 1.35 1.24 1.13 1.36 1.19 1.02 1984 61.16 1.97 1.90 1.83 1.77 1.70 1.63 1.64 1.55 1.60 1.58 1.41 1.32 1.22 1.44 1.29 1.16 1985 62.25 1.97 1.90 1.83 1.77 1.71 1.64 1.64 1.56 1.62 1.59 1.44 1.35 1.27 1.47 1.34 1.23 1986 63.70 1.98 1.92 1.85 1.79 1.74 1.68 1.68 1.60 1.66 1.64 1.50 1.42 1.35 1.54 1.43 1.34 1987 63.99 1.92 1.86 1.79 1.73 1.68 1.62 1.62 1.54 1.59 1.57 1.43 1.36 1.29 1.46 1.35 1.26 1988 64.89 1.90 1.84 1.77 1.72 1.67 1.61 1.61 1.54 1.58 1.56 1.43 1.36 1.30 1.45 1.36 1.27 1989 65.53 1.87 1.81 1.74 1.69 1.64 1.58 1.58 1.51 1.55 1.53 1.41 1.34 1.28 1.42 1.33 1.25 1990 66.54 1.86 1.80 1.74 1.69 1.63 1.58 1.58 1.51 1.55 1.53 1.41 1.35 1.29 1.43 1.34 1.27 1991 67.33 1.84 1.78 1.72 1.67 1.62 1.56 1.56 1.50 1.53 1.51 1.40 1.34 1.29 1.42 1.33 1.26 1992 69.76 1.89 1.84 1.78 1.74 1.69 1.64 1.64 1.58 1.62 1.61 1.50 1.45 1.41 1.54 1.46 1.41 1993 70.07 1.85 1.79 1.74 1.69 1.65 1.60 1.60 1.54 1.57 1.56 1.46 1.41 1.36 1.48 1.41 1.35 1994 70.56 1.81 1.76 1.70 1.66 1.61 1.56 1.56 1.51 1.54 1.52 1.42 1.37 1.33 1.44 1.37 1.32 1995 71.01 1.78 1.73 1.67 1.63 1.58 1.53 1.53 1.47 1.50 1.48 1.39 1.34 1.30 1.40 1.33 1.28 1996 72.39 1.78 1.73 1.68 1.63 1.59 1.55 1.54 1.49 1.52 1.50 1.41 1.37 1.32 1.43 1.36 1.31 1997 73.73 1.78 1.74 1.68 1.64 1.60 1.56 1.55 1.50 1.53 1.52 1.43 1.39 1.35 1.44 1.39 1.34 1998 75.44 1.80 1.75 1.70 1.66 1.62 1.58 1.58 1.53 1.56 1.54 1.46 1.42 1.38 1.48 1.43 1.38 1999 77.72 1.83 1.79 1.74 1.70 1.66 1.62 1.62 1.58 1.61 1.59 1.52 1.48 1.45 1.54 1.49 1.45 2000 79.67 1.85 1.80 1.76 1.72 1.69 1.65 1.65 1.61 1.64 1.62 1.55 1.52 1.49 1.58 1.53 1.50 2001 81.37 1.86 1.81 1.77 1.73 1.70 1.66 1.66 1.62 1.65 1.64 1.57 1.54 1.51 1.60 1.56 1.52 2002 83.84 1.88 1.84 1.80 1.77 1.74 1.70 1.70 1.66 1.69 1.68 1.62 1.59 1.56 1.65 1.61 1.58 2003 86.62 1.92 1.88 1.84 1.81 1.78 1.74 1.75 1.71 1.74 1.73 1.67 1.64 1.62 1.71 1.67 1.64 2004 88.96 1.94 1.90 1.86 1.83 1.80 1.77 1.77 1.74 1.77 1.76 1.70 1.68 1.65 1.74 1.71 1.68 2005 90.73 1.94 1.90 1.86 1.83 1.80 1.77 1.78 1.74 1.77 1.77 1.71 1.69 1.66 1.75 1.71 1.69 2006 91.52 1.91 1.88 1.84 1.81 1.78 1.75 1.76 1.72 1.75 1.74 1.69 1.66 1.64 1.72 1.69 1.66 2007 92.63 1.90 1.86 1.82 1.80 1.77 1.74 1.74 1.71 1.74 1.73 1.67 1.65 1.63 1.71 1.67 1.65 2008 93.91 1.89 1.85 1.81 1.79 1.76 1.73 1.73 1.70 1.73 1.72 1.67 1.64 1.62 1.70 1.66 1.64 2009 96.78 1.91 1.88 1.84 1.81 1.79 1.76 1.76 1.73 1.76 1.75 1.70 1.68 1.66 1.73 1.70 1.68 2010 99.47 1.93 1.90 1.86 1.84 1.81 1.78 1.79 1.76 1.78 1.78 1.73 1.71 1.69 1.76 1.74 1.72 2011 99.52 1.89 1.86 1.82 1.80 1.77 1.75 1.75 1.72 1.74 1.74 1.69 1.67 1.65 1.72 1.69 1.67 2012 100.00 1.86 1.83 1.80 1.77 1.74 1.72 1.72 1.69 1.71 1.71 1.66 1.64 1.62 1.68 1.66 1.64 2013 100.61 1.84 1.81 1.77 1.75 1.72 1.69 1.70 1.67 1.69 1.68 1.63 1.61 1.59 1.66 1.63 1.61 2014 100.99 1.81 1.78 1.74 1.72 1.69 1.67 1.67 1.64 1.66 1.65 1.60 1.58 1.56 1.62 1.60 1.57 2015 101.60 1.79 1.76 1.72 1.70 1.67 1.64 1.65 1.62 1.64 1.63 1.58 1.56 1.54 1.60 1.57 1.55 2016 101.99 1.76 1.73 1.70 1.67 1.65 1.62 1.62 1.59 1.61 1.60 1.55 1.53 1.51 1.57 1.54 1.52 2017 102.90 1.75 1.72 1.68 1.66 1.63 1.60 1.60 1.58 1.59 1.59 1.54 1.52 1.50 1.55 1.53 1.50 2018 103.95 1.73 1.70 1.67 1.64 1.62 1.59 1.59 1.56 1.58 1.57 1.53 1.51 1.49 1.54 1.51 1.49 2019 105.47 1.73 1.70 1.67 1.64 1.62 1.59 1.59 1.56 1.58 1.57 1.53 1.51 1.49 1.54 1.51 1.49 2020 108.97 1.76 1.73 1.69 1.67 1.65 1.62 1.62 1.60 1.61 1.61 1.56 1.54 1.53 1.58 1.55 1.53 2021 110.58 1.75 1.72 1.69 1.67 1.64 1.62 1.62 1.59 1.61 1.60 1.56 1.54 1.52 1.58 1.55 1.53 
Productivity, Page 15 

 Table 1.4 (continued): Total-Economy Productivity: Compound Annual Rates of Growth (%) Base Year = 2012 

From

To Variable 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 

1981 58.281982 58.29 0.021983 59.87 1.36 2.711984 61.16 1.62 2.43 2.151985 62.25 1.66 2.21 1.96 1.781986 63.70 1.80 2.24 2.09 2.06 2.331987 63.99 1.57 1.88 1.68 1.52 1.39 0.451988 64.89 1.55 1.80 1.62 1.49 1.40 0.93 1.421989 65.53 1.48 1.69 1.52 1.39 1.29 0.95 1.20 0.981990 66.54 1.48 1.67 1.52 1.42 1.34 1.10 1.31 1.26 1.541991 67.33 1.45 1.61 1.48 1.38 1.32 1.11 1.28 1.23 1.36 1.191992 69.76 1.65 1.81 1.71 1.66 1.64 1.53 1.74 1.82 2.10 2.39 3.611993 70.07 1.55 1.69 1.59 1.52 1.49 1.37 1.53 1.55 1.69 1.74 2.02 0.451994 70.56 1.48 1.61 1.51 1.44 1.40 1.29 1.41 1.41 1.49 1.48 1.58 0.58 0.701995 71.01 1.42 1.53 1.43 1.37 1.33 1.22 1.31 1.30 1.35 1.31 1.34 0.60 0.67 0.641996 72.39 1.46 1.56 1.47 1.42 1.38 1.29 1.38 1.38 1.43 1.42 1.46 0.93 1.09 1.28 1.941997 73.73 1.48 1.58 1.50 1.45 1.42 1.34 1.43 1.43 1.48 1.48 1.53 1.11 1.28 1.47 1.89 1.851998 75.44 1.53 1.63 1.55 1.51 1.49 1.42 1.51 1.52 1.58 1.58 1.64 1.31 1.49 1.68 2.04 2.09 1999 77.72 1.61 1.71 1.64 1.61 1.60 1.54 1.63 1.65 1.72 1.74 1.81 1.56 1.74 1.95 2.28 2.40 2000 79.67 1.66 1.75 1.69 1.67 1.66 1.61 1.70 1.72 1.79 1.82 1.89 1.68 1.85 2.04 2.33 2.42 2001 81.37 1.68 1.77 1.72 1.69 1.69 1.65 1.73 1.76 1.82 1.85 1.91 1.73 1.89 2.06 2.29 2.37 2002 83.84 1.75 1.83 1.79 1.77 1.77 1.73 1.82 1.85 1.91 1.95 2.01 1.86 2.01 2.18 2.40 2.48 2003 86.62 1.82 1.90 1.86 1.85 1.85 1.82 1.91 1.94 2.01 2.05 2.12 1.99 2.14 2.30 2.51 2.60 2004 88.96 1.86 1.94 1.90 1.89 1.90 1.87 1.96 1.99 2.06 2.10 2.17 2.05 2.19 2.34 2.53 2.61 2005 90.73 1.86 1.94 1.91 1.90 1.90 1.88 1.96 1.99 2.05 2.09 2.15 2.04 2.18 2.31 2.48 2.54 2006 91.52 1.82 1.90 1.86 1.85 1.85 1.83 1.90 1.93 1.98 2.01 2.07 1.96 2.08 2.19 2.33 2.37 2007 92.63 1.80 1.87 1.83 1.82 1.82 1.80 1.87 1.89 1.94 1.97 2.01 1.91 2.01 2.11 2.24 2.27 2008 93.91 1.78 1.85 1.82 1.80 1.80 1.78 1.84 1.87 1.91 1.93 1.98 1.88 1.97 2.06 2.17 2.19 2009 96.78 1.83 1.90 1.86 1.85 1.86 1.84 1.90 1.92 1.97 1.99 2.04 1.94 2.04 2.13 2.24 2.26 2010 99.47 1.86 1.93 1.90 1.89 1.89 1.87 1.94 1.96 2.01 2.03 2.08 1.99 2.08 2.17 2.27 2.30 2011 99.52 1.80 1.86 1.83 1.82 1.82 1.80 1.86 1.88 1.92 1.94 1.97 1.89 1.97 2.04 2.13 2.14 2012 100.00 1.76 1.82 1.78 1.77 1.77 1.75 1.80 1.82 1.85 1.87 1.90 1.82 1.89 1.96 2.03 2.04 2013 100.61 1.72 1.78 1.75 1.73 1.73 1.71 1.76 1.77 1.80 1.81 1.84 1.76 1.83 1.88 1.95 1.96 2014 100.99 1.68 1.73 1.70 1.69 1.68 1.66 1.70 1.72 1.75 1.75 1.78 1.70 1.76 1.81 1.87 1.87 2015 101.60 1.65 1.70 1.67 1.65 1.65 1.62 1.67 1.67 1.70 1.71 1.73 1.65 1.70 1.75 1.81 1.80 2016 101.99 1.61 1.66 1.63 1.61 1.61 1.58 1.62 1.63 1.65 1.66 1.68 1.60 1.65 1.69 1.74 1.73 2017 102.90 1.59 1.64 1.61 1.59 1.58 1.56 1.60 1.60 1.62 1.63 1.65 1.57 1.61 1.65 1.70 1.69 2018 103.95 1.58 1.62 1.59 1.57 1.57 1.54 1.58 1.58 1.60 1.61 1.62 1.55 1.59 1.63 1.67 1.66 2019 105.47 1.57 1.62 1.59 1.57 1.56 1.54 1.57 1.58 1.60 1.60 1.62 1.54 1.59 1.62 1.66 1.65 2020 108.97 1.62 1.66 1.63 1.62 1.61 1.59 1.63 1.63 1.65 1.66 1.67 1.61 1.65 1.69 1.73 1.72 2021 110.58 1.61 1.66 1.63 1.61 1.61 1.59 1.62 1.63 1.65 1.65 1.67 1.60 1.64 1.68 1.72 1.71 

From

To Variable 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 

2001 81.372002 83.84 3.042003 86.62 3.18 3.312004 88.96 3.02 3.01 2.702005 90.73 2.76 2.67 2.34 1.992006 91.52 2.38 2.22 1.85 1.43 0.882007 92.63 2.18 2.01 1.69 1.36 1.04 1.212008 93.91 2.07 1.91 1.63 1.36 1.16 1.30 1.392009 96.78 2.19 2.07 1.87 1.70 1.63 1.88 2.21 3.052010 99.47 2.26 2.16 2.00 1.88 1.86 2.10 2.40 2.91 2.782011 99.52 2.03 1.92 1.75 1.62 1.55 1.69 1.81 1.95 1.41 0.052012 100.00 1.89 1.78 1.61 1.47 1.40 1.49 1.54 1.58 1.10 0.27 0.482013 100.61 1.78 1.67 1.51 1.38 1.30 1.36 1.39 1.39 0.98 0.38 0.55 0.612014 100.99 1.68 1.56 1.41 1.28 1.20 1.24 1.24 1.22 0.86 0.38 0.49 0.49 0.382015 101.60 1.60 1.49 1.34 1.22 1.14 1.17 1.16 1.13 0.81 0.43 0.52 0.53 0.49 0.602016 101.99 1.52 1.41 1.26 1.15 1.07 1.09 1.08 1.04 0.75 0.42 0.49 0.49 0.45 0.49 0.382017 102.90 1.48 1.37 1.24 1.13 1.05 1.07 1.06 1.02 0.77 0.49 0.56 0.57 0.56 0.63 0.64 0.902018 103.95 1.45 1.35 1.22 1.12 1.05 1.07 1.05 1.02 0.80 0.55 0.62 0.65 0.66 0.72 0.76 0.96 2019 105.47 1.45 1.36 1.24 1.14 1.08 1.10 1.09 1.06 0.86 0.65 0.73 0.76 0.79 0.87 0.94 1.12 2020 108.97 1.55 1.47 1.36 1.28 1.23 1.25 1.26 1.25 1.08 0.92 1.01 1.08 1.15 1.28 1.41 1.67 2021 110.58 1.55 1.47 1.37 1.29 1.24 1.27 1.27 1.26 1.12 0.97 1.06 1.12 1.19 1.30 1.42 1.63 
Productivity, Page 16 

 Table 1.5: Nonfarm Business Productivity: Compound Annual Rates of Growth (%) Base Year = 2012 

From

To Variable 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 

1961 34.091962 35.64 4.541963 36.86 3.98 3.421964 37.90 3.59 3.12 2.821965 39.11 3.49 3.15 3.01 3.201966 40.52 3.52 3.26 3.21 3.40 3.601967 41.29 3.24 2.99 2.88 2.89 2.74 1.901968 42.73 3.28 3.07 3.00 3.05 3.00 2.70 3.501969 42.81 2.89 2.66 2.53 2.47 2.29 1.86 1.83 0.191970 43.45 2.73 2.51 2.38 2.30 2.13 1.76 1.72 0.83 1.481971 45.15 2.85 2.66 2.57 2.53 2.42 2.19 2.26 1.86 2.70 3.931972 46.73 2.91 2.75 2.67 2.65 2.58 2.41 2.51 2.26 2.96 3.71 3.491973 48.17 2.92 2.78 2.71 2.70 2.64 2.50 2.60 2.42 2.99 3.50 3.28 3.071974 47.38 2.56 2.40 2.31 2.26 2.15 1.97 1.99 1.73 2.05 2.19 1.61 0.69 -1.641975 48.69 2.58 2.43 2.35 2.30 2.21 2.06 2.08 1.88 2.16 2.30 1.90 1.37 0.54 2.771976 50.38 2.64 2.50 2.43 2.40 2.33 2.20 2.24 2.08 2.35 2.50 2.22 1.90 1.51 3.12 3.491977 51.25 2.58 2.45 2.38 2.35 2.28 2.16 2.19 2.04 2.27 2.39 2.13 1.86 1.56 2.66 2.60 1.731978 51.96 2.51 2.39 2.32 2.28 2.21 2.10 2.11 1.98 2.18 2.26 2.03 1.78 1.53 2.34 2.20 1.56 1979 51.85 2.36 2.23 2.16 2.11 2.03 1.92 1.92 1.77 1.93 1.98 1.74 1.50 1.24 1.82 1.59 0.96 1980 51.84 2.23 2.10 2.03 1.98 1.90 1.78 1.77 1.62 1.75 1.78 1.55 1.31 1.06 1.51 1.26 0.72 1981 52.61 2.19 2.07 2.00 1.95 1.87 1.76 1.75 1.61 1.73 1.75 1.54 1.33 1.11 1.51 1.30 0.87 1982 52.20 2.05 1.93 1.85 1.79 1.71 1.60 1.58 1.44 1.54 1.54 1.33 1.11 0.90 1.22 1.00 0.59 1983 54.33 2.14 2.03 1.96 1.91 1.84 1.74 1.73 1.61 1.72 1.73 1.55 1.38 1.21 1.53 1.38 1.08 1984 55.54 2.15 2.04 1.97 1.93 1.86 1.77 1.76 1.65 1.75 1.77 1.61 1.45 1.30 1.60 1.47 1.23 1985 56.51 2.13 2.02 1.96 1.92 1.86 1.77 1.76 1.66 1.75 1.77 1.62 1.47 1.34 1.62 1.50 1.28 1986 58.21 2.16 2.07 2.01 1.97 1.91 1.83 1.82 1.73 1.82 1.84 1.71 1.58 1.47 1.73 1.64 1.45 1987 58.54 2.10 2.00 1.95 1.91 1.85 1.77 1.76 1.67 1.75 1.77 1.64 1.51 1.40 1.64 1.55 1.37 1988 59.50 2.08 1.99 1.93 1.90 1.84 1.76 1.76 1.67 1.75 1.76 1.64 1.52 1.42 1.64 1.55 1.40 1989 60.04 2.04 1.95 1.89 1.86 1.80 1.72 1.72 1.63 1.71 1.72 1.60 1.49 1.39 1.59 1.51 1.36 1990 61.07 2.03 1.94 1.89 1.85 1.80 1.72 1.72 1.64 1.71 1.72 1.60 1.50 1.41 1.60 1.52 1.38 1991 62.06 2.02 1.93 1.88 1.84 1.79 1.72 1.71 1.64 1.70 1.71 1.60 1.50 1.42 1.60 1.53 1.40 1992 64.85 2.10 2.02 1.97 1.94 1.89 1.83 1.82 1.75 1.82 1.84 1.74 1.65 1.58 1.76 1.70 1.59 1993 64.92 2.03 1.95 1.91 1.87 1.83 1.76 1.76 1.69 1.75 1.76 1.66 1.58 1.50 1.67 1.61 1.50 1994 65.38 1.99 1.91 1.87 1.83 1.79 1.72 1.72 1.65 1.71 1.72 1.62 1.54 1.47 1.62 1.56 1.46 1995 66.10 1.97 1.89 1.84 1.81 1.76 1.70 1.70 1.63 1.68 1.69 1.60 1.52 1.45 1.60 1.54 1.44 1996 67.49 1.97 1.90 1.85 1.82 1.78 1.72 1.71 1.65 1.70 1.71 1.62 1.54 1.48 1.62 1.57 1.47 1997 68.80 1.97 1.90 1.85 1.82 1.78 1.72 1.72 1.66 1.71 1.72 1.63 1.56 1.50 1.64 1.58 1.49 1998 71.13 2.01 1.94 1.90 1.87 1.83 1.77 1.77 1.71 1.77 1.78 1.70 1.63 1.57 1.71 1.66 1.58 1999 73.93 2.06 1.99 1.95 1.93 1.89 1.84 1.84 1.78 1.84 1.85 1.78 1.71 1.66 1.80 1.76 1.68 2000 76.11 2.08 2.02 1.98 1.96 1.92 1.87 1.87 1.82 1.87 1.89 1.82 1.76 1.71 1.84 1.80 1.73 2001 78.09 2.09 2.03 2.00 1.97 1.94 1.89 1.89 1.84 1.90 1.91 1.84 1.79 1.74 1.87 1.83 1.77 2002 81.45 2.15 2.09 2.05 2.03 2.00 1.96 1.96 1.92 1.97 1.98 1.92 1.87 1.83 1.95 1.92 1.86 2003 84.45 2.18 2.13 2.09 2.08 2.05 2.00 2.01 1.97 2.02 2.03 1.98 1.93 1.89 2.01 1.99 1.93 2004 86.97 2.20 2.15 2.12 2.10 2.07 2.03 2.03 1.99 2.05 2.06 2.01 1.96 1.92 2.05 2.02 1.97 2005 88.87 2.20 2.15 2.12 2.10 2.07 2.03 2.04 2.00 2.05 2.07 2.01 1.97 1.93 2.05 2.03 1.98 2006 89.75 2.17 2.12 2.09 2.07 2.05 2.01 2.01 1.97 2.02 2.04 1.98 1.94 1.90 2.02 1.99 1.94 2007 91.20 2.16 2.11 2.08 2.06 2.04 2.00 2.00 1.96 2.01 2.02 1.97 1.93 1.90 2.00 1.98 1.93 2008 92.38 2.14 2.09 2.06 2.05 2.02 1.98 1.98 1.95 1.99 2.00 1.95 1.91 1.88 1.98 1.96 1.91 2009 95.66 2.17 2.12 2.09 2.08 2.05 2.02 2.02 1.98 2.03 2.04 2.00 1.95 1.92 2.03 2.01 1.96 2010 98.95 2.20 2.15 2.12 2.11 2.08 2.05 2.05 2.02 2.06 2.08 2.03 1.99 1.96 2.07 2.05 2.01 2011 98.99 2.16 2.11 2.08 2.06 2.04 2.01 2.01 1.97 2.02 2.03 1.98 1.94 1.91 2.01 1.99 1.95 2012 100.00 2.13 2.08 2.06 2.04 2.02 1.98 1.99 1.95 1.99 2.00 1.96 1.92 1.89 1.99 1.96 1.92 2013 100.49 2.10 2.05 2.03 2.01 1.99 1.95 1.95 1.92 1.96 1.97 1.92 1.88 1.86 1.95 1.93 1.88 2014 101.13 2.07 2.03 2.00 1.98 1.96 1.92 1.92 1.89 1.93 1.94 1.89 1.86 1.83 1.91 1.89 1.85 2015 102.32 2.06 2.01 1.98 1.97 1.94 1.91 1.91 1.88 1.91 1.92 1.88 1.84 1.81 1.90 1.87 1.83 2016 102.68 2.02 1.98 1.95 1.94 1.91 1.88 1.88 1.84 1.88 1.89 1.84 1.81 1.78 1.86 1.84 1.80 2017 103.81 2.01 1.96 1.94 1.92 1.89 1.86 1.86 1.83 1.86 1.87 1.83 1.79 1.76 1.84 1.82 1.78 2018 105.35 2.00 1.95 1.93 1.91 1.89 1.85 1.85 1.82 1.85 1.86 1.82 1.78 1.75 1.83 1.81 1.77 2019 107.51 2.00 1.96 1.93 1.91 1.89 1.86 1.86 1.83 1.86 1.87 1.82 1.79 1.76 1.84 1.82 1.78 2020 110.12 2.01 1.96 1.94 1.92 1.90 1.87 1.87 1.84 1.87 1.88 1.84 1.80 1.77 1.85 1.83 1.79 2021 112.21 2.01 1.96 1.94 1.92 1.90 1.87 1.87 1.84 1.87 1.88 1.84 1.80 1.78 1.85 1.83 1.80 
Productivity, Page 17 

Table 1.5 (continued): Nonfarm Business Productivity: Compound Annual Rates of Growth (%) Base Year = 2012 

From

To Variable 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 

1981 52.611982 52.20 -0.781983 54.33 1.62 4.071984 55.54 1.82 3.15 2.231985 56.51 1.81 2.68 1.99 1.751986 58.21 2.04 2.76 2.32 2.37 2.991987 58.54 1.80 2.32 1.88 1.77 1.77 0.571988 59.50 1.77 2.20 1.83 1.73 1.73 1.10 1.641989 60.04 1.67 2.02 1.68 1.57 1.53 1.04 1.28 0.921990 61.07 1.67 1.98 1.68 1.59 1.56 1.21 1.42 1.31 1.701991 62.06 1.67 1.94 1.68 1.60 1.57 1.29 1.47 1.42 1.67 1.631992 64.85 1.92 2.19 1.99 1.96 1.98 1.82 2.07 2.18 2.60 3.05 4.491993 64.92 1.77 2.00 1.80 1.75 1.75 1.57 1.74 1.76 1.97 2.06 2.28 0.111994 65.38 1.69 1.89 1.70 1.64 1.63 1.46 1.59 1.58 1.72 1.72 1.75 0.41 0.701995 66.10 1.64 1.83 1.65 1.59 1.58 1.42 1.53 1.51 1.61 1.60 1.59 0.64 0.90 1.101996 67.49 1.67 1.85 1.68 1.64 1.63 1.49 1.59 1.59 1.68 1.68 1.69 1.00 1.30 1.60 2.111997 68.80 1.69 1.86 1.70 1.66 1.65 1.53 1.63 1.63 1.72 1.72 1.73 1.19 1.46 1.72 2.02 1.941998 71.13 1.79 1.95 1.81 1.78 1.79 1.69 1.79 1.80 1.90 1.93 1.97 1.55 1.84 2.13 2.48 2.66 1999 73.93 1.91 2.07 1.94 1.92 1.94 1.86 1.96 1.99 2.10 2.15 2.21 1.89 2.19 2.49 2.84 3.08 2000 76.11 1.96 2.12 2.00 1.99 2.00 1.93 2.04 2.07 2.18 2.23 2.29 2.02 2.30 2.57 2.86 3.05 2001 78.09 1.99 2.14 2.04 2.02 2.04 1.98 2.08 2.11 2.21 2.26 2.32 2.09 2.34 2.57 2.82 2.96 2002 81.45 2.10 2.25 2.15 2.15 2.17 2.12 2.23 2.27 2.37 2.43 2.50 2.31 2.55 2.79 3.03 3.18 2003 84.45 2.17 2.32 2.23 2.23 2.26 2.21 2.32 2.36 2.47 2.52 2.60 2.43 2.66 2.88 3.11 3.25 2004 86.97 2.21 2.35 2.27 2.27 2.29 2.26 2.36 2.40 2.50 2.56 2.63 2.48 2.69 2.89 3.10 3.22 2005 88.87 2.21 2.34 2.26 2.26 2.29 2.25 2.35 2.39 2.48 2.53 2.60 2.45 2.65 2.83 3.00 3.10 2006 89.75 2.16 2.28 2.21 2.21 2.23 2.19 2.27 2.31 2.39 2.44 2.49 2.35 2.52 2.68 2.82 2.89 2007 91.20 2.14 2.26 2.18 2.18 2.20 2.16 2.24 2.27 2.35 2.39 2.43 2.30 2.46 2.59 2.72 2.77 2008 92.38 2.11 2.22 2.15 2.14 2.16 2.12 2.20 2.22 2.29 2.33 2.37 2.24 2.38 2.50 2.61 2.65 2009 95.66 2.16 2.27 2.20 2.20 2.22 2.18 2.26 2.29 2.36 2.39 2.43 2.31 2.45 2.57 2.68 2.72 2010 98.95 2.20 2.31 2.25 2.25 2.27 2.24 2.31 2.34 2.41 2.44 2.49 2.38 2.51 2.62 2.73 2.77 2011 98.99 2.13 2.23 2.17 2.16 2.18 2.15 2.21 2.24 2.30 2.33 2.36 2.25 2.37 2.47 2.56 2.59 2012 100.00 2.09 2.19 2.13 2.12 2.14 2.10 2.17 2.19 2.24 2.27 2.30 2.19 2.30 2.39 2.47 2.49 2013 100.49 2.04 2.14 2.07 2.07 2.08 2.04 2.10 2.12 2.17 2.19 2.21 2.11 2.21 2.29 2.35 2.37 2014 101.13 2.00 2.09 2.02 2.02 2.03 1.99 2.05 2.06 2.11 2.12 2.15 2.04 2.13 2.21 2.26 2.27 2015 102.32 1.98 2.06 2.00 1.99 2.00 1.96 2.01 2.03 2.07 2.09 2.10 2.00 2.09 2.16 2.21 2.21 2016 102.68 1.93 2.01 1.95 1.94 1.94 1.91 1.96 1.97 2.01 2.02 2.03 1.93 2.01 2.07 2.12 2.12 2017 103.81 1.91 1.98 1.92 1.91 1.92 1.88 1.93 1.94 1.97 1.98 2.00 1.90 1.97 2.03 2.07 2.07 2018 105.35 1.89 1.97 1.91 1.90 1.91 1.87 1.91 1.92 1.96 1.97 1.98 1.88 1.96 2.01 2.05 2.04 2019 107.51 1.90 1.97 1.91 1.91 1.91 1.88 1.92 1.93 1.96 1.97 1.98 1.89 1.96 2.01 2.05 2.05 2020 110.12 1.91 1.98 1.93 1.92 1.92 1.89 1.93 1.94 1.98 1.98 2.00 1.91 1.98 2.03 2.06 2.06 2021 112.21 1.91 1.98 1.93 1.92 1.92 1.89 1.93 1.94 1.97 1.98 1.99 1.91 1.97 2.02 2.06 2.05 

From

To Variable 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 

2001 78.092002 81.45 4.302003 84.45 3.99 3.672004 86.97 3.65 3.33 2.992005 88.87 3.28 2.95 2.59 2.182006 89.75 2.82 2.45 2.05 1.59 0.992007 91.20 2.62 2.29 1.94 1.59 1.30 1.612008 92.38 2.43 2.12 1.81 1.52 1.30 1.45 1.292009 95.66 2.57 2.32 2.10 1.92 1.86 2.15 2.41 3.552010 98.95 2.67 2.46 2.29 2.17 2.17 2.47 2.76 3.50 3.442011 98.99 2.40 2.19 2.01 1.87 1.81 1.98 2.07 2.33 1.73 0.042012 100.00 2.27 2.07 1.90 1.76 1.70 1.82 1.86 2.00 1.49 0.53 1.022013 100.49 2.12 1.93 1.75 1.62 1.55 1.63 1.63 1.70 1.24 0.52 0.75 0.492014 101.13 2.01 1.82 1.65 1.52 1.45 1.50 1.49 1.52 1.12 0.55 0.71 0.56 0.642015 102.32 1.95 1.77 1.61 1.49 1.42 1.47 1.45 1.47 1.13 0.67 0.83 0.77 0.91 1.182016 102.68 1.84 1.67 1.52 1.39 1.32 1.35 1.33 1.33 1.02 0.62 0.73 0.66 0.72 0.76 0.352017 103.81 1.79 1.63 1.49 1.37 1.30 1.33 1.30 1.30 1.03 0.69 0.79 0.75 0.82 0.87 0.72 1.102018 105.35 1.78 1.62 1.49 1.38 1.32 1.34 1.32 1.32 1.08 0.79 0.89 0.87 0.95 1.03 0.98 1.29 2019 107.51 1.79 1.65 1.52 1.42 1.37 1.40 1.38 1.39 1.18 0.93 1.04 1.04 1.13 1.23 1.25 1.55 2020 110.12 1.83 1.69 1.57 1.49 1.44 1.47 1.46 1.47 1.29 1.07 1.19 1.21 1.32 1.43 1.48 1.76 2021 112.21 1.83 1.70 1.59 1.51 1.47 1.50 1.49 1.51 1.34 1.15 1.26 1.29 1.39 1.50 1.55 1.79 
 Productivity, Page 18 

1.6 Appendix 

Nordhaus demonstrates how the growth rates in productivity in n sectors of the economy can be 

aggregated to the growth rate in total-economy productivity.27 Monaco adopts the formulation to 

aggregate the growth rates in productivity in the nonfarm business, farm, and “all other” 

sectors.28 Equation A1 is a similar adaptation to five sectors: nonfarm business (n), farm (f), 

households (h), nonprofit institutions (i), and general government (g). 

H (wt wt ) H (wt wt )

H (wt wt ) H (wt wt ) H (wt wt )

(A1) P P wt P wt P wt P wt P wt

H

g

Q

g g

H

i

Q

i i

H

h

Q

h h

H

f

Q

f f

H

n

Q

n n

Q

g g

Q

i i

Q

h h

Q

f f

Q

t n n

  

     

     

 

  

     

 Where, 

 ▪

 X = rate of change in x 

 P = productivity 

 H = hours worked 

 wtQf = nominal output weight for farm sector defined as the ratio of nominal GDP 

in the farm sector to nominal GDP for the total economy 

 wtHf = hours worked weight for farm sector defined as the ratio of hours worked 

in the farm sector to hours worked in the total economy 

 t = total economy 

In the long-range, it is reasonable to assume that the growth rate in hours worked in all sectors 

will be equal. Thus, Equation A1 can be simplified to A2. 

Q

g g

Q

i i

Q

h h

Q

f f

Q (A2) Pt Pn wtn P wt P wt P wt P wt      

    

Furthermore, if the ultimate growth rates in productivity in the household, nonprofits, and 

general government sectors are zero, Equation A2 can be further simplified to A3. 

Q

f f

Q (A3) Pt Pn wt n P wt   

 

27 Nordhaus, William D., “Productivity Growth and the New Economy.” Brookings Papers on Economic 

Activity, (Volume 2, 2002). pp.211-265. 

28 Monaco, Ralph, “Issues in Projecting Productivity in the Very Long Term.” Sept. 28, 2005. Treasury 

Office of Economic Policy. Unpublished. 
 Price Inflation, Page 1 

2. PRICE INFLATION 

THE 2023 TRUSTEES REPORT 

OFFICE OF THE CHIEF ACTUARY, SOCIAL SECURITY ADMINISTRATION 

TABLE OF CONTENTS PAGE 

2 PRICE INFLATION .............................................................................................................. 2 

2.1 SUMMARY ...................................................................................................................................................... 2

2.2 RECENT REVISIONS TO BLS AND BEA DATA ................................................................................................. 2

2.2.1 Recent and Expected Future Changes to Methods BLS Uses to Compute the CPI ................................................. 2

2.2.2 OCACT Adjustments to the Published CPI-W ........................................................................................................ 2

2.2.3 BEA Annual Update ............................................................................................................................................... 3

2.2.4 OCACT Adjustments to the Published PGDP ........................................................................................................ 3

2.3 CONSUMER PRICE INDEX FOR URBAN WAGE EARNERS AND CLERICAL WORKERS (CPI-W) ......................... 4

2.3.1 Historical Growth in the Adjusted CPI-W .............................................................................................................. 4

2.3.2 Future Growth in the CPI-W .................................................................................................................................. 6

2.4 GROSS DOMESTIC PRODUCT IMPLICIT PRICE DEFLATOR (PGDP) .................................................................. 7

2.4.1 Historical Behavior of the Adjusted PGDP ............................................................................................................ 7

2.4.1.1 Adjusted Deflator for Personal Consumption Expenditures (PGDP_C) ............................................................ 9

2.4.1.2 Deflator for Investment Expenditures (PGDP_I) ............................................................................................. 11

2.4.1.3 Deflator for Government Expenditures (PGDP_G) ......................................................................................... 14

2.4.1.4 Ultimate Assumption for the GDP Deflator ..................................................................................................... 16

2.5 PRICE DIFFERENTIAL .................................................................................................................................... 16

2.6 PROJECTIONS FROM OTHER SOURCES ........................................................................................................... 16

2.7 APPENDIX ..................................................................................................................................................... 22

TABLE OF TABLES PAGE 

TABLE 2.1: ASSUMED ULTIMATE ANNUAL RATES OF INCREASE IN PRICE LEVEL MEASURES ........................................ 2

TABLE 2.2: HISTORICAL GROWTH IN THE ADJUSTED CPI-W, THE GDP DEFLATOR, AND THE PRICE DIFFERENTIAL ..... 6

TABLE 2.3: AVERAGE ANNUAL PERCENTAGE CHANGE IN THE GDP DEFLATOR, AND THE IMPLICIT PRICE DEFLATORS 

FOR CONSUMPTION EXPENDITURES (PGDP_C), INVESTMENT EXPENDITURES (PGDP_I) AND GOVERNMENT 

EXPENDITURES (PGDP_G) .................................................................................................................................... 8

TABLE 2.4: CPI-U VS. C-CPI-U GROWTH RATES ......................................................................................................... 10

TABLE 2.5: ADJUSTED CPI-W: COMPOUND ANNUAL RATES OF GROWTH (%) BASE YEAR = 1982-1984 .................... 18

TABLE 2.6: ADJUSTED GDP DEFLATOR: COMPOUND ANNUAL RATES OF GROWTH (%) BASE YEAR = 2012 .............. 20

 
 Price Inflation, Page 2 

2 Price Inflation 

2.1 Summary 

For the 2023 Trustees Report, the assumed ultimate annual rates of increase in the CPI-W are 

3.00 percent, 2.40 percent, and 1.80 percent for alternatives I, II, and III, respectively, as shown 

in Table 2.1. The Trustees also assume the ultimate annual rates of increase in the gross domestic 

product implicit price deflator (PGDP) to be 2.75 percent, 2.05 percent, and 1.35 percent for 

alternatives I, II, and III, respectively. Thus, the ultimate price differential, defined as the PGDP 

less CPI-W average annual rates of increase, is assumed to be -0.25, -0.35, -0.45 percentage 

point for alternatives I, II, and III, respectively.29 The assumed ultimate annual rates of increase 

for CPI-W and PGDP are unchanged from those assumed for the 2022 Trustees Report. 

Table 2.1: Assumed Ultimate Annual Rates of Increase in Price Level Measures 

2.2 Recent Revisions to BLS and BEA Data 

2.2.1 Recent and Expected Future Changes to Methods BLS Uses to Compute the CPI 

The Bureau of Labor Statistics (BLS) collects and publishes data on the CPI. BLS updated the 

consumption expenditure weights in the CPI-W and in the CPI for all Urban Consumers (CPI-U) 

from the 2017-2018 to 2019-2020 period, effective January 2022. Since 2000, BLS has been 

updating the weights at regular intervals every two years, while before 2000 the updates occurred 

about once per decade. BLS has recently announced that it will update CPI weights annually 

starting with the January 2023 data. 30

2.2.2 OCACT Adjustments to the Published CPI-W 

Over the years, BLS has introduced numerous improvements to the CPI-W. For example, 

beginning in January 1995 and July 1996, BLS introduced changes to correct methodological 

29 The projected price differential is important because it affects the real rate of increase in the average 

OASDI covered wage (see Section 3.3.2.4) and, therefore, the long-range actuarial balance. 

30 For BLS’s CPI methodology, see https://www.bls.gov/opub/hom/pdf/cpihom.pdf. Information about the 

2022 weight update is at https://www.bls.gov/cpi/tables/relative-importance/weight-update-information-2022.htm. 

The new weights are at https://www.bls.gov/cpi/tables/relative-importance/2021.htm, and the weights they replaced 

are at https://www.bls.gov/cpi/tables/relative-importance/2020.htm. 

2023 Trustees Report 

Alternative 

2022 Trustees Report 

Alternative 

2023 Trustees Report Less 

2022 Trustees Report 

I II III I II III I II III

 CPI-W 3.00 2.40 1.80 3.00 2.40 1.80 0.00 0.00 0.00 

 PGDP 2.75 2.05 1.35 2.75 2.05 1.35 0.00 0.00 0.00 

 Price Differential 

 (PGDP less CPI-W) 

-0.25 -0.35 -0.45 -0.25 -0.35 -0.45 0.00 0.00 0.00 
 Price Inflation, Page 3 

errors introduced into the index in January 1978 and January 1987. In addition, beginning in 

January 1999, BLS introduced a new geometric mean formula that assumes some lower-level 

substitution among items purchased by consumers within broad categories of goods and services 

due to changes in relative prices. 

Because BLS has no plans to revise the historical CPI, these improvements present a 

comparability problem. The goal is to project future growth rates in the CPI, based, in part, on an 

analysis of historical growth rates. Any projected growth rate in the CPI will be affected by the 

BLS method improvements mentioned above. Thus, OCACT adjusted the historical CPI to 

reflect the estimated effects of these method changes, effectively reducing the measured growth 

rate in the CPI-W over the historical period.31 This adjustment is the same as in last year’s 

Trustees Report. Table 2.5 lists the adjusted CPI-W. (See Section 2.6 Appendix for details on 

OCACT’s adjustments to the actual published CPI-W annual growth rates.) 

2.2.3 BEA Annual Update 

On September 29, 2022, BEA released a regular annual update to the NIPA data, including GDP, 

PGDP, and their components for 2016 and later.32 Compared to the values reported a year earlier, 

the growth rate of PGDP is revised by less than 0.1 percentage point for each year 2016 through 

2020. 

2.2.4 OCACT Adjustments to the Published PGDP 

BEA’s estimate of the PGDP is based, in part, on the CPI. BLS has introduced numerous 

improvements to the CPI that have lowered its post-1995 growth rate. BEA “backcasted” these 

improvements in the NIPA, lowering the growth rate in the PGDP (and raising the real growth 

rate in GDP). However, because BEA only backcasted these effects to 1978, OCACT has 

lowered the pre-1978 growth rate in the PGDP for consistency (see Section 2.7 Appendix for 

further details on the adjustments to the actual published annual growth rates in PGDP and 

annual real growth rates in GDP). The adjusted PGDP is shown in Table 2.6. 

31 While historical values in this document are adjusted for consistency with assumptions about the future, 

the historical values shown in the Trustees Report are unadjusted published values. 

32 BEA’s data release with the new GDP data reflecting the annual update can be found at 

https://www.bea.gov/news/2022/gross-domestic-product-third-estimate-gdp-industry-and-corporate-profits-revised2nd. 
 Price Inflation, Page 4 

2.3 Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) 

2.3.1 Historical Growth in the Adjusted CPI-W33

 Over the last six complete economic cycles (1969 to 2019), the adjusted CPI-W grew at an 

average annual rate of 3.63 percent. The growth rates by cycle were 4.44, 7.59, 5.00, 2.45, 2.64, 

and 1.75 percent for the 1969-1973, 1973-1979, 1979-1990, 1990-2001, 2001-2007, and 2007-

2019 economic cycles, respectively. The relatively higher inflation rates experienced from the 

late 1960s to the mid-1980s can be reasonably attributed to high-capacity utilization associated 

with the Vietnam War, the two oil price shocks in the early and late 1970s, and the fiscal and 

monetary policy responses to those events. Even over the last four complete economic cycles 

(1979 to 2019), the adjusted CPI-W grew at an average annual rate of 2.96 percent. However, 

over the last three complete economic cycles (1990 to 2019) that took place after these 

adjustments had concluded, the adjusted CPI-W grew at an average annual rate of 2.20 percent. 

The high inflation rate in the late 1970s led the Federal Reserve to place a greater emphasis on 

price stability as part of their mandate to pursue maximum employment and stable prices. In the 

early 1980s, the Federal Reserve raised the federal funds rate to reduce the double-digit inflation 

rates that occurred in 1979 and 1980. In the mid-1990s, the Federal Reserve made a judgment 

that inflation at the rate of 2 percent (as measured by the annual change in the price index for 

personal consumption expenditures, or PCE) is most consistent over the longer run with the 

Federal Reserve's statutory mandate. The Federal Reserve publicly announced their 2 percent 

goal in 2012, and in their May 2018 meeting clarified that the goal was meant to be symmetric 

and that “a temporary period of inflation modestly above 2 percent would be consistent with the 

Committee's symmetric inflation objective.” In August 2020, the Federal Reserve announced an 

update to its “Statement on Longer-Run Goals and Monetary Policy Strategy”. This statement 

indicated that the Federal Reserve will more strongly emphasize the maximum employment part 

of its mandate. This implies that the Federal Reserve is willing to allow inflation to exceed the 

target of 2 percent in the interest of promoting maximum employment. Specifically, the 

statement says that “following periods when inflation has been running persistently below 2 

percent, appropriate monetary policy will likely aim to achieve inflation moderately above 2 

percent for some time.”34

Between 1981 and 2020, various other factors also contributed to the slowdown in the inflation 

rate. Oil prices were mostly stable between 1980 and 2001, and the dependence of the U.S. 

economy on oil decreased. The economic output of developing nations with relatively low labor 

costs (for example, China and India) increased substantially, as did the share of U.S. imports 

from those countries. The dollar appreciated relative to the trade-weighted average of other 

currencies between 1980 and 1985 and again between 1995 and 2002, further contributing to 

decreases in prices of imported goods. Between 2002 and 2008, some of those factors reversed: 

the price of oil and other commodities increased sharply and the dollar depreciated sharply, but 

there was relatively little corresponding increase in the inflation rate. During 2009 through 2020, 

33 See section 2.2.2 for a description of the adjusted CPI-W. 

34 See https://www.federalreserve.gov/monetarypolicy/files/fomcminutes20180502.pdf (page 9) and 

https://www.federalreserve.gov/monetarypolicy/review-of-monetary-policy-strategy-tools-and-communicationsstatement-on-longer-run-goals-monetary-policy-strategy.htm. 
 Price Inflation, Page 5 

the inflation rate was even lower, due to a recession, a decrease in the price of oil and other 

commodities, appreciation of the dollar, and eventually the pandemic-induced recession of 

2020.35 This period was also characterized by unusually weak aggregate demand for goods and 

services. The Trustees do not expect this weak demand to continue into the long-range future. 

The COVID-19 pandemic that started in 2020 interrupted the global supply of a broad range of 

goods. The imbalance of supply and demand was exacerbated by a shift in demand from services 

to goods as various services were much less available. Additionally, economic stimulus in many 

countries kept aggregate demand relatively strong. By mid-2021, the excess of demand over 

supply was manifested in faster price increases globally, with countries whose economies were 

recovering from the pandemic-induced recession at the fastest pace (such as the United States) 

experiencing the highest rates of price inflation. The Russian invasion of Ukraine in early 2022 

further aggravated price inflation globally, affecting energy prices most strongly. This second 

wave of inflation hit Europe the hardest, but was felt globally, including in the United States. In 

response to the large price increases, the Federal Reserve began increasing the federal funds rate 

in March 2022. This was followed by four more increases as of September 21, 2022, with the 

cumulative rate increase of 3 percentage points, and repeatedly declared intentions to further 

increase rates until the inflation is decelerated to the target rate. While the relatively high 

inflation rate during 2021 and 2022 illustrates the possibility of episodes of inflation exceeding 

policy targets, there is so far no evidence that expectations of long-term price growth have 

changed significantly. 

 

35 CPI-W grew at a 2.22 percent annual rate over the 7-year period 1995-2002, 3.09 percent over the 6-year 

period 2002-2008, and 1.52 percent over the 12-year period 2008-2020. The dollar has appreciated significantly 

relative to the euro and the British pound since 2008, and did not changed much relative to the yen and the yuan 

during that period. 
 Price Inflation, Page 6 

Table 2.2: Historical Growth in the Adjusted CPI-W, the GDP Deflator, and the Price Differential 

CPI-W Average 

Annual Rate of 

Growth (percent) 

GDP Deflator 

Average Annual 

Rate of Growth 

Price Differential 

= GDP Deflator 

less CPI-W 

Long-Term Historical Averages: 

 1956-2021 (65 years) 3.29 3.17 -0.12 

 1971-2021 (50 years) 3.58 3.35 -0.23 

 1971-1996 (25 years) 4.98 4.75 -0.23 

 1996-2021 (25 years) 2.20 1.96 -0.23 

By Economic Cycle: 

 1969-1973 4.44 4.93 0.49 

 1973-1979 7.59 7.45 -0.14 

 1979-1990 5.00 4.61 -0.39 

 1990-2001 2.45 2.08 -0.37 

 2001-2007 2.64 2.52 -0.12 

 2007-2019 1.75 1.61 -0.14

 2019-2021 (incomplete cycle) 3.22 2.92 -0.31 

By Multiple Complete Cycles: 

 Last Six: 1969-2019 (50 years) 3.63 3.43 -0.19 

 Last Five: 1973-2019 (46 years) 3.55 3.30 -0.25 

 Last Four: 1979-2019 (40 years) 2.96 2.70 -0.27 

 Last Three: 1990-2019 (29 years) 2.20 1.98 -0.22 

 Last Two: 2001-2019 (18 years) 2.05 1.91 -0.13 

Note: Price differentials displayed may not equal the CPI-W less GDP deflators displayed because of rounding.

2.3.2 Future Growth in the CPI-W 

If only past inflation rates were used to determine the assumed ultimate rate for the future, then 

only the period (e.g., the most recent 50 or 20 years) and method (e.g., a simple, weighted, or 

geometric average) would need to be chosen. The best historical period would be the one that is 

most representative of the conditions that are expected to prevail over the upcoming 75-year 

projection period. The historical record is filled with inflation-related events, some of which 

occurred in unique circumstances and have limited relevance for projecting the future. These 

include the Vietnam War, oil price shocks, and periods of price controls. Furthermore, after a 

historically unusual departure in the 1970s, monetary policy returned to a relatively strong 

emphasis on price stability. 

While these specific historical events will not recur in the future (at least not exactly as they have 

in the past), other inflation-related events may take their place. The spike in inflation following 

the pandemic-induced recession illustrates the continued possibility of inflationary episodes, 

especially those triggered by supply shocks, and thus more difficult to counteract with monetary 
 Price Inflation, Page 7 

policy. At the same time, long-term market rates do not reveal a significant increase in long-run 

inflation rate, indicating continued confidence that monetary policy will be consistent and 

generally successful in containing inflation. The recent appreciation of the U.S. dollar despite the 

high inflation rate in the U.S. is also consistent with confidence in the U.S. monetary policy. 

It is reasonable to expect additional upward pressure on the future growth rate in the CPI due to 

changes in international trade. The ratio of net exports (i.e., exports less imports) to GDP 

averaged about -3.2 percent over the last economic cycle, i.e., the 12-year period from 2008 

through 2019. Part of this imbalance is due to imports of relatively low-priced consumer goods 

from emerging economies, such as China. However, as these developing economies mature, their 

average wage and consumption levels are expected to rise relative to their output, and their 

currencies and price levels are expected to rise relative to those of the U.S. This may lessen the 

downward pressure on the prices of basic commodities and, therefore, the CPI. These trends are 

also expected to ultimately return the ratio of net exports to GDP to zero in the future. 

OCACT believes that the 2.96 percent average annual growth rate for the adjusted CPI-W for the 

last four economic cycles from 1979 to 2019 is higher than the most reasonable assumption for 

the ultimate CPI-W annual rate of increase, because it includes several years of high inflation 

rates unlikely to be repeated at a similar frequency under the current monetary policy. Over the 

last three complete economic cycles (from 1990 to 2019), which better reflect the current 

domestic monetary policy environment, the average annual growth rate for the adjusted CPI-W 

was 2.20 percent. However, that period includes unusually low inflation rates of the last cycle, 

heavily influenced by the deep recession of 2007-2009, slower-than-usual recovery, and a 

continuation of a trend of inexpensive imported goods, a set of circumstances also not likely to 

be typical in the long run. Thus, the assumed ultimate rate of increase in the CPI-W for the 2023 

Trustees Report is 2.40 percent for alternative II, and 3.00 and 1.80 percent for alternatives I and 

III, respectively, the same as the rates assumed for the 2022 Trustees Report. 

2.4 Gross Domestic Product Implicit Price Deflator (PGDP) 

2.4.1 Historical Behavior of the Adjusted PGDP 

Table 2.3 shows historical data for the average annual percentage change in PGDP and its key 

components. The PGDP can be viewed as a weighted average of its key components, which 

include the implicit price deflator for personal consumption expenditures (PGDP_C), the implicit 

price deflator for gross private domestic investment (PGDP_I), and the implicit price deflator for 

government consumption expenditures and gross investment (PGDP_G). While the implicit price 

deflators for imports and exports also contribute to PGDP over the historical period, the effect of 

net exports on the deflator is assumed to be zero on average over the 75-year projection period. 

The weights are the ratios of the components’ nominal expenditures to total nominal GDP. The 

weights have been relatively stable in the historical period. In 2021, the weights for personal 

consumption, investment, and government expenditures were about 0.68, 0.18, and 0.18, 

respectively. These weights summed to more than one because net exports were negative. 

Adjusting for the assumed effect of net exports on the PGDP, the weights for personal 

consumption, investment, and government expenditures are assumed to be 0.63, 0.18, and 0.19, 

respectively. These values are consistent with the average values observed in the historical 

period. 
 Price Inflation, Page 8 

Table 2.3: Average Annual Percentage Change in the GDP Deflator, and the Implicit Price Deflators for 

Consumption Expenditures (PGDP_C), Investment Expenditures (PGDP_I) and Government Expenditures 

(PGDP_G) 

 GDP Deflator PGDP_C PGDP_I PGDP_G 

Long-Term Historical Averages: 

 1956-2021 (65 years) 3.21 3.18 2.48 3.90 

 1971-2021 (50 years) 3.36 3.39 2.64 3.97 

 1971-1996 (25 years) 4.78 4.97 4.16 5.18 

 1996-2021 (25 years) 1.96 1.85 1.14 2.77 

By Economic Cycle: 

 1969-1973 5.04 4.43 4.72 7.57 

 1973-1979 7.54 7.75 8.64 7.55 

 1979-1990 4.61 4.95 3.42 4.88 

 1990-2001 2.08 2.12 0.68 2.79 

 2001-2007 2.52 2.36 2.18 4.05 

 2007-2019 1.62 1.53 0.74 1.97 

 2019-2021 (incomplete cycle) 2.91 2.55 2.45 3.58 

By Multiple Complete Cycles: 

 Last Six: 1969-2019 (50 years) 3.45 3.47 2.72 4.14 

 Last Five: 1973-2019 (46 years) 3.32 3.39 2.55 3.85 

 Last Four: 1979-2019 (40 years) 2.70 2.75 1.67 3.30 

 Last Three: 1990-2019 (29 years) 1.98 1.93 1.01 2.71 

 Last Two: 2001-2019 (18 years) 1.92 1.81 1.22 2.66 

Note: All values shown are consistent with the unadjusted values reported by BEA, because adjusted values are not available for

the components of PGDP. Therefore, the values shown in this table may differ from the values shown in Tables 2.2 and 2.6. 

The annual percentage change in PGDP tends to be lower than the annual percentage change in 

the CPI-W, as shown in Table 2.2, primarily due to two factors. First, the computational 

weighting method for the PGDP allows for substitution between items over time, which 

contributes to a slower annual rate of change when compared to the CPI-W. Second, the PGDP 

covers investment and government expenditures in addition to consumer expenditures. The 

second factor generally contributes to slower growth in GDP due to the PGDP_I, apart from the 

1969-1973 period and the 2001-2007 period where the average annual growth in PGDP_G was 

elevated due to the Vietnam war and the Afghanistan and Iraq wars, respectively. While there are 

other differences between the two measures, such differences are relatively less important in 

explaining the differences in the annual percentage change. 

The long-run historical growth rate in PGDP is mostly explained by the separate historical 

growth rates in PGDP_C, PGDP_I, and PGDP_G. The historical and expected future growth 

rates for each component deflator are examined below. 
 Price Inflation, Page 9 

2.4.1.1 Adjusted Deflator for Personal Consumption Expenditures (PGDP_C) 

While both the PGDP_C and the CPI-W focus on changes in the prices of consumer goods, the 

PGDP_C differs from the CPI-W in terms of the formula used for the computation and the scope 

of items covered. The PGDP_C formula allows for substitution between items, which tends to 

result in a lower annual rate of change when compared to the CPI-W. The difference in the scope 

of items covered tends to contribute less to systematic differences over time than the difference 

in the formula. Thus, all else equal, the average annual change in the PGDP_C contributes to the 

annual percentage change in the PGDP being lower than the annual percentage change in the 

CPI-W. 

When examining the historical data on the PGDP_C and the CPI-W, the more recent complete 

economic cycles provide a good basis for assessing the future relationship between the two price 

measures because the BLS provides the information necessary to produce a good approximation 

of the current CPI-W computation method from 1979 to the present. Over the last four complete 

economic cycles (40-year period from 1979 to 2019), the average annual growth rate for the 

adjusted PGDP_C was 2.75 percent, or 0.21 percentage point below the CPI-W growth rate of 

2.96 percent. Over the last three complete economic cycles (29-year period from 1990 to 2019), 

the average annual growth rate for the adjusted PGDP_C was 1.93 percent, or 0.27 percentage 

point below the CPI-W growth rate of 2.20 percent. Over the last two complete economic cycles 

(18-year period from 2001 to 2019), the average annual growth rate for the adjusted PGDP_C 

was 1.81 percent, or 0.24 percentage point below the CPI-W growth rate of 2.05 percent. Over 

the most recently completed economic cycle from 2007 to 2019, the average annual growth rate 

for the adjusted PGDP_C was 1.53 percent, or 0.22 percentage point below the CPI-W growth 

rate of 1.75 percent. 

The historical difference in the last two complete economic cycles between the PGDP_C and the 

CPI-W of 0.24 percentage point is similar to the difference between the CPI-U and the chainedCPI-U (C-CPI-U), as shown in Table 2.4. Like the PGDP_C, the C-CPI-U allows for substitution 

between items over time and tends to grow at a slower rate than the CPI-U. BLS has published 

monthly values for the C-CPI-U for each year beginning in January 2000. Final values for 2020 

and interim values for 2021 are now available.36 The average annual growth rate in the C-CPI-U 

from the first quarter of 2000 to the fourth quarter of 2021 was 2.01 percent. Over the same 

period, the average annual growth rates in the PGDP_C, CPI-U, and CPI-W were approximately 

1.96, 2.29, and 2.29 percent, respectively. The data suggest that over this period, the contribution 

of the difference in computational methods was about 0.28 percentage point (i.e., 2.29 – 2.01), 

and that the PGDP_C price differential (the difference between the growth rates of PGDP_C and 

CPI-W) was -0.33 percentage point (i.e., 1.96 – 2.29).37 OCACT believes that the PGDP_C price 

36 Ideally, only final values would be used in this comparison, as done in prior years. At this time, however, 

final values are available only through 2020, a year affected in unusual ways by the pandemic-induced recession. To 

avoid affecting the averages by using a potential outlier as the final value, the interim 2021 values are used here. 

Corresponding values for the period ending in 2020 are 1.81 percent for C-CPI-U, 1.79 percent for PGDP-C, 2.08 

percent for CPI-U and 2.05 percent for CPI-W. The implied contribution of the difference in computational methods 

is 0.27 percentage points and the PGDP_C price differential is 0.26 percentage points. 37 The data also suggest that from the first quarter of 2000 to the fourth quarter of 2019, the average annual 

growth rate in the C-CPI-U (1.83 percent) was a reasonable approximation of the average annual growth rate in the 

PGDP_C (1.82 percent). 
 Price Inflation, Page 10 

differential of -0.33 may be temporarily increased in magnitude by the measurement differences 

specific to the inflation surge that began in 2021. 

Table 2.4: CPI-U vs. C-CPI-U Growth Rates 

CPI-U growth rate less C-CPI-U growth rate 

(December-to-December, percentage points) 

Year

All Items Less 

Food and Energy All Items 

2000 0.7 0.8 

2001 0.6 0.3 

2002 0.3 0.4 

2003 0.4 0.2 

2004 -0.1 0.1 

2005 0.3 0.5 

2006 0.4 0.3 

2007 0.5 0.4 

2008 0.0 -0.1 

2009 0.3 0.3 

2010 0.2 0.2 

2011 0.0 0.0 

2012 0.3 0.3 

2013 0.2 0.2 

2014 0.4 0.2 

2015 0.4 0.3 

2016 0.3 0.3 

2017 0.5 0.4 

2018 0.5 0.4 

2019 0.6 0.5 

2020 -0.1 -0.1 

2021 0.3 0.4 

Average 2000-2021 0.33 0.28 

Over the long-range period, it is reasonable to assume that the average annual growth rates in the 

CPI-W and CPI-U will be roughly equal. It also seems reasonable to assume that the difference 

in the long-range average annual growth rates (PGDP_C less CPI-W) will be -0.30 percentage 

point, and that this difference will be only due to the expected 0.30 percentage point effect from 

the different computational weighting methods. Stated differently, the expected growth-rate 

differential for the personal consumption deflator (PGDP_C less CPI-W) due to factors other 

than the computational weighting methods is assumed to be zero. Thus, the assumed ultimate 

annual growth rate for PGDP_C is 2.1 percent, equal to the assumed ultimate annual growth rate 

for CPI-W (i.e., 2.4 percent) less the 0.30 percentage point effect of the different computational 

weighting methods. 
 Price Inflation, Page 11 

2.4.1.2 Deflator for Investment Expenditures (PGDP_I) 

The PGDP_I can be viewed as a weighted average of deflators for its principal components: 

investment in equipment (PGDP_INE), investment in intellectual property (PGDP_INIP), 

residential investment (PGDP_IR), and investment in nonresidential structures (PGDP_INS).38

The equipment and intellectual property components in their current form were first used in the 

2013 revisions to NIPA. The 2018 comprehensive revisions to NIPA further refined the 

definition, which resulted in revisions to historical data for investment in software and computer 

equipment. 

Deflator for Equipment (PGDP_INE): Over the last four complete economic cycles (the 40-year 

period from 1979 to 2019), the average annual growth rate was about -0.13 percent for the 

PGDP_INE, compared to 2.75 percent for the PGDP_C. The PGDP_INE growth rate has been 

depressed by the rise in nominal investment expenditures for computers and the sharp decline in 

their quality-adjusted prices. Over this period, the deflator for computers fell at an average 

annual rate of about 11.14 percent, and the ratio of nominal investment expenditures for 

computers to all investment expenditures for equipment rose from about 5 percent in 1979 to 

about 13 percent in the late 1990s, followed by a decline to about 9 percent in 2015-2016. The 

ratio rose slightly to about 10 percent in 2018-2019 and about 12 percent in 2020-2021. 

It seems reasonable to assume that quality-adjusted computer prices will continue to decline in 

the future, but at a somewhat slower rate. The average annual rate of decline was about 12.9 

percent over the 1982 to 1994 period, 20.2 percent over the 1994 to 2001 period, 10.1 percent 

over the 2001 to 2009 period, and 1.5 percent over the 2009 to 2021 period. The large rate of 

decline in the late 1990s was probably due to a combination of technological advances and 

production volume increases that are unlikely to be sustained over a longer period. On the other 

hand, the recent slowdown has been dramatic, but it is unclear if it is permanent. It seems 

reasonable to assume that the future rate of price decline will be similar to that over the last two 

complete economic cycles (18 years between 2001 and 2019); thus, the assumed rate of decline 

in quality-adjusted computer prices is 5.5 percent per year. Furthermore, it is expected that the 

ratio of nominal investment expenditures for computers to all investment expenditures for 

equipment will stabilize at the approximate average value of the ratio over the last decade (i.e., 

10 percent). 

Over the last four complete economic cycles (the period from 1979 to 2019), the deflator for 

equipment other than computers grew on average at a 1.19 percent annual rate, or 1.56 

percentage points less than the 2.75 percent annual growth rate for the PGDP_C. OCACT 

believes that the growth rate in the price deflator for other equipment will continue to be 

depressed relative to the PGDP_C, since the prices for at least some items in other equipment 

will be driven down by the same types of future technological advancements expected for 

computers. Thus, it is reasonable to expect that, in the future, the average annual growth rate in 

other equipment will be about 0.8 percent, or 1.3 percentage points less than the 2.1 percent 

assumed ultimate average annual growth rate in the PGDP_C. 

38 This decomposition excludes the change in business inventories, which has averaged roughly 1.8 percent 

of total investment expenditures over the 40-year period from 1979 to 2019. 
 Price Inflation, Page 12 

Using these average annual growth rates and weights, it is reasonable to set the assumed ultimate 

average annual rate of growth in PGDP_INE in the future to about 0.17 percent (i.e., -5.5 * 0.10 

+ 0.8 * 0.90). 

Deflator for Intellectual Property (PGDP_INIP): Over the last four complete economic cycles 

(the 40-year period from 1979 to 2019), the average annual growth rate was about 1.31 percent 

for the PGDP_INIP, compared to 2.75 percent for the PGDP_C. The PGDP_INIP growth rate 

has been depressed by the rise in nominal investment expenditures for software and a slow but 

steady decline in its quality-adjusted prices. Over this period, the deflator for software fell at an 

average annual rate of about 1.63 percent, and the ratio of nominal investment expenditures for 

software to all investment expenditures for intellectual property rose from about 17 percent in 

1979 to about 38 percent by 2000, and has slowly increased to about 42 percent since. 

Software prices have been declining slowly, but steadily. They declined over five of the last six 

economic cycles (the only exception being the 1973-1979 cycle), and their rate of decline ranged 

from 0.16 percent in the 1969-1973 cycle to 2.41 percent in 2001-2007. Over the last cycle (a 12-

year period from 2007 to 2019), software prices declined at an average annual rate of 1.37 

percent. It seems reasonable to expect some future price decline, but at a somewhat slower rate 

than the average over the last 40 years. OCACT expects that software prices will decline at a rate 

of 1 percent per year. OCACT also expects that the ratio of nominal investment expenditures for 

software to all investment expenditures for intellectual property will stabilize at about 45 percent. 

Over the last four complete economic cycles (from 1979 to 2019), the deflator for intellectual 

property other than software grew on average at a 2.62 percent annual rate, or 0.13 percentage 

point less than the 2.75 percent annual growth rate for the PGDP_C. OCACT believes that it is 

reasonable to expect that, in the future, the average annual growth rate in the price deflator for 

other intellectual property will continue to be somewhat lower than the PGDP_C. The assumed 

growth rate in the deflator for other intellectual property is 2.0 percent, or 0.1 percentage point 

less than the 2.1 percent assumed ultimate average annual growth rate in the PGDP_C. 

Using these average annual growth rates and weights, it is reasonable to set the assumed ultimate 

average annual rate of growth in PGDP_INIP in the future to about 0.65 percent (i.e., -1 * 0.45 + 

2.0 * 0.55). 

Deflator for Residential Investment (PGDP_IR): Residential investment is almost entirely 

composed of investment in fixed structures, which, in turn, is composed of single-family, 

multifamily, and other structures (e.g., manufactured homes, dormitories, etc.). Over the 22-year 

period from 1979 to 2001, which spans two complete economic cycles, the average annual 

growth rate was about 3.80 percent for the PGDP_IR, compared to 3.52 percent for the 

PGDP_C. Thus, the average annual growth rate for the PGDP_IR was about 0.28 percentage 

point (3.80 – 3.52) higher than the average annual growth rate in the PGDP_C over the period. 

However, over the next economic cycle (6-year period from 2001 to 2007), this differential 

increased substantially. From 2001 to 2007, the average annual growth rate was about 4.74 

percent for the PGDP_IR and 2.36 percent for the PGDP_C. Thus, the average annual growth 

rate for the PGDP_IR was about 2.38 percentage points (4.74 – 2.36) higher than the average 

annual growth rate in the PGDP_C over the period.
 Price Inflation, Page 13 

OCACT believes that the 2.38 percentage point growth rate differential between the PGDP_IR 

and the PGDP_C over the 2001-2007 period was a temporary market phenomenon characterized 

by overheated demand for housing, house “flipping,” subprime mortgage lending, and unusually 

high profits and gains in stock prices for the builders of new homes. The last complete economic 

cycle, 2007 to 2019, began with a market correction: the housing bubble collapsed, new and 

existing home sales dropped nationally, prices of new homes in most markets declined, and the 

profits and stock prices of new homebuilders plummeted. After a relatively slow housing market 

recovery, home prices in 2019 were about 14 percent above the 2006 level, while the number of 

sales remained well below the mid-2000s level. During the latest complete economic cycle, from 

2007 to 2019, the average annual growth in PGDP_IR and PGDP_C was 2.17 and 1.53 percent, 

respectively, indicating a 0.64 percent (2.17 – 1.53) differential between the two deflators. From 

the end of 2019 to the end of 2021, home prices increased further, by about 31 percent, due to a 

combination of factors unique to the COVID-19 pandemic and the policy response that followed: 

historically low interest rates, changes in housing preferences, and a rapid rise in the prices of 

other assets. It remains to be seen how home prices will respond to the increases in nominal 

interest rates in 2022. 

OCACT believes housing prices will grow at a somewhat faster rate than PGDP_C, but a large 

difference in rates would not be sustainable over a long period. The assumed ultimate average 

annual rate of increase in the PGDP_IR is therefore 2.35 percent, or about 0.25 percentage point 

higher than the 2.1 percent assumed ultimate average annual rate of increase in the PGDP_C. 39

Deflator for Investment in Nonresidential Structures (PGDP_INS): Investment in nonresidential 

structures includes investment in structures used for drilling for petroleum and natural gas. Over 

the 22-year period from 1979 to 2001, spanning two complete economic cycles, the average 

annual growth rate for PGDP_INS was 3.69 percent, or slightly less than the 3.80 percent growth 

rate in PGDP_IR. However, over the next complete economic cycle from 2001 to 2007, the 

average annual growth rates for PGDP_INS and PGDP_IR were 7.49 and 4.74 percent, 

respectively. The relatively faster average annual growth rate for PGDP_INS occurred because 

the average annual growth rate in the deflator for investment in petroleum and natural gas was 

about 20.3 percent. Excluding the effects of petroleum and natural gas, the average annual 

growth rate for PGDP_INS was about 5.0 percent, closer to the 4.74 percent average annual 

growth rate in PGDP_IR over the period. 

OCACT believes the relatively rapid growth rate in the deflator for investment in petroleum and 

natural gas is a temporary market phenomenon associated with a run-up in oil prices. The price 

of a barrel of oil rose from about $26 in 2001 to $72 in 2007, or at an average annual rate of 

about 19.0 percent. As the market price for oil rose, previously expensive technologies became 

economically profitable. Over the last complete cycle, from 2007 to 2019, the deflator for 

investment in petroleum and natural gas rose at a much lower annual rate of 1.7 percent, and 

PGDP_INS grew at a 2.37 percent annual rate, or 0.20 percentage point higher than the 2.17 

percent annual growth rate in PGDP_IR. In the two years since the last cycle peak (2019 to 

2021), the deflator for investment in petroleum and natural gas decreased at an annual rate of 8.8 

percent, offsetting the 4.1 percent annual growth rate in the deflator for investment in other non39 In the future, the PGDP_IR may grow faster than the PGDP_C due to more rapid increases in the prices 

of scarce land and basic building commodities such as copper, lumber, and cement. 
 Price Inflation, Page 14 

residential structures, resulting in an annual growth rate in PGDP_INS of 2.69 percent, slightly 

higher than the adjusted PGDP_C (2.56 percent) and much lower than PGDP_IR (7.13 percent). 

OCACT believes this decrease in the deflator for investment in petroleum and natural gas is also 

a temporary phenomenon, caused by record low oil prices in the early part of the pandemic. The 

price of a barrel of oil averaged less than $17 in April 2020, and was even negative on April 20, 

2020. As the global economy recovered from the recession, oil price increased to well above its 

pre-pandemic level, exceeding $90 in February 2022, and then increased even further after the 

Russian invasion of Ukraine, peaking at above $120 in March and again in June. 

OCACT believes that in the long-range future the average annual growth rate in the price of a 

barrel of oil will not be significantly greater than the growth rate in the PGDP_C and that the 

average annual growth rates in the PGDP_INS and PGDP_IR will be approximately equal. Thus, 

the assumed ultimate average annual rate of increase in PGDP_INS is 2.35 percent, or 0.25 

percentage point higher than the 2.1 percent assumed ultimate average annual growth rate in the 

PGDP_C, and equal to the assumed ultimate average annual rate of increase in the PGDP_IR. 

The ratio of investment expenditures in equipment to total investment expenditures has averaged 

about 36 percent over the past 60 years. For the 20 years 2002 through 2021, the average has 

decreased slightly to 33 percent. OCACT assumes that the share of investment expenditures in 

equipment to total investment expenditures will be about 35 percent, in the future. Investment in 

intellectual property has been an increasing share of total investment. Much of the increase, 

however, has been due to the sharp rise in investment in software from the 1970s to the early 

2000s. Since the share of software in the investment in intellectual property has stabilized 

recently, OCACT believes it is reasonable to assume that the ratio of investment in intellectual 

property to total investment will be similar to its recent levels, or about 25 percent. OCACT also 

assumes that the investment expenditure weights for nonresidential investment for structures and 

residential investment will account for approximately equal shares of the rest of the investment 

expenditures, or 20 percent each. 

Thus, the assumed ultimate average annual rate of increase for PGDP_I is 1.16 percent (i.e., 0.17 

* 0.35 + 0.65 * 0.25 + 2.35 * (0.20 + 0.20)). 

2.4.1.3 Deflator for Government Expenditures (PGDP_G) 

The PGDP_G can be viewed as a weighted average of deflators for government consumption 

expenditures (PGDP_GC) and government investment (PGDP_GI). 

Deflator for Government Consumption Expenditures (PGDP_GC): Government consumption 

expenditures can be separated into employee compensation and other (residual) government 

consumption expenditures. In the NIPA, the deflator for government consumption expenditures 

on employee compensation is defined as an index proportional to average employee 

compensation. From 1979 to 2001, a 22-year period covering two complete economic cycles, the 

average annual growth rate in the average government employee compensation and the adjusted 

CPI-W were about 5.34 and 3.72 percent, respectively. This indicates that over the period, the 

real annual growth rate in average employee compensation was 1.56 percent (i.e., 100 * (1.0534 / 
 Price Inflation, Page 15 

1.0372 – 1)), slightly higher than the 1.23 percent assumed ultimate real annual growth rate in 

average compensation in the 2022 Trustees Report.40 

From 2001 to 2007, a 6-year period covering a complete economic cycle, the average annual 

growth rate in the average government employee compensation and the adjusted CPI-W were 

about 4.61 and 2.64 percent, respectively. This indicates that over the period, the real annual 

growth rate in average employee compensation was 1.92 percent (i.e., 100 * (1.0461 / 1.0264 – 

1)), about 0.7 percentage point higher than the 1.23 percent ultimate real annual growth rate in 

average compensation assumed in the 2022 Trustees Report. 

OCACT believes that the relatively high growth rate in the deflator for employee compensation 

over the 2001 to 2007 period was a temporary phenomenon mostly associated with military pay 

incentives related to the conflicts in Iraq and Afghanistan. Over this period, the average annual 

growth rates in the average compensation of state and local, federal civilian, and federal military 

employees were 4.10, 5.62, and 9.52 percent, respectively. By contrast, between 2007 and 2019, 

the latest complete economic cycle, the average annual growth rates in the average compensation 

of state and local, federal civilian, and federal military employees were 2.37, 2.59, and 1.87 

percent, respectively, and the average annual growth rate in the deflator for employee 

compensation was 2.40 percent, or just 0.65 percentage point higher than the 1.75 percent growth 

rate in CPI-W over the same period. 

It is reasonable to assume that in the future the average annual nominal growth rate in the 

average compensation for all government employees will be equal to the rate assumed for the 

economy-wide average compensation, which is assumed to be 3.66 percent for the 2023 Trustees 

Report. Therefore, OCACT believes that the average annual growth rate in the deflator for 

government consumption expenditures on employee compensation will be 3.66 percent.41

It is also reasonable and consistent to assume that the average annual growth rate in the deflator 

for other government consumption will be equal to the assumed ultimate average annual growth 

rate in the PGDP_C, or 2.1 percent. 

Using rough averages over the 1979 to 2019 period, OCACT assumes that future government 

consumption expenditures for employee compensation will be about 70 percent of total 

government consumption expenditures. Thus, the assumed ultimate average annual growth rate 

for PGDP_GC is 3.19 percent (i.e., 3.66 * 0.70 + 2.1 * 0.30). 

Deflator for Government Investment (PGDP_GI): Government investment can be separated into 

1) structures, 2) equipment, and 3) intellectual property. It is reasonable to assume that the future 

average annual growth rate in the deflator for each of these categories of government investment 

40 For the 2022 Trustees Report alternative II, the Trustees assumed that the ultimate average annual 

nominal rates of increase in the average compensation for all employees and in the CPI were 3.66 and 2.4 percent, 

respectively. 

41 OCACT assumes the size of the active military remains constant throughout the projection period, rather 

than increasing proportionally with the civilian employment. This implies a gradual shift in weights between civilian 

government employment and the military and, since the average military compensation is higher, a slightly slower 

average growth in government compensation. However, the effect is small. 
 Price Inflation, Page 16 

will be equal to the expected future average annual growth rate in the corresponding categories 

of private investment. Thus, OCACT also assumes the future average annual growth rates in the 

deflator for government investment will be 2.35 percent for investment in structures, 0.17 

percent for investment in equipment, and 0.65 percent for investment in intellectual property. 

Using rough averages over the 1979 to 2019 period, OCACT assumes the future ratio of 

government investment components to total government investment will be about 0.45 for 

structures, about 0.25 for equipment, and about 0.30 for intellectual property. Thus, the assumed 

ultimate average annual growth rate for PGDP_GI is 1.30 percent (i.e., 2.35 * 0.45 + 0.17 * 0.25 

+ 0.65 * 0.30). 

Finally, the historical proportions of government consumption and investment expenditures over 

the last four economic cycles (40-year period from 1979 to 2019) averaged about 79 and 21 

percent of total government expenditures, respectively. OCACT assumes that the future 

proportions of government consumption and investment expenditures will also be 79 and 21 

percent of total government expenditures, respectively. Hence, the assumed ultimate average 

annual rate of increase in the PGDP_G is 2.79 percent (i.e., 3.19 * 0.79 + 1.30 * 0.21). 

2.4.1.4 Ultimate Assumption for the GDP Deflator 

The assumed annual growth rates for the components of the GDP deflator, and corresponding 

weights, result in an assumed average annual growth rate of 2.05 percent for the intermediate 

assumption. The 2.05 percent is approximately equal to the sum of the PGDP_C component of 

2.1 percent times its weight of 0.63, the PGDP_I component of 1.16 percent times its weight of 

0.18, and the PGDP_G component of 2.79 percent and its weight of 0.19. For alternatives I and 

III the assumptions are 2.75 percent and 1.35 percent, respectively. 

The assumed annual increase in the GDP deflator for the 2023 Trustees Report is unchanged 

from that used in the 2022 Trustees Report. 

2.5 Price Differential 

The price differential is defined as the annual growth rate in the PGDP less the annual growth 

rate in the CPI-W. For the 2023 Trustees Report, the assumed ultimate price differential 

is -0.25, -0.35, and -0.45 percentage point for alternative I, II, and III, respectively. 

For alternative II, the ultimate price differential of -0.35 percentage point is the sum of -0.30 

percentage point due to the difference in computational methods and -0.05 percentage point due 

to coverage differences between the PGDP and CPI-W. These values are unchanged from those 

used in the 2022 Trustees Report. 

2.6 Projections from Other Sources 

At the time assumptions were developed, the following projections from other sources were 

available. 

IHS Markit provided projections through 2052 in its August 2022 30-year trend forecast (see The 

30-Year Focus, Third Quarter, August 2022). Over the 20-year period from 2032 to 2052, IHS 
 Price Inflation, Page 17 

Markit projected an average annual rate of increase of 2.20 percent for the CPI and 2.17 percent 

for the PGDP, with a resulting price differential of -0.03 percentage point (2.17 – 2.20). Moody’s 

Analytics provided projections through 2052 in its September 2022 forecast. Over the 20-year 

period from 2032 to 2052, Moody’s Analytics projected an average annual growth rate of 2.39 

percent for the CPI-W and 2.01 percent for the PGDP, for a price differential of -0.38 percentage 

point (2.01 – 2.39). 

The Office of Management and Budget (OMB) Mid-Session Review to the Fiscal Year 2023 

Budget included projections through 2032. OMB’s annual growth rates for the PGDP and CPI-W 

(and CPI-U) for 2032 were 2.10 and 2.30 percent, respectively. Thus, OMB projected a price 

differential of -0.20 percentage point (i.e., 2.10 – 2.30). The Congressional Budget Office (CBO) 

July 2022 report, The 2022 Long-Term Budget Outlook, included projections through 2052. 

CBO’s annual growth rates for the PGDP and CPI-U for 2032-2052 were 2.02 and 2.30 percent, 

respectively. Thus, CBO projected an average annual price differential of -0.28 percentage point 

(i.e., 2.02 – 2.30 for the period. 

The Social Security Advisory Board’s 2019 Technical Panel on Assumptions and Methods 

recommended assuming an ultimate (i.e., long-range average) annual rate of increase in the 

CPI-W of 2.4 percent for alternative II, and a price differential of -0.35 percentage point. The 

prior technical panel, which met in 2015, recommended an ultimate annual rate of increase in the 

CPI-W of 2.5 percent for alternative II, and a price differential of -0.4 percentage point.
Price Inflation, Page 18 

Table 2.5: Adjusted CPI-W: Compound Annual Rates of Growth (%) Base Year = 1982-1984 

From

To Variable 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 

1961 35.301962 35.58 0.801963 35.98 0.96 1.121964 36.37 1.00 1.11 1.101965 36.88 1.10 1.21 1.25 1.401966 37.86 1.41 1.56 1.71 2.02 2.641967 38.94 1.65 1.82 2.00 2.30 2.75 2.871968 40.29 1.91 2.10 2.29 2.59 2.99 3.17 3.481969 42.00 2.20 2.40 2.61 2.92 3.30 3.53 3.86 4.241970 43.94 2.46 2.67 2.90 3.20 3.56 3.80 4.11 4.42 4.611971 45.73 2.62 2.83 3.04 3.33 3.65 3.85 4.10 4.31 4.34 4.081972 47.16 2.67 2.86 3.05 3.30 3.58 3.73 3.91 4.01 3.94 3.60 3.131973 49.98 2.94 3.14 3.34 3.59 3.87 4.05 4.25 4.40 4.44 4.39 4.54 5.981974 54.92 3.46 3.68 3.92 4.21 4.52 4.76 5.03 5.30 5.51 5.73 6.29 7.91 9.871975 59.26 3.77 4.00 4.25 4.54 4.86 5.10 5.39 5.66 5.90 6.16 6.69 7.91 8.88 7.901976 62.52 3.88 4.11 4.34 4.62 4.91 5.15 5.40 5.64 5.85 6.05 6.45 7.30 7.75 6.70 5.511977 66.35 4.02 4.24 4.47 4.73 5.02 5.23 5.47 5.70 5.88 6.06 6.40 7.07 7.34 6.51 5.82 6.131978 70.75 4.18 4.39 4.61 4.87 5.14 5.35 5.58 5.79 5.96 6.14 6.43 6.99 7.20 6.54 6.09 6.38 1979 77.52 4.47 4.69 4.91 5.17 5.45 5.67 5.91 6.13 6.32 6.51 6.82 7.36 7.59 7.14 6.95 7.43 1980 86.13 4.81 5.03 5.27 5.54 5.82 6.05 6.30 6.53 6.75 6.96 7.29 7.82 8.08 7.79 7.77 8.34 1981 94.21 5.03 5.26 5.49 5.76 6.04 6.27 6.51 6.75 6.96 7.18 7.49 7.99 8.25 8.01 8.03 8.55 1982 99.76 5.07 5.29 5.51 5.77 6.03 6.24 6.47 6.69 6.88 7.07 7.35 7.78 7.98 7.75 7.73 8.10 1983 103.92 5.03 5.24 5.45 5.68 5.92 6.12 6.33 6.52 6.68 6.85 7.08 7.45 7.59 7.34 7.27 7.53 1984 108.14 4.99 5.18 5.38 5.60 5.83 6.00 6.19 6.36 6.51 6.64 6.84 7.16 7.27 7.01 6.91 7.09 1985 111.77 4.92 5.10 5.29 5.49 5.70 5.86 6.03 6.19 6.31 6.42 6.59 6.86 6.94 6.67 6.55 6.67 1986 113.43 4.78 4.95 5.12 5.31 5.50 5.64 5.79 5.92 6.02 6.11 6.24 6.47 6.51 6.23 6.08 6.14 1987 117.26 4.73 4.89 5.05 5.22 5.40 5.53 5.67 5.78 5.87 5.94 6.06 6.26 6.28 6.01 5.85 5.88 1988 121.34 4.68 4.83 4.98 5.15 5.31 5.44 5.56 5.67 5.74 5.81 5.91 6.08 6.09 5.83 5.67 5.68 1989 126.61 4.67 4.81 4.96 5.12 5.27 5.39 5.51 5.60 5.67 5.73 5.82 5.98 5.98 5.73 5.57 5.58 1990 132.62 4.67 4.81 4.95 5.10 5.25 5.36 5.47 5.56 5.63 5.68 5.76 5.91 5.91 5.66 5.52 5.52 1991 137.31 4.63 4.77 4.90 5.04 5.19 5.29 5.39 5.48 5.53 5.58 5.65 5.79 5.77 5.54 5.39 5.39 1992 140.58 4.56 4.69 4.81 4.95 5.08 5.18 5.27 5.34 5.39 5.43 5.49 5.61 5.59 5.36 5.21 5.19 1993 143.88 4.49 4.61 4.73 4.86 4.98 5.07 5.16 5.22 5.26 5.29 5.35 5.45 5.43 5.20 5.05 5.03 1994 146.75 4.41 4.53 4.64 4.76 4.88 4.96 5.04 5.10 5.13 5.15 5.20 5.29 5.26 5.04 4.89 4.85 1995 150.36 4.35 4.46 4.57 4.68 4.80 4.87 4.94 5.00 5.03 5.04 5.08 5.17 5.13 4.91 4.77 4.73 1996 154.24 4.30 4.41 4.51 4.62 4.72 4.79 4.86 4.91 4.94 4.95 4.98 5.06 5.02 4.81 4.66 4.62 1997 157.53 4.24 4.34 4.44 4.54 4.64 4.71 4.77 4.81 4.83 4.84 4.87 4.94 4.90 4.69 4.54 4.50 1998 159.31 4.16 4.25 4.34 4.44 4.53 4.59 4.65 4.69 4.70 4.71 4.73 4.79 4.75 4.54 4.39 4.34 1999 162.68 4.10 4.19 4.28 4.37 4.46 4.52 4.57 4.60 4.62 4.62 4.64 4.69 4.64 4.44 4.30 4.25 2000 168.41 4.09 4.18 4.26 4.35 4.43 4.49 4.54 4.57 4.58 4.58 4.60 4.65 4.60 4.40 4.27 4.22 2001 173.00 4.05 4.14 4.22 4.30 4.39 4.44 4.48 4.51 4.52 4.52 4.53 4.58 4.53 4.34 4.21 4.16 2002 175.39 3.99 4.07 4.15 4.23 4.30 4.35 4.39 4.42 4.43 4.42 4.43 4.48 4.42 4.23 4.10 4.05 2003 179.26 3.94 4.02 4.10 4.17 4.25 4.29 4.33 4.36 4.36 4.35 4.36 4.40 4.35 4.16 4.03 3.98 2004 184.02 3.91 3.99 4.06 4.14 4.21 4.25 4.29 4.31 4.31 4.30 4.31 4.35 4.29 4.11 3.98 3.93 2005 190.50 3.91 3.98 4.05 4.12 4.19 4.23 4.27 4.29 4.29 4.28 4.29 4.32 4.27 4.09 3.97 3.92 2006 196.61 3.89 3.96 4.03 4.10 4.17 4.20 4.24 4.26 4.26 4.25 4.26 4.29 4.24 4.07 3.94 3.89 2007 202.24 3.87 3.94 4.00 4.07 4.13 4.17 4.20 4.22 4.22 4.21 4.22 4.25 4.20 4.03 3.91 3.86 2008 210.51 3.87 3.94 4.00 4.07 4.13 4.17 4.20 4.22 4.22 4.21 4.21 4.24 4.19 4.03 3.92 3.87 2009 209.11 3.78 3.84 3.90 3.96 4.02 4.05 4.08 4.10 4.09 4.08 4.08 4.11 4.06 3.89 3.78 3.73 2010 213.45 3.74 3.80 3.86 3.92 3.98 4.01 4.04 4.05 4.04 4.03 4.03 4.05 4.00 3.84 3.73 3.68 2011 221.03 3.74 3.80 3.85 3.91 3.97 4.00 4.02 4.04 4.03 4.02 4.02 4.04 3.99 3.84 3.72 3.67 2012 225.78 3.71 3.76 3.82 3.88 3.93 3.96 3.98 3.99 3.99 3.97 3.97 3.99 3.94 3.79 3.68 3.63 2013 228.91 3.66 3.72 3.77 3.83 3.88 3.90 3.93 3.94 3.93 3.91 3.91 3.93 3.88 3.73 3.62 3.57 2014 232.51 3.62 3.68 3.73 3.78 3.83 3.85 3.88 3.88 3.88 3.86 3.85 3.87 3.82 3.67 3.57 3.52 2015 231.68 3.55 3.60 3.65 3.70 3.74 3.77 3.79 3.79 3.78 3.76 3.76 3.77 3.72 3.57 3.47 3.42 2016 234.01 3.50 3.55 3.60 3.64 3.69 3.71 3.73 3.73 3.72 3.70 3.69 3.71 3.66 3.51 3.41 3.35 2017 239.03 3.47 3.52 3.57 3.62 3.66 3.68 3.70 3.70 3.69 3.67 3.66 3.67 3.62 3.48 3.38 3.33 2018 245.11 3.46 3.51 3.55 3.60 3.64 3.66 3.67 3.68 3.67 3.65 3.64 3.65 3.60 3.46 3.36 3.31 2019 249.19 3.43 3.47 3.52 3.56 3.60 3.62 3.63 3.64 3.63 3.61 3.60 3.61 3.55 3.42 3.32 3.27 2020 252.25 3.39 3.43 3.48 3.52 3.56 3.57 3.59 3.59 3.58 3.56 3.55 3.56 3.50 3.37 3.27 3.22 2021 265.51 3.42 3.47 3.51 3.55 3.59 3.61 3.62 3.62 3.61 3.59 3.58 3.59 3.54 3.41 3.31 3.27 
Price Inflation, Page 19 

Table 2.5 (continued): Adjusted CPI-W: Compound Annual Rates of Growth (%) Base Year = 1982-1984 

From

To Variable 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 

1981 94.211982 99.76 5.901983 103.92 5.03 4.171984 108.14 4.71 4.12 4.061985 111.77 4.37 3.86 3.71 3.361986 113.43 3.78 3.26 2.96 2.42 1.481987 117.26 3.72 3.29 3.07 2.74 2.43 3.381988 121.34 3.68 3.32 3.15 2.92 2.78 3.43 3.481989 126.61 3.76 3.46 3.35 3.20 3.16 3.73 3.91 4.341990 132.62 3.87 3.62 3.54 3.46 3.48 3.98 4.19 4.54 4.751991 137.31 3.84 3.61 3.54 3.47 3.49 3.90 4.02 4.21 4.14 3.541992 140.58 3.71 3.49 3.41 3.33 3.33 3.64 3.69 3.75 3.55 2.96 2.381993 143.88 3.59 3.39 3.31 3.22 3.21 3.46 3.47 3.47 3.25 2.75 2.37 2.351994 146.75 3.47 3.27 3.19 3.10 3.07 3.27 3.26 3.22 3.00 2.56 2.24 2.17 1.991995 150.36 3.40 3.21 3.13 3.04 3.01 3.18 3.16 3.11 2.91 2.54 2.29 2.27 2.22 2.461996 154.24 3.34 3.16 3.08 3.00 2.97 3.12 3.09 3.04 2.86 2.55 2.35 2.35 2.34 2.52 2.581997 157.53 3.27 3.09 3.02 2.94 2.90 3.03 3.00 2.94 2.77 2.49 2.32 2.30 2.29 2.39 2.36 2.141998 159.31 3.14 2.97 2.89 2.81 2.76 2.87 2.82 2.76 2.59 2.32 2.15 2.11 2.06 2.08 1.95 1.63 1999 162.68 3.08 2.92 2.84 2.76 2.72 2.81 2.77 2.70 2.54 2.30 2.14 2.11 2.07 2.08 1.99 1.79 2000 168.41 3.10 2.95 2.88 2.81 2.77 2.86 2.82 2.77 2.63 2.42 2.29 2.28 2.27 2.32 2.29 2.22 2001 173.00 3.09 2.94 2.87 2.80 2.77 2.85 2.82 2.77 2.64 2.45 2.34 2.33 2.33 2.38 2.37 2.32 2002 175.39 3.00 2.86 2.79 2.72 2.69 2.76 2.72 2.67 2.54 2.36 2.25 2.24 2.22 2.25 2.22 2.16 2003 179.26 2.97 2.83 2.76 2.70 2.66 2.73 2.69 2.64 2.52 2.35 2.25 2.23 2.22 2.25 2.22 2.17 2004 184.02 2.95 2.82 2.76 2.69 2.66 2.72 2.69 2.64 2.52 2.37 2.28 2.27 2.26 2.29 2.27 2.23 2005 190.50 2.98 2.85 2.79 2.73 2.70 2.77 2.73 2.69 2.59 2.44 2.37 2.37 2.37 2.40 2.39 2.37 2006 196.61 2.99 2.87 2.81 2.75 2.73 2.79 2.76 2.72 2.62 2.49 2.42 2.43 2.43 2.47 2.47 2.46 2007 202.24 2.98 2.87 2.81 2.76 2.73 2.79 2.76 2.73 2.64 2.51 2.45 2.45 2.46 2.50 2.50 2.49 2008 210.51 3.02 2.91 2.86 2.81 2.79 2.85 2.83 2.79 2.71 2.60 2.55 2.56 2.57 2.61 2.62 2.63 2009 209.11 2.89 2.78 2.73 2.67 2.64 2.70 2.66 2.63 2.54 2.43 2.36 2.36 2.36 2.39 2.38 2.37 2010 213.45 2.86 2.75 2.70 2.65 2.62 2.67 2.64 2.60 2.52 2.41 2.35 2.35 2.35 2.37 2.36 2.35 2011 221.03 2.88 2.78 2.73 2.68 2.66 2.70 2.68 2.64 2.57 2.46 2.41 2.41 2.41 2.44 2.44 2.43 2012 225.78 2.86 2.76 2.71 2.66 2.64 2.68 2.66 2.62 2.55 2.45 2.40 2.40 2.40 2.42 2.42 2.41 2013 228.91 2.81 2.72 2.67 2.62 2.59 2.63 2.61 2.57 2.50 2.40 2.35 2.35 2.35 2.37 2.36 2.35 2014 232.51 2.78 2.68 2.63 2.58 2.56 2.60 2.57 2.53 2.46 2.37 2.32 2.31 2.31 2.33 2.32 2.31 2015 231.68 2.68 2.59 2.54 2.49 2.46 2.49 2.46 2.42 2.35 2.26 2.20 2.20 2.19 2.20 2.19 2.16 2016 234.01 2.63 2.54 2.49 2.44 2.41 2.44 2.41 2.37 2.30 2.21 2.16 2.15 2.14 2.14 2.13 2.11 2017 239.03 2.62 2.53 2.48 2.43 2.40 2.43 2.40 2.37 2.30 2.21 2.15 2.15 2.14 2.14 2.13 2.11 2018 245.11 2.62 2.53 2.48 2.44 2.41 2.44 2.41 2.37 2.30 2.22 2.17 2.16 2.15 2.16 2.15 2.13 2019 249.19 2.59 2.50 2.46 2.41 2.39 2.41 2.38 2.35 2.28 2.20 2.15 2.14 2.13 2.14 2.13 2.11 2020 252.25 2.56 2.47 2.43 2.38 2.35 2.38 2.35 2.31 2.25 2.17 2.12 2.11 2.10 2.11 2.09 2.07 2021 265.51 2.62 2.54 2.50 2.46 2.43 2.46 2.43 2.40 2.34 2.26 2.22 2.22 2.21 2.22 2.21 2.20 

From

To Variable 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 

2001 173.002002 175.39 1.382003 179.26 1.79 2.212004 184.02 2.08 2.43 2.652005 190.50 2.44 2.79 3.09 3.522006 196.61 2.59 2.90 3.13 3.37 3.212007 202.24 2.64 2.89 3.06 3.20 3.04 2.862008 210.51 2.84 3.09 3.27 3.42 3.39 3.47 4.092009 209.11 2.40 2.54 2.60 2.59 2.36 2.07 1.68 -0.672010 213.45 2.36 2.49 2.53 2.50 2.30 2.08 1.81 0.70 2.082011 221.03 2.48 2.60 2.65 2.65 2.51 2.37 2.25 1.64 2.81 3.552012 225.78 2.45 2.56 2.60 2.59 2.46 2.33 2.23 1.77 2.59 2.85 2.152013 228.91 2.36 2.45 2.47 2.46 2.32 2.20 2.09 1.69 2.29 2.36 1.77 1.382014 232.51 2.30 2.38 2.39 2.37 2.24 2.12 2.01 1.67 2.14 2.16 1.70 1.48 1.572015 231.68 2.11 2.16 2.16 2.12 1.98 1.84 1.71 1.38 1.72 1.65 1.18 0.86 0.60 -0.362016 234.01 2.03 2.08 2.07 2.02 1.89 1.76 1.63 1.33 1.62 1.54 1.15 0.90 0.74 0.32 1.012017 239.03 2.04 2.09 2.08 2.03 1.91 1.79 1.69 1.42 1.69 1.63 1.31 1.15 1.09 0.93 1.57 2.152018 245.11 2.07 2.11 2.11 2.07 1.96 1.85 1.76 1.53 1.78 1.74 1.49 1.38 1.38 1.33 1.90 2.35 2019 249.19 2.05 2.09 2.08 2.04 1.94 1.84 1.75 1.55 1.77 1.73 1.51 1.42 1.42 1.39 1.84 2.12 2020 252.25 2.00 2.04 2.03 1.99 1.89 1.80 1.71 1.52 1.72 1.68 1.48 1.40 1.40 1.37 1.72 1.89 2021 265.51 2.16 2.21 2.21 2.18 2.10 2.02 1.96 1.80 2.01 2.00 1.85 1.82 1.87 1.91 2.30 2.56 
Price Inflation, Page 20 

Table 2.6: Adjusted GDP Deflator: Compound Annual Rates of Growth (%) Base Year = 2012 

From

To Variable 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 

1961 17.101962 17.29 1.111963 17.47 1.08 1.041964 17.71 1.19 1.23 1.421965 18.02 1.32 1.39 1.57 1.731966 18.50 1.60 1.72 1.94 2.21 2.691967 19.02 1.79 1.93 2.16 2.40 2.74 2.791968 19.81 2.13 2.30 2.55 2.84 3.21 3.47 4.151969 20.76 2.46 2.65 2.92 3.23 3.61 3.91 4.48 4.801970 21.84 2.76 2.96 3.24 3.55 3.92 4.22 4.71 4.98 5.171971 22.92 2.98 3.18 3.46 3.75 4.09 4.37 4.77 4.98 5.07 4.971972 23.89 3.09 3.29 3.54 3.81 4.11 4.35 4.66 4.79 4.78 4.59 4.221973 25.17 3.28 3.47 3.72 3.98 4.27 4.49 4.78 4.90 4.93 4.85 4.79 5.371974 27.40 3.70 3.91 4.18 4.46 4.77 5.03 5.35 5.55 5.70 5.84 6.13 7.10 8.871975 29.92 4.08 4.31 4.59 4.88 5.20 5.48 5.82 6.06 6.28 6.50 6.89 7.79 9.02 9.181976 31.53 4.17 4.39 4.65 4.92 5.22 5.47 5.78 5.98 6.15 6.32 6.59 7.19 7.80 7.27 5.401977 33.46 4.29 4.50 4.75 5.01 5.29 5.53 5.81 6.00 6.15 6.29 6.51 6.97 7.38 6.88 5.75 6.111978 35.78 4.44 4.65 4.90 5.15 5.42 5.65 5.91 6.09 6.23 6.37 6.57 6.96 7.29 6.89 6.14 6.52 1979 38.74 4.65 4.86 5.10 5.36 5.62 5.85 6.11 6.29 6.44 6.58 6.78 7.15 7.45 7.17 6.68 7.10 1980 42.25 4.88 5.09 5.33 5.58 5.85 6.07 6.33 6.51 6.67 6.82 7.03 7.39 7.68 7.48 7.15 7.59 1981 46.24 5.10 5.31 5.56 5.81 6.07 6.30 6.55 6.74 6.90 7.06 7.27 7.62 7.90 7.76 7.53 7.96 1982 49.10 5.15 5.36 5.59 5.83 6.07 6.29 6.53 6.70 6.84 6.99 7.17 7.47 7.71 7.56 7.33 7.66 1983 51.02 5.10 5.29 5.51 5.73 5.95 6.15 6.36 6.51 6.63 6.75 6.90 7.14 7.32 7.15 6.90 7.12 1984 52.86 5.03 5.21 5.41 5.62 5.83 6.00 6.20 6.33 6.43 6.52 6.64 6.84 6.98 6.79 6.53 6.67 1985 54.53 4.95 5.12 5.31 5.50 5.69 5.85 6.03 6.14 6.22 6.29 6.39 6.56 6.66 6.46 6.19 6.28 1986 55.64 4.83 4.99 5.17 5.34 5.52 5.66 5.81 5.90 5.97 6.02 6.09 6.23 6.29 6.08 5.80 5.84 1987 57.00 4.74 4.89 5.05 5.21 5.37 5.50 5.64 5.72 5.77 5.81 5.86 5.97 6.01 5.80 5.52 5.53 1988 59.02 4.70 4.84 4.99 5.14 5.29 5.41 5.54 5.61 5.65 5.68 5.72 5.82 5.85 5.63 5.37 5.36 1989 61.33 4.67 4.80 4.95 5.09 5.24 5.35 5.47 5.53 5.56 5.59 5.62 5.70 5.72 5.52 5.26 5.25 1990 63.64 4.64 4.76 4.91 5.04 5.18 5.28 5.39 5.45 5.48 5.49 5.52 5.59 5.61 5.41 5.16 5.14 1991 65.78 4.59 4.72 4.85 4.98 5.11 5.20 5.31 5.36 5.38 5.39 5.41 5.48 5.48 5.29 5.05 5.02 1992 67.28 4.52 4.63 4.76 4.88 5.00 5.09 5.18 5.23 5.24 5.25 5.26 5.31 5.31 5.12 4.88 4.85 1993 68.87 4.45 4.56 4.68 4.79 4.91 4.99 5.07 5.11 5.12 5.12 5.13 5.17 5.16 4.97 4.74 4.70 1994 70.34 4.38 4.48 4.60 4.70 4.81 4.88 4.96 4.99 5.00 5.00 5.00 5.03 5.02 4.83 4.60 4.56 1995 71.82 4.31 4.41 4.52 4.62 4.72 4.79 4.86 4.89 4.89 4.88 4.87 4.90 4.88 4.70 4.48 4.43 1996 73.13 4.24 4.33 4.43 4.53 4.62 4.69 4.75 4.77 4.77 4.76 4.75 4.77 4.75 4.56 4.35 4.30 1997 74.40 4.17 4.26 4.35 4.44 4.53 4.59 4.65 4.67 4.66 4.65 4.63 4.65 4.62 4.44 4.23 4.17 1998 75.22 4.09 4.17 4.26 4.34 4.43 4.48 4.53 4.55 4.54 4.52 4.50 4.51 4.48 4.30 4.09 4.03 1999 76.27 4.01 4.09 4.18 4.26 4.34 4.39 4.44 4.44 4.43 4.41 4.39 4.39 4.36 4.18 3.98 3.92 2000 78.02 3.97 4.05 4.13 4.20 4.28 4.32 4.37 4.38 4.36 4.34 4.31 4.32 4.28 4.11 3.91 3.85 2001 79.81 3.93 4.00 4.08 4.15 4.22 4.26 4.31 4.31 4.30 4.27 4.25 4.25 4.21 4.04 3.85 3.78 2002 81.01 3.87 3.94 4.01 4.08 4.15 4.19 4.23 4.23 4.21 4.18 4.16 4.15 4.11 3.95 3.76 3.70 2003 82.64 3.82 3.89 3.96 4.03 4.09 4.13 4.16 4.16 4.15 4.12 4.09 4.08 4.04 3.88 3.70 3.63 2004 84.84 3.80 3.86 3.93 3.99 4.05 4.09 4.12 4.12 4.10 4.07 4.05 4.04 4.00 3.84 3.66 3.60 2005 87.49 3.78 3.84 3.91 3.97 4.03 4.06 4.10 4.10 4.08 4.05 4.02 4.01 3.97 3.82 3.64 3.58 2006 90.21 3.77 3.83 3.89 3.95 4.01 4.04 4.07 4.07 4.05 4.02 3.99 3.99 3.94 3.79 3.62 3.57 2007 92.65 3.74 3.80 3.87 3.92 3.98 4.01 4.04 4.03 4.01 3.98 3.96 3.95 3.91 3.76 3.60 3.54 2008 94.40 3.70 3.76 3.82 3.88 3.93 3.96 3.98 3.98 3.96 3.93 3.90 3.89 3.85 3.71 3.54 3.49 2009 95.02 3.64 3.69 3.75 3.80 3.85 3.88 3.90 3.90 3.88 3.84 3.81 3.80 3.76 3.62 3.46 3.40 2010 96.16 3.59 3.64 3.70 3.75 3.79 3.82 3.84 3.83 3.81 3.78 3.75 3.73 3.69 3.55 3.39 3.33 2011 98.16 3.56 3.61 3.66 3.71 3.75 3.78 3.80 3.79 3.77 3.73 3.70 3.69 3.65 3.51 3.36 3.30 2012 100.00 3.52 3.57 3.63 3.67 3.71 3.74 3.76 3.75 3.72 3.69 3.66 3.64 3.60 3.47 3.32 3.26 2013 101.77 3.49 3.54 3.59 3.63 3.67 3.69 3.71 3.70 3.68 3.64 3.61 3.60 3.55 3.42 3.27 3.22 2014 103.66 3.46 3.50 3.55 3.60 3.64 3.66 3.67 3.66 3.64 3.60 3.57 3.56 3.51 3.38 3.24 3.18 2015 104.66 3.41 3.46 3.50 3.54 3.58 3.60 3.62 3.60 3.58 3.54 3.51 3.50 3.45 3.32 3.18 3.12 2016 105.70 3.37 3.41 3.46 3.49 3.53 3.55 3.56 3.55 3.52 3.49 3.46 3.44 3.39 3.27 3.13 3.07 2017 107.74 3.34 3.38 3.43 3.47 3.50 3.51 3.53 3.52 3.49 3.45 3.42 3.40 3.36 3.24 3.10 3.04 2018 110.33 3.33 3.37 3.41 3.45 3.48 3.49 3.51 3.49 3.47 3.43 3.40 3.38 3.34 3.22 3.08 3.03 2019 112.28 3.30 3.34 3.38 3.41 3.45 3.46 3.47 3.46 3.43 3.40 3.37 3.35 3.30 3.18 3.05 3.00 2020 113.74 3.26 3.30 3.34 3.38 3.41 3.42 3.43 3.42 3.39 3.36 3.32 3.30 3.26 3.14 3.01 2.96 2021 118.92 3.29 3.32 3.36 3.40 3.43 3.44 3.45 3.44 3.41 3.38 3.35 3.33 3.29 3.17 3.05 2.99 
Price Inflation, Page 21 

 Table 2.6 (continued): Adjusted GDP Deflator: Compound Annual Rates of Growth (%) Base Year = 2012

From

To Variable 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 

1981 46.241982 49.10 6.181983 51.02 5.04 3.911984 52.86 4.56 3.76 3.611985 54.53 4.21 3.56 3.39 3.161986 55.64 3.77 3.18 2.93 2.59 2.031987 57.00 3.55 3.03 2.81 2.55 2.24 2.461988 59.02 3.55 3.11 2.96 2.79 2.67 2.99 3.531989 61.33 3.59 3.23 3.12 3.02 2.98 3.30 3.73 3.921990 63.64 3.61 3.29 3.21 3.14 3.14 3.41 3.74 3.84 3.761991 65.78 3.59 3.30 3.23 3.17 3.17 3.40 3.64 3.68 3.56 3.361992 67.28 3.47 3.20 3.12 3.06 3.05 3.22 3.37 3.33 3.13 2.82 2.281993 68.87 3.38 3.12 3.05 2.98 2.96 3.10 3.20 3.14 2.94 2.67 2.33 2.371994 70.34 3.28 3.04 2.96 2.90 2.87 2.97 3.05 2.97 2.78 2.54 2.26 2.25 2.131995 71.82 3.20 2.97 2.89 2.83 2.79 2.88 2.93 2.84 2.67 2.45 2.22 2.20 2.12 2.101996 73.13 3.10 2.89 2.81 2.74 2.70 2.77 2.81 2.72 2.55 2.35 2.14 2.11 2.02 1.96 1.831997 74.40 3.02 2.81 2.73 2.66 2.62 2.68 2.70 2.61 2.44 2.26 2.07 2.03 1.95 1.89 1.78 1.731998 75.22 2.90 2.70 2.62 2.55 2.50 2.54 2.55 2.46 2.29 2.11 1.93 1.88 1.78 1.69 1.55 1.42 1999 76.27 2.82 2.62 2.55 2.47 2.43 2.46 2.46 2.36 2.20 2.03 1.87 1.81 1.71 1.63 1.52 1.41 2000 78.02 2.79 2.61 2.53 2.46 2.42 2.44 2.44 2.35 2.21 2.06 1.91 1.87 1.80 1.74 1.67 1.63 2001 79.81 2.77 2.59 2.52 2.45 2.41 2.43 2.43 2.35 2.22 2.08 1.95 1.92 1.86 1.82 1.77 1.76 2002 81.01 2.71 2.54 2.46 2.40 2.36 2.38 2.37 2.29 2.16 2.03 1.91 1.88 1.82 1.78 1.74 1.72 2003 82.64 2.67 2.51 2.44 2.38 2.34 2.35 2.35 2.27 2.15 2.03 1.92 1.89 1.84 1.81 1.77 1.76 2004 84.84 2.67 2.52 2.45 2.39 2.35 2.37 2.37 2.29 2.19 2.08 1.98 1.95 1.91 1.89 1.87 1.87 2005 87.49 2.69 2.54 2.48 2.43 2.39 2.41 2.41 2.34 2.25 2.14 2.06 2.04 2.01 2.00 1.99 2.01 2006 90.21 2.71 2.57 2.51 2.46 2.43 2.45 2.45 2.39 2.30 2.21 2.13 2.12 2.10 2.09 2.09 2.12 2007 92.65 2.71 2.57 2.52 2.47 2.44 2.46 2.46 2.40 2.32 2.23 2.16 2.16 2.14 2.14 2.15 2.17 2008 94.40 2.68 2.55 2.49 2.45 2.41 2.43 2.43 2.38 2.30 2.21 2.15 2.14 2.12 2.12 2.13 2.15 2009 95.02 2.61 2.48 2.42 2.37 2.34 2.35 2.35 2.29 2.21 2.13 2.06 2.05 2.03 2.02 2.02 2.03 2010 96.16 2.56 2.43 2.38 2.33 2.29 2.31 2.30 2.24 2.16 2.09 2.02 2.00 1.98 1.97 1.97 1.97 2011 98.16 2.54 2.42 2.36 2.32 2.29 2.30 2.29 2.24 2.16 2.09 2.02 2.01 1.99 1.98 1.97 1.98 2012 100.00 2.52 2.40 2.35 2.30 2.27 2.28 2.27 2.22 2.15 2.08 2.01 2.00 1.98 1.97 1.97 1.97 2013 101.77 2.50 2.38 2.33 2.28 2.25 2.26 2.25 2.20 2.13 2.06 2.00 1.99 1.97 1.96 1.96 1.96 2014 103.66 2.48 2.36 2.31 2.27 2.24 2.25 2.24 2.19 2.12 2.05 2.00 1.98 1.97 1.96 1.95 1.96 2015 104.66 2.43 2.32 2.27 2.23 2.20 2.20 2.19 2.14 2.08 2.01 1.95 1.94 1.92 1.91 1.90 1.90 2016 105.70 2.39 2.28 2.23 2.19 2.16 2.16 2.15 2.10 2.04 1.97 1.92 1.90 1.88 1.87 1.86 1.86 2017 107.74 2.38 2.27 2.22 2.18 2.15 2.15 2.14 2.10 2.03 1.97 1.92 1.90 1.88 1.87 1.86 1.86 2018 110.33 2.38 2.27 2.23 2.19 2.16 2.16 2.15 2.11 2.05 1.98 1.93 1.92 1.90 1.89 1.88 1.89 2019 112.28 2.36 2.26 2.22 2.18 2.15 2.15 2.14 2.10 2.04 1.98 1.93 1.91 1.90 1.89 1.88 1.88 2020 113.74 2.33 2.24 2.19 2.15 2.12 2.13 2.12 2.07 2.01 1.95 1.91 1.89 1.88 1.87 1.86 1.86 2021 118.92 2.39 2.29 2.25 2.22 2.19 2.19 2.19 2.15 2.09 2.04 1.99 1.98 1.97 1.96 1.96 1.96 

From

To Variable 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 

2001 79.812002 81.01 1.502003 82.64 1.75 2.002004 84.84 2.06 2.34 2.672005 87.49 2.32 2.60 2.90 3.122006 90.21 2.48 2.73 2.97 3.12 3.112007 92.65 2.52 2.72 2.90 2.98 2.91 2.712008 94.40 2.43 2.58 2.70 2.70 2.57 2.29 1.882009 95.02 2.20 2.30 2.35 2.29 2.09 1.75 1.27 0.662010 96.16 2.09 2.17 2.19 2.11 1.91 1.61 1.25 0.93 1.212011 98.16 2.09 2.16 2.18 2.10 1.94 1.70 1.45 1.31 1.64 2.072012 100.00 2.07 2.13 2.14 2.08 1.93 1.73 1.54 1.45 1.72 1.98 1.882013 101.77 2.05 2.10 2.10 2.04 1.91 1.74 1.58 1.52 1.73 1.91 1.82 1.772014 103.66 2.03 2.08 2.08 2.02 1.90 1.75 1.62 1.57 1.76 1.89 1.84 1.81 1.862015 104.66 1.95 1.99 1.99 1.93 1.81 1.66 1.54 1.49 1.62 1.71 1.62 1.53 1.41 0.962016 105.70 1.89 1.92 1.91 1.85 1.73 1.60 1.47 1.42 1.53 1.59 1.49 1.40 1.27 0.98 0.992017 107.74 1.89 1.92 1.91 1.86 1.75 1.63 1.52 1.48 1.58 1.64 1.56 1.50 1.44 1.30 1.46 1.932018 110.33 1.92 1.95 1.95 1.89 1.80 1.69 1.60 1.57 1.67 1.73 1.68 1.65 1.63 1.57 1.77 2.16 2019 112.28 1.91 1.94 1.93 1.89 1.80 1.70 1.61 1.59 1.68 1.74 1.69 1.67 1.65 1.61 1.77 2.03 2020 113.74 1.88 1.90 1.90 1.85 1.76 1.67 1.59 1.57 1.65 1.69 1.65 1.62 1.60 1.56 1.68 1.85 2021 118.92 2.01 2.04 2.04 2.01 1.94 1.86 1.80 1.79 1.89 1.95 1.94 1.94 1.97 1.98 2.15 2.39 
Price Inflation, Page 22 

2.7 Appendix 

OCACT adjustments to the published CPI-W annual growth rates. Between 1978 and 2019, 

OCACT set the annual growth rate in the adjusted CPI-W to the growth rate in the published 

CPI-W plus an annual growth rate differential, defined as the growth rate in the CPI-U “Research 

Series” (CPI-U-RS) less the growth rate in the published CPI-U. BLS constructs the CPI-U-RS 

by recalculating the CPI-U back to 1978 using present methodology (see 

https://www.bls.gov/cpi/research-series/home.htm). An exception to this specification was made 

because BLS introduced an improvement for “rental equivalence” in 1983 for the CPI-U, but not 

until 1985 for the CPI-W. Thus, for 1983 and 1984, the annual percent change in the adjusted 

CPI-W is defined as the percent change in the CPI-U-RS less 0.1 percentage point. This 

adjustment reflects the belief that, had the introductions been simultaneous in 1983, the observed 

differences in growth between the two inflation measures would have been equal to their 

published compound average annual difference (0.1 percentage point) over the post-1985 period. 

Between 1967 and 1977, the annual growth rate in the adjusted CPI-W was set to the growth rate 

in the published CPI-W less 0.2 percentage point plus an annual growth rate differential, defined 

as the growth rate in the CPI-U-X1 (a BLS “experimental series” that incorporates the 

improvement for rental equivalence into the historical CPI-U) less the growth rate in the actual 

published CPI-U. The 0.2 percentage point adjustment reflects a BLS estimate of the effect of 

introducing an improved geometric weighting formula into the CPI-W beginning in January 

1999. Finally, for 1966 and earlier, the annual growth rate in the adjusted CPI-W was set to the 

growth rate in the published CPI-W less the 0.2 percentage point adjustment for the improved 

geometric formula. 

OCACT adjustments to the published PGDP and real GDP (and therefore productivity) annual 

growth rates. As mentioned above, starting in January 1999, BLS introduced a new geometric 

weighting formula to the CPI, estimating that it would lower the future annual growth rate in the 

CPI by about 0.2 percentage point. BEA estimates that this change would have had a 50.0 

percent “feed-through” effect on the aggregate annual PGDP growth rate in the past. Thus, due 

to BLS’ introduction of an improved geometric weighting formula to the CPI, BEA lowered the 

annual growth rate in the aggregate PGDP by about 0.1 percentage point (0.2 * 50.0%). In 

addition, since the BLS improvement to the CPI does not alter the historical path of nominal 

GDP, BEA raised the annual real growth rate in the GDP by about 0.1 percentage point. 

However, BEA made these adjustments only back to 1978. Thus, to improve consistency, 

OCACT added the effect of this BLS improvement to the earlier data. That is, for 1978 and each 

earlier year, OCACT lowered the annual growth rate in the CPI by 0.2 percentage point, lowered 

the annual growth rate in the aggregate PGDP index by 0.1 percentage point, and raised the 

annual real growth rate in GDP, and therefore productivity, by 0.1 percentage point. 

Furthermore, a change in the CPI growth rate affects the PGDP through about 85.0% of the 

prices used to determine one of the components of the PGDP, that is, the GDP deflator for 

consumption (PGDP_C). Hence, the annual growth rate for the PGDP_C in 1978 and earlier was 

lowered by about 0.17 percent (0.2 * 0.85). 
Real Growth in Average OASDI Covered Wage, Page 1 

3. REAL GROWTH IN AVERAGE OASDI COVERED WAGE 

THE 2023 TRUSTEES REPORT 

OFFICE OF THE CHIEF ACTUARY, SOCIAL SECURITY ADMINISTRATION 

TABLE OF CONTENTS PAGE 

3 REAL GROWTH IN AVERAGE OASDI COVERED WAGE ........................................ 2

3.1 SUMMARY ...................................................................................................................................................... 2

3.2 DEFINITIONS AND PRESENTATIONAL CHANGES FROM LAST YEAR ................................................................. 2

3.3 MEASURES OF REAL GROWTH: ECONOMY-WIDE AND OASDI COVERED EARNINGS ..................................... 3

3.3.1 Productivity ............................................................................................................................................................ 6

3.3.2 Other Components: Links between Real Earnings and Productivity ...................................................................... 6

3.3.2.1 Ratio of Compensation to Nominal GDP ........................................................................................................... 7

3.3.2.2 Ratio of Earnings to Compensation.................................................................................................................... 8

3.3.2.3 Average Hours Worked.................................................................................................................................... 10

3.3.2.4 Ratio of PGDP to CPI-W ................................................................................................................................. 11

3.3.2.5 Total Links ....................................................................................................................................................... 11

3.4 PROJECTIONS FROM OTHER SOURCES ........................................................................................................... 12

3.5 APPENDIX ..................................................................................................................................................... 15

TABLE OF TABLES PAGE 

TABLE 3.1: ASSUMED GROWTH RATES IN AVERAGE OASDI COVERED WAGE ............................................................. 2

TABLE 3.2: AVERAGE ANNUAL REAL PERCENTAGE CHANGE IN AVERAGE EARNINGS: COMPARISON OF THE U.S.

ECONOMY TO OASDI COVERED ............................................................................................................................ 5

TABLE 3.3: AVERAGE ANNUAL REAL PERCENTAGE CHANGE IN AVERAGE EARNINGS: TOTAL U.S. ECONOMY AND ITS 

COMPONENTS ......................................................................................................................................................... 7

TABLE 3.4: AVERAGE HOURS WORKED PER WEEK, TOTAL U.S.: COMPOUND ANNUAL RATES OF CHANGE (%)......... 13
Real Growth in Average OASDI Covered Wage, Page 2 

3 Real Growth in Average OASDI Covered Wage 

3.1 Summary 

For the 2023 Trustees Report, over the 65-year period from 2032 to 2097, the annual nominal 

growth rate in the average OASDI covered wage is assumed to be 4.79 percent, 3.57 percent, and 

2.35 percent for alternatives I, II, and III, respectively (Table 3.1). 42, Also for the 2023 Trustees 

Report, the assumed ultimate annual rates of increase in the CPI-W are 3.00 percent, 2.40 

percent, and 1.80 percent for alternatives I, II, and III, respectively (Table 2.1). Thus, for the 

2023 Trustees Report, the annual real growth rate in the average OASDI covered wage, over the 

65-year period from 2032 to 2097, is assumed to be 1.74 percent (104.79 / 103.00 – 1), 1.14 

percent (103.57 / 102.40 – 1), and 0.54 percent (102.35 / 101.80 – 1) for alternatives I, II, and III, 

respectively. These real growth rates are slightly higher than those assumed in the 2022 Trustees 

Report. 

Table 3.1: Assumed Growth Rates in Average OASDI Covered Wage 

(growth rates shown for last 65 

years of projection period) 

2023 Trustees Report 

Alternative 

2022 Trustees Report 

Alternative 

2023 Trustees Report Less 

2022 Trustees Report 

I II III I II III I II III

Annual Nominal Growth in 

Average OASDI Covered Wage 4.79 3.57 2.35 4.77 3.55 2.33 0.02 0.02 0.02 

Adjusted for: CPI-W 3.00 2.40 1.80 3.00 2.40 1.80 0.00 0.00 0.00 

Equals: 

Annual Real Growth in Average 

OASDI Covered Wage 

1.74 1.14 0.54 1.72 1.12 0.52 0.02 0.02 0.02 

3.2 Definitions and Presentational Changes from Last Year 

The average OASDI covered wage is defined as the ratio of total OASDI covered wages in a 

year to the number of workers with any OASDI covered wages during the year. In the 2022 and 

earlier Trustees Reports, the assumption representing a measure of average OASDI covered 

wage growth was presented as the real wage differential. The real wage differential for a year is 

defined as the annual percentage change from the prior year in the average OASDI covered wage 

minus the annual percentage change from the prior year in the CPI-W. The average real wage 

differential over any period is the arithmetic mean of annual real wage differentials over that 

period. The assumed average real wage differentials for the period 2032 through 2096 in the 

2022 Trustees Report (equivalent to the average real growth rate in the average OASDI covered 

wage, shown in the bottom middle panel of Table 3.1) were 1.77 percent for alternative I, 1.15 

percent for alternative II, and 0.53 percent for alternative III. Beginning with the 2023 report, for 

consistency with other growth rate measures, this assumption is stated in terms of the average 

real (i.e., inflation-adjusted) growth rate in the average OASDI covered wage, and computed as 

42 The 65-year period begins with the last year of the 10-year (2023 to 2032) short-range projection period 

and ends with the last year of the 75-year (2023 to 2097) long-range projection period. 
Real Growth in Average OASDI Covered Wage, Page 3 

ARGAW௕௬,௘௬ = ቆ

AW௘௬

AW௕௬

∙

CPIW௕௬

CPIW௘௬ ቇ

ଵ

௘௬ି௕௬

− 1

Where 

ARGAWby,ey = average annual real growth rate in the average OASDI covered wage from 

beginning year by to end year ey; 

AWy = average nominal wage in year y; 

CPIWy = annual average of CPI-W in year y. 

Both the income to the Social Security program and the benefits paid are related to total OASDI 

covered earnings (i.e., the combination of OASDI covered wages and OASDI covered net 

earnings from self-employment). For this reason, the growth in average earnings, not average 

wages, is the subject of the balance of this section. The future real growth rates in average U.S. 

earnings, average U.S. wages, and the average OASDI covered wage are expected to be similar, 

with the sources of minor differences described below. 

For the 2023 Trustees Report, the average annual rate of increase in average real OASDI covered 

earnings, over the 65-year period from 2032 to 2097, is assumed to be 1.74 percent, 1.14 percent, 

and 0.55 percent for alternatives I, II, and III, respectively. These values are slightly greater than 

those in the 2022 Trustees Report. 

3.3 Measures of Real Growth: Economy-Wide and OASDI Covered Earnings 

Average real earnings in the total U.S. economy are defined as the ratio of total nominal earnings 

(wage and salary disbursements and net proprietors’ income) to total adjusted average weekly 

civilian employment (see Section 3.5 Appendix A) and U.S. Armed Forces, divided by the 

adjusted CPI-W. BEA estimates historical values for nominal earnings as part of its broader 

responsibility of maintaining the NIPA for the U.S. economy. BLS estimates the CPI-W from its 

sample of prices and the civilian employment from its monthly CPS data. Because CPS data for 

the U.S. represent average weekly employment, the growth in average earnings for the total U.S. 

economy represents the growth in average weekly earnings for those employed. 

Average real earnings of OASDI covered workers differ from average U.S. earnings in two 

ways: the types of workers covered and the types of compensation reported. 

The types of workers covered by the OASDI program have changed in the past as a result of 

changes in the law and shifts in employment. Even without further changes in the law, the 

proportion of federal civilian government employees covered under the OASDI program will 

continue to increase toward 100 percent. All federal civilian government employees hired after 

1983 are covered under OASDI, while some of those hired earlier are not. Virtually all federal 

civilian government employees will be covered around 2030. As a result, the composition of 

OASDI covered employment, which has varied since 1940, will stabilize around 2030. 

The types of compensation reported for the two measures differ primarily because employeepaid premiums for employer-sponsored group health insurance within cafeteria plans under 

Section 125 of the Internal Revenue Code are counted in the NIPA definition of U.S. earnings, 
Real Growth in Average OASDI Covered Wage, Page 4 

but not reported as earnings for OASDI purposes. Like the employer-paid premiums, employeepaid premiums are projected to continue to grow faster than compensation. As a result, OASDI 

covered wages are projected to grow at a slightly lower rate than U.S. wages and, similarly, 

OASDI covered earnings are projected to grow at a slightly lower rate than U.S. earnings. 

Average real weekly earnings in the total U.S. economy increased at an average annual rate of 

0.93 percent over the last six complete economic cycles (1969-2019), 0.84 percent over the last 

five cycles (1973-2019), 1.03 percent over the last four cycles (1979-2019), 1.25 percent over the 

last three cycles (1990-2019), 0.72 percent over the last two cycles (2001-2019), and 0.80 

percent over the last complete cycle (2007-2019). The average annual real earnings of OASDI 

covered workers increased at an average annual rate of 0.94 percent over the last six complete 

economic cycles, 0.88 percent over the last five cycles, 0.93 percent over the last four cycles, 

1.07 percent over the last three cycles, 0.73 percent over the last two cycles, and 0.69 percent 

over the last complete cycle (see Table 3.2 below). Since the end of the last complete cycle, from 

2019 to 2021, average real weekly earnings increased by 3.03 percent a year and the average real 

earnings of OASDI covered workers increased by 0.90 percent a year. These growth rates were 

greatly affected by the recession during the COVID-19 pandemic, particularly by the large loss 

of employment for part of the year, which disproportionately affected workers with lower 

earnings. 

As the proportion of workers covered by OASDI is expected to change much less in the future 

than it has in the past, it is reasonable to evaluate the 1.14 percent assumed average real rate of 

increase for average OASDI covered earnings for alternative II in relation to the historical real 

growth rate in average earnings for all workers in the total economy. The other difference 

between the average-weekly total economy and average-annual OASDI covered earnings 

measures is fluctuation in average weeks worked per year, which is mitigated by considering 

growth over complete economic cycles. Therefore, the balance of this section focuses on the past 

trends for average earnings in the U.S. economy. 

Considering complete economic cycles, the average annual real growth rate in earnings for all 

workers in the total U.S. economy was 1.93 percent from 1969 to 1973 (4 years), -0.44 percent 

from 1973 to 1979 (6 years), 0.47 percent from 1979 to 1990 (11 years), 2.12 percent from 1990 

to 2001 (11 years), 0.54 percent from 2001 to 2007 (6 years), and 0.80 percent from 2007 to 

2019 (12 years).43 The 1.14 percent assumed average future annual real growth rate in average 

OASDI covered earnings is between the historical average annual real growth rates in average 

U.S. earnings over the last four complete cycles (1.03 percent) and over the last three complete 

cycles (1.25 percent). 

 

43 Peaks in economic cycles roughly follow the NBER cycle dating, except for short recoveries such as 

1980-1981, which are not counted as separate cycles. 
Real Growth in Average OASDI Covered Wage, Page 5 

Table 3.2: Average Annual Real Percentage Change in Average Earnings: Comparison of the U.S. Economy to 

OASDI Covered 

 

Average 

Real 

Earnings for 

U.S. 

Economy Total Links 

Ratio of 

Employed 

Labor Force 

to OASDI 

Covered 

Workers 

Ratio of 

OASDI 

Covered 

Earnings to 

U.S. 

Earnings 

Average 

Real 

Earnings for 

OASDI 

Covered

 (1) (2) (3) (4) (5) 

Long-Term Historical Averages: 

 1956-2021 (65 years) 1.28 -0.11 -0.20 0.08 1.17 

 1971-2021 (50 years) 1.01 -0.05 -0.04 -0.01 0.95 

 1971-1996 (25 years) 0.66 0.16 0.07 0.09 0.82 

 1996-2021 (25 years) 1.35 -0.26 -0.16 -0.10 1.09 

By Economic Cycle: 

 1969-1973 1.93 -0.33 -0.23 -0.10 1.60 

 1973-1979 -0.44 1.00 0.46 0.53 0.56 

 1979-1990 0.47 0.11 0.09 0.02 0.58 

 1990-2001 2.12 -0.49 -0.23 -0.26 1.62 

 2001-2007 0.54 0.27 0.09 0.18 0.81 

 2007-2019 0.80 -0.11 0.07 -0.18 0.69 

 2019-2021 (incomplete cycle) 3.03 -2.07 -2.04 -0.03 0.90 

By Multiple Complete Cycles: 

 Last Six: 1969-2019 (50 years) 0.93 0.01 0.03 -0.02 0.94 

 Last Five: 1973-2019 (46 years) 0.84 0.04 0.06 -0.01 0.88 

 Last Four: 1979-2019 (40 years) 1.03 -0.10 0.00 -0.09 0.93 

 Last Three: 1990-2019 (29 years) 1.25 -0.18 -0.04 -0.14 1.07 

 Last Two: 2001-2019 (18 years) 0.72 0.01 0.08 -0.06 0.73 

The real growth rate in average earnings of all workers in the economy was depressed for the 

1973-1979 and 1979-1990 cycles in a way not expected to be repeated in the future. During this 

period, the baby boom generation reached working age and the proportion of women in the labor 

force increased dramatically. As a result, the economy accommodated an extraordinary number 

of relatively low-paid (inexperienced and young) workers, thus depressing real growth in overall 

average earnings. However, the inclusion of baby boomers in the labor force ended in the 

mid-1980s, and the increasing percentage of women under age 60 in the labor force stabilized 

more recently. 

The rapid increase in average earnings during the economic cycle from 1990 to 2001 was likely 

due in part to maturation of the baby boomers and women in the labor force. The large number 

of baby boomers and women in the labor force have been reaching prime working ages and thus 

boosted growth since 1990. This kind of swing in demographic trends is not projected to occur in 

the future, so consideration of the longer period of the last four complete economic cycles seems 

appropriate. This approach averages out the effects of past demographic trends, which initially 

depressed and later boosted average earnings growth. 
Real Growth in Average OASDI Covered Wage, Page 6 

Additional changing conditions contributing to the potential future growth of average earnings 

are discussed in the next two sections on productivity growth and earnings links to productivity. 

3.3.1 Productivity 

Total-economy productivity growth ultimately affects the growth of real earnings. 

Total-economy productivity is defined as the ratio of real GDP to total hours worked in the U.S. 

economy. For the 2023 Trustees Report, the assumed ultimate annual rates of increase in 

total-economy productivity are 1.93 percent, 1.63 percent, and 1.33 percent for alternatives I, II, 

and III, respectively. These ultimate rates of increase for total-economy productivity are 

consistent with ultimate annual rates of increase in nonfarm business productivity of 2.36 

percent, 2.00 percent, and 1.63 percent for alternatives I, II, and III, respectively (see Section 1). 

3.3.2 Other Components: Links between Real Earnings and Productivity 

Not all of the historical gains in productivity have resulted in proportional increases in average 

real earnings. For example, over the last five economic cycles (1973-2019), average real earnings 

increased at an average annual rate of only 0.84 percent per year, while productivity for the total 

U.S. economy increased at 1.50 percent per year. The approximate difference of -0.65 percent 

per year was due to changes in the links, that is, factors that connect productivity to average real 

earnings in a multiplicative fashion. Table 3.3 summarizes the U.S. experience over the last six 

economic cycles for each of those factors.44 

Those factors include the ratio of compensation to nominal GDP, the ratio of earnings to 

compensation, the ratio of total hours worked to total average weekly employment, and the ratio 

of the gross domestic product implicit price deflator (PGDP) to the CPI-W. Each of those links is 

discussed separately below. 

 

44 This section calculates values for productivity, hours per week, price differential, and average real 

earnings using adjusted data for the CPI, PGDP, real GDP, and employment (weeks worked). Hence, Table 3.3 

contains adjusted productivity values, which may not equal the unadjusted productivity values in Table 1.4 in 

Section 1. Adjustments to the CPI, PGDP, and real GDP are described in Section 2.7 Appendix. Adjustments to 

employment are described in Section 3.5 Appendix. 
Real Growth in Average OASDI Covered Wage, Page 7 

 Productivity

Total 

Links 

Compensation 

to GDP 

Earnings to 

Compensation 

Hours 

per 

Week

PGDP to 

CPI-W Residual 

Average 

Real 

Earnings 

 (1) (2) (3) (4) (5) (6) (7) (8) 

Long-Term Historical Averages: 

 1956-2021 (65 years) 1.87 -0.57 -0.11 -0.15 -0.20 -0.12 0.00 1.28 

 1971-2021 (50 years) 1.57 -0.56 -0.10 -0.11 -0.13 -0.22 0.00 1.01 

 1971-1996 (25 years) 1.44 -0.77 -0.18 -0.25 -0.12 -0.22 0.00 0.66 

 1996-2021 (25 years) 1.71 -0.35 -0.01 0.02 -0.13 -0.23 0.00 1.35 

By Economic Cycle: 

 1969-1973 2.77 -0.81 -0.04 -0.34 -0.89 0.46 0.00 1.93 

 1973-1979 1.16 -1.58 -0.48 -0.43 -0.55 -0.13 0.00 -0.44 

 1979-1990 1.41 -0.92 -0.16 -0.29 -0.11 -0.37 0.00 0.47 

 1990-2001 1.85 0.28 0.43 0.05 0.16 -0.36 0.00 2.12 

 2001-2007 2.18 -1.61 -0.95 -0.18 -0.37 -0.12 0.00 0.54 

 2007-2019 1.09 -0.28 -0.04 0.04 -0.15 -0.14 0.00 0.80 

 2019-2021 (incomplete cycle) 2.40 0.65 0.22 0.32 0.41 -0.30 0.00 3.03 

By Multiple Complete Cycles: 

 Last Six: 1969-2019 (50 years) 1.60 -0.66 -0.13 -0.14 -0.21 -0.19 0.00 0.93 

 Last Five: 1973-2019 (46 years) 1.50 -0.65 -0.13 -0.13 -0.15 -0.24 0.00 0.84 

 Last Four: 1979-2019 (40 years) 1.55 -0.51 -0.08 -0.08 -0.09 -0.26 0.00 1.03 

 Last Three: 1990-2019 (29 years) 1.60 -0.35 -0.05 0.00 -0.08 -0.22 0.00 1.25 

 Last Two: 2001-2019 (18 years) 1.45 -0.73 -0.34 -0.03 -0.23 -0.13 0.00 0.72 

Recommended Future Average Annual Rates of Increase for the 2023 Trustees Report (2032-2097) 

 I 1.93 -0.19 0.00 0.00 0.05 -0.24 0.00 1.74 

 II 1.63 -0.48 0.00 -0.09 -0.05 -0.34 0.00 1.14 

 III 1.33 -0.77 0.00 -0.18 -0.15 -0.44 0.00 0.55 

Note: Total links may not match the relative growth rate of average real earnings to productivity, due to slight discrepancies in the PGDP 

and GDP values reported by BEA. 

 

3.3.2.1 Ratio of Compensation to Nominal GDP 

The first link is the ratio of total compensation to nominal GDP, or the total compensation ratio 

(CR). The CR is the ratio of the sum of employee compensation and self-employed (proprietors’) 

income to nominal GDP. For the 2023 Trustees Report, the assumed ultimate annual rate of 

change in the CR is 0.0 percent for alternatives I, II, and III. The CR is closely related to the 

labor share of total output. Most economists believe that the shares of total output going to the 

various factors of production tend toward stable proportions in the long run. Therefore, it is 

assumed that the CR will be constant over the last 65 years of the long-range period. 

Table 3.3: Average Annual Real Percentage Change in Average Earnings: Total U.S. Economy and Its Components 
Real Growth in Average OASDI Covered Wage, Page 8 

3.3.2.2 Ratio of Earnings to Compensation 

The second link is the ratio of total worker earnings to compensation. Worker earnings differ 

from compensation because part of compensation comes in the form of employer contributions 

to employee pension plans, health and other insurance premiums, and government social 

insurance programs. Using NIPA definitions, total worker earnings are the sum of total wage and 

salary disbursements and total proprietors’ income. Total compensation is the sum of employee 

compensation and total proprietors’ income. Total employee compensation is the sum of total 

wage and salary disbursements, employer contributions for employee pension and insurance 

funds, and employer contributions to government social insurance programs. Employer 

contributions to government social insurance programs include payments for public insurance 

and publicly mandated insurance such as for unemployment, workers’ compensation, Medicare, 

and Social Security. 

The average annual rate of change for the ratio of earnings to compensation was 0.00 percent 

over the last three complete economic cycles, from 1990 to 2019. The ratio had declined at an 

average annual rate of -0.34 percent, over the previous three complete economic cycles, from 

1969 to 1990, a period characterized by increasing statutory rates for contributions to 

government social insurance programs, and steeply rising costs of health insurance. Combining 

those periods, the average annual rate of change for the ratio was -0.14 percent from 1969 to 

2019, a 50-year period that covers the last six complete economic cycles. 

Statutory employer payroll tax rates in 1969 were 4.2 percent for OASDI and 0.6 percent for 

Medicare Hospital Insurance (HI). The OASDI rate increased to its current level of 6.2 percent 

by 1990, and the HI rate reached its current level of 1.45 percent in 1986. As a consequence of 

rate changes combined with changes in maximum taxable earnings, employer contributions to 

government social insurance programs increased from 3.9 percent of compensation in 1969 to 

6.2 percent of compensation in 1990. This change in the tax law by itself caused a -0.12 percent 

annual change in the ratio of wages to compensation over the period from 1969 to 1990. Payroll 

tax rates for employers have not changed since 1990 and are not scheduled to change in the 

future under current law. 

Most employer contributions to pensions are for employees in the private sector and are 

composed of contributions to defined-benefit (DB) and defined-contribution (DC) plans. The 

ratio of pension contributions to total compensation has exhibited no significant trend since the 

early 1970s, staying within a fairly narrow range (between 4.5 and 5.6 percent) throughout that 

period. Many factors affected this ratio, including the changing age distribution of the 

population, the rise and decline of DB pensions, and stock market booms and crashes, but their 

effects largely offset each other. OCACT expects that multiple factors will continue to affect this 

ratio in mutually offsetting ways. 

The growth of contributions to employer-sponsored group health insurance (ESI) has also 

decelerated in recent decades. grew from 1.7 percent of compensation in 1969 to 5.3 percent in 

1990, contributing the most to the change in the ratio of wages to compensation in that period. It 

grew somewhat slower in the subsequent two decades, reaching 7.1 percent in 2009. Since then, 
Real Growth in Average OASDI Covered Wage, Page 9 

however, the historical trend in ESI cost has flattened, to the point that it was lower as a percent 

of compensation in 2019 through 2021 than in 2009 through 2011. 

Continued expected growth of ESI was a major contributor to the assumed 0.2 percent annual 

decline in the ratio of earnings to compensation in the 2009 Trustees Report. Provisions of the 

Affordable Care Act (ACA), enacted in 2010, affected expectations of future growth of ESI and 

thus led to a higher (less negative) assumed future rate of change in the ratio of earnings to 

compensation for the 2010 through 2019 Trustees Reports. However, a major provision of the 

ACA affecting the projected growth in ESI—the excise tax on ESI premiums (commonly 

referred to as the “Cadillac Tax”)—was repealed in December 2019. As a result, beginning with 

the 2020 Trustees Report, the Trustees have assumed ESI premiums would increase faster, and 

wages therefore more slowly, than was assumed in the 2019 and several previous reports. On the 

other hand, the flattening of the observed historical trend in ESI cost, as well as other factors, 

contribute to a lower projected ESI cost than before the passage of the ACA.. The Centers for 

Medicare and Medicaid Services (CMS) develops long-range projections of ESI premium 

growth. CMS’s projected average growth rates have gradually declined over time, consistent 

with recent experience, but also due to methodological changes. For example, in September 

2022, CMS projected that ESI would be 7.4 percent of GDP in 2085, compared to 12.7 percent 

projected for 2085 just before the passage of the ACA in 2010. 

It is reasonable to assume that the ratio of wages to compensation will decrease in the 

intermediate alternative, but not as fast as over the last six complete cycles, because the period 

from 1969 to 1990 was characterized by trends that have not persisted and are unlikely to be 

repeated in the future. 

For the 2023 Trustees Report, the annual rate of change in the ratio of wages to employee 

compensation over the last 65 years of the projection horizon (2032 to 2097) is assumed to be 

0.00, -0.10, and -0.20 percentage point for alternatives I, II, and III, respectively. These rates are 

approximately 0.01 percentage point higher (less negative) than those used in the 2022 Trustees 

Report. Consistent with this, the assumed average annual rate of change in the ratio of earnings 

to total compensation over the last 65 years of the projection horizon (2032 to 2097) is 

approximately 0.00, -0.09, and -0.18 percentage point for alternatives I, II, and III, respectively. 

These rates are slightly less negative than those used in the 2022 Trustees Report. 

 
Real Growth in Average OASDI Covered Wage, Page 10 

3.3.2.3 Average Hours Worked 

The third link is average hours worked per week (AHW), defined as the ratio of total hours 

worked to total employment in the U.S. economy. Its compounded annual rate of change is 

shown in Table 3.4. Total hours worked in the U.S. economy is provided by BLS, based mostly 

on the Current Employment Statistics (CES), which surveys establishments.45 Total employment 

is the sum of civilian average weekly employment and the U.S. Armed Forces. BLS publishes 

total civilian employment from the Current Population Survey (CPS), which surveys households. 

The Census Bureau provides estimates for the U.S. Armed Forces. For the 2023 Trustees Report, 

the assumed ultimate annual rate of change in average hours worked is +0.05 percent, -0.05 

percent and -0.15 percent in alternatives I, II, and III, respectively. These rates of change are the 

same as those used in the 2022 Trustees Report. 

The average annual rate of change in AHW was -0.21 percent over the last six complete 

economic cycles, a 50-year period from 1969 to 2019, and -0.09 percent over the last four cycles, 

from 1979 to 2019. Looking at individual cycles, the average annual rate of change in AHW 

was -0.89 percent, -0.55 percent, -0.11 percent, 0.16 percent, -0.37, and -0.15 percent, over the 

1969-1973, 1973-1979, 1979-1990, 1990-2001, 2001-2007, and 2007-2019 periods, respectively. 

The average annual rate of change from 2019 to 2021 (since the end of the last complete cycle) 

was a 0.41 percent increase. 

The historical pattern of AHW is also affected by the difference between CES and CPS 

employment measures. While CES estimates the number of jobs in the economy, CPS estimates 

the number of employed persons. Furthermore, CPS estimates are controlled to population 

annually between censuses. This causes the ratio of the two measures to change over time. BLS 

publishes a regularly updated file of the total hours worked and the employment estimate on 

which it is based (previously available as a special request file).46 The ratio between the 

employment measure implicit in the BLS measure of total hours worked and the total 

employment measure used in this section (i.e., CPS-based civilian employment plus the Census 

estimate of armed forces) has fluctuated between about 1.03 and 1.08. Notably, it was rising in 

the 1990s, achieving its highest annual value in 1999, followed by a decline to its lowest annual 

value in 2010. The average annual rate of change in the average weekly hours implicit in the 

BLS calculation of total hours worked was -0.58 percent, -0.49 percent, -0.11 percent, -0.04 

percent, -0.12 percent, and -0.07 percent, over the 1969-1973, 1973-1979, 1979-1990, 

1990-2001, 2001-2007, and 2007-2019 economic cycles, respectively. The average annual rate 

of change was -0.17 percent over the last six complete economic cycles (1969 to 2019), 

45 The analysis in this memo is based on total hours worked published in September 2022. Beginning with 

the November 2022 release, BLS applies a new methodology to estimation of aggregate hours. The new method 

estimates hours worked, while the old method estimated hours paid. The estimated levels of the two measures differ, 

but there is no indication of systematic differences in trends between the two measures, so the change in 

methodology does not affect assumed long-range rates of change. For details of BLS methodological change, see 

https://www.bls.gov/productivity/technical-notes/labor-productivity-hours-worked-method-using-ces-all-employeehours-nov-2022.htm. 

46 https://www.bls.gov/productivity/tables/total-economy-hours-employment.xlsx. 
Real Growth in Average OASDI Covered Wage, Page 11 

and -0.08 percent over the last four cycles (1979 to 2019), both of which are very close to the 

corresponding average rates of change calculated using the CPS-based employment measure.47

The average annual rate of change in AHW was -0.37 percent over the 6-year economic cycle 

from 2001 to 2007, suggesting a return to the steep declines seen over the period from 1969 to 

1979. Accordingly, the Trustees lowered the assumed ultimate annual rate of change in AHW 

to -0.05 percent starting with the 2012 report, or approximately equal to the average annual rate 

of change of -0.06 percent over the previous three complete economic cycles, a 28-year period 

from 1979 to 2007.48 In the last complete cycle, the decline in AHW has slowed down. The 

average rate of change in AHW over the period from 2007 to 2019 was -0.15 percent, or -0.07 

percent using the alternative CES-based employment measure. 

There are factors that may affect the future AHW in offsetting ways. On one hand, the assumed 

steady increases in productivity will allow workers to gradually increase leisure time while still 

maintaining increases in weekly and annual earnings. On the other hand, it is reasonable to 

assume that the assumed future increases in life expectancy will raise labor force participation 

rates for older workers and it may also raise AHW, holding other factors constant. The average 

projected changes in the education and age-sex distributions of the workforce are not expected to 

significantly affect the average annual rate of change in the AHW in the future. Thus, for the 

2023 Trustees Report the assumed ultimate annual rate of change in AHW is -0.05 percent for 

alternative II. 

3.3.2.4 Ratio of PGDP to CPI-W 

The final link is the ratio of the PGDP to the CPI-W. Including this ratio is necessary because 

nominal earnings depend on nominal GDP (i.e., the product of real GDP and the PGDP), but are 

converted to real earnings using the CPI-W. The projected ratio is based on the assumed 

difference between the growth rates. For the 2023 Trustees Report, the assumed ultimate “price 

differential”, that is, the average annual rate of increase in PGDP less the average annual rate of 

increase in CPI-W, is -0.25, -0.35, and -0.45 percentage point for alternative I, II, and III, 

respectively. For alternative II, the -0.35 percentage point price differential is the sum of a -0.30 

percentage point computational difference and a -0.05 percentage point coverage difference (see 

Section 2.5). These assumed values are the same as those assumed in the 2022 Trustees Report. 

3.3.2.5 Total Links 

The average annual change in the total links was -0.51 percent over the last four complete 

economic cycles and -0.66 percent over the last six complete cycles. For the 2023 Trustees 

Report, the assumed average annual changes in the total links are approximately -0.19 

47 One could further decouple the “average hours worked” link into two links, roughly corresponding to 

average hours per job and average jobs per worker. However, despite fluctuations over economic cycles and 

between censuses, the latter link seems to be very stable over longer time periods, so that such an additional step 

seems unnecessary for the purpose of deriving assumptions about the future. 

48 The corresponding value implicit in the BLS estimate of total hours worked is -0.09 percent. 
Real Growth in Average OASDI Covered Wage, Page 12 

percentage point, -0.48 percentage point, and -0.77 percentage point for alternatives I, II, and III, 

respectively. 

3.4 Projections from Other Sources 

At the time assumptions were developed, the following projections from other sources were 

available. 

IHS Markit provided projections through 2052 in its August 2022 30-year trend forecast (see The 

30-Year Focus, Third Quarter, August 2022). IHS Markit projected that the average annual real 

growth rate for average U.S. earnings would be 2.2 percent over the 20-year period from 2032 to 

2052.49 Moody’s Analytics provided projections through 2052 in its September 2022 forecast. 

Over the 20-year period from 2032 to 2052, Moody’s Analytics projected that the annual real 

growth rate for average U.S. earnings would average 1.92 percent. 

The Office of Management and Budget (OMB) Mid-Session Review to the Fiscal Year 2023 

Budget included projections through 2032. OMB projected that the annual real growth rate for 

average U.S. earnings would be about 2.6 percent for 2032. The Congressional Budget Office 

(CBO) July 2022 report, The 2022 Long-Term Budget Outlook, included projections through 

2052. CBO projected that the annual real growth rate for average U.S. earnings would average 

about 0.9 percent over the period 2032 to 2052. 

The Social Security Advisory Board’s 2019 Technical Panel on Assumptions and Methods 

recommended reducing the assumed long-range average annual real rate of increase in average 

earnings from 1.18 percent in the 2019 Trustees Report, alternative II, to 1.08 percent. The prior 

technical panel, which met in 2015, recommended no changes to the long-range average annual 

real wage differential of 1.17 percent in the 2015 Trustees Report, alternative II. 

49 OCACT calculation estimated from IHS projections of wage and salary disbursements, nonfarm proprietors’ 

income, and total nonfarm payrolls. 
Real Growth in Average OASDI Covered Wage, Page 13 

Table 3.4: Average Hours Worked per Week, Total U.S.: Compound Annual Rates of Change (%) 

From

To Variable 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 

1961 37.571962 37.85 0.731963 37.62 0.07 -0.601964 37.79 0.19 -0.08 0.441965 37.96 0.26 0.10 0.45 0.461966 38.15 0.31 0.20 0.47 0.48 0.511967 37.68 0.05 -0.09 0.04 -0.10 -0.37 -1.251968 37.57 0.00 -0.12 -0.03 -0.14 -0.34 -0.77 -0.281969 37.57 0.00 -0.11 -0.03 -0.12 -0.26 -0.52 -0.15 -0.011970 36.69 -0.27 -0.39 -0.36 -0.49 -0.68 -0.98 -0.88 -1.18 -2.341971 36.38 -0.32 -0.44 -0.42 -0.54 -0.71 -0.95 -0.87 -1.07 -1.59 -0.841972 36.29 -0.32 -0.42 -0.40 -0.50 -0.64 -0.83 -0.75 -0.86 -1.15 -0.55 -0.251973 36.25 -0.30 -0.39 -0.37 -0.46 -0.58 -0.73 -0.64 -0.71 -0.89 -0.40 -0.18 -0.121974 35.70 -0.39 -0.49 -0.48 -0.57 -0.68 -0.83 -0.77 -0.85 -1.01 -0.68 -0.62 -0.81 -1.501975 35.08 -0.49 -0.58 -0.58 -0.67 -0.79 -0.93 -0.89 -0.98 -1.14 -0.89 -0.91 -1.12 -1.62 -1.751976 34.96 -0.48 -0.57 -0.56 -0.65 -0.75 -0.87 -0.83 -0.90 -1.02 -0.80 -0.79 -0.93 -1.20 -1.04 -0.341977 34.93 -0.45 -0.53 -0.53 -0.60 -0.69 -0.80 -0.75 -0.81 -0.90 -0.70 -0.67 -0.76 -0.92 -0.72 -0.21 -0.081978 35.04 -0.41 -0.48 -0.47 -0.54 -0.61 -0.71 -0.66 -0.69 -0.77 -0.57 -0.53 -0.58 -0.67 -0.47 -0.04 0.12 1979 35.07 -0.38 -0.45 -0.44 -0.50 -0.56 -0.65 -0.59 -0.62 -0.68 -0.50 -0.46 -0.48 -0.55 -0.35 0.00 0.11 1980 34.77 -0.41 -0.47 -0.46 -0.52 -0.58 -0.66 -0.62 -0.64 -0.70 -0.54 -0.50 -0.53 -0.59 -0.44 -0.18 -0.14 1981 34.53 -0.42 -0.48 -0.48 -0.53 -0.59 -0.66 -0.62 -0.65 -0.70 -0.55 -0.52 -0.55 -0.60 -0.47 -0.26 -0.25 1982 34.16 -0.45 -0.51 -0.51 -0.56 -0.62 -0.69 -0.65 -0.68 -0.73 -0.59 -0.57 -0.60 -0.66 -0.55 -0.38 -0.39 1983 34.31 -0.41 -0.47 -0.46 -0.51 -0.56 -0.62 -0.58 -0.60 -0.64 -0.51 -0.49 -0.51 -0.55 -0.44 -0.27 -0.27 1984 34.59 -0.36 -0.41 -0.40 -0.44 -0.49 -0.54 -0.50 -0.51 -0.55 -0.42 -0.39 -0.40 -0.42 -0.32 -0.16 -0.13 1985 34.68 -0.33 -0.38 -0.37 -0.41 -0.45 -0.50 -0.46 -0.47 -0.50 -0.37 -0.34 -0.35 -0.37 -0.26 -0.11 -0.09 1986 34.27 -0.37 -0.41 -0.40 -0.44 -0.49 -0.54 -0.50 -0.51 -0.54 -0.42 -0.40 -0.41 -0.43 -0.34 -0.21 -0.20 1987 34.40 -0.34 -0.38 -0.37 -0.41 -0.45 -0.49 -0.45 -0.46 -0.49 -0.38 -0.35 -0.36 -0.37 -0.29 -0.16 -0.15 1988 34.56 -0.31 -0.35 -0.34 -0.37 -0.41 -0.45 -0.41 -0.42 -0.44 -0.33 -0.30 -0.30 -0.32 -0.23 -0.12 -0.10 1989 34.76 -0.28 -0.31 -0.30 -0.33 -0.37 -0.40 -0.37 -0.37 -0.39 -0.28 -0.25 -0.25 -0.26 -0.18 -0.06 -0.04 1990 34.67 -0.28 -0.31 -0.30 -0.33 -0.36 -0.40 -0.36 -0.36 -0.38 -0.28 -0.25 -0.25 -0.26 -0.18 -0.08 -0.06 1991 34.50 -0.28 -0.32 -0.31 -0.34 -0.37 -0.40 -0.37 -0.37 -0.39 -0.29 -0.26 -0.26 -0.27 -0.20 -0.10 -0.09 1992 34.25 -0.30 -0.33 -0.32 -0.35 -0.38 -0.41 -0.38 -0.38 -0.40 -0.31 -0.29 -0.29 -0.30 -0.23 -0.14 -0.13 1993 34.53 -0.26 -0.30 -0.29 -0.31 -0.34 -0.37 -0.34 -0.34 -0.35 -0.26 -0.24 -0.24 -0.24 -0.18 -0.09 -0.07 1994 35.03 -0.21 -0.24 -0.23 -0.25 -0.28 -0.30 -0.27 -0.27 -0.28 -0.19 -0.16 -0.16 -0.16 -0.09 -0.01 0.01 1995 35.21 -0.19 -0.22 -0.21 -0.23 -0.25 -0.28 -0.24 -0.24 -0.25 -0.16 -0.14 -0.13 -0.13 -0.07 0.02 0.04 1996 35.31 -0.18 -0.20 -0.19 -0.21 -0.23 -0.26 -0.22 -0.22 -0.23 -0.15 -0.12 -0.11 -0.11 -0.05 0.03 0.05 1997 35.39 -0.17 -0.19 -0.18 -0.20 -0.22 -0.24 -0.21 -0.21 -0.21 -0.13 -0.11 -0.10 -0.10 -0.04 0.04 0.06 1998 35.58 -0.15 -0.17 -0.16 -0.18 -0.20 -0.22 -0.18 -0.18 -0.19 -0.11 -0.08 -0.08 -0.07 -0.01 0.06 0.08 1999 35.61 -0.14 -0.16 -0.15 -0.17 -0.19 -0.21 -0.18 -0.17 -0.18 -0.10 -0.08 -0.07 -0.07 -0.01 0.06 0.08 2000 35.68 -0.13 -0.15 -0.14 -0.16 -0.18 -0.20 -0.16 -0.16 -0.17 -0.09 -0.07 -0.06 -0.06 0.00 0.07 0.09 2001 35.28 -0.16 -0.18 -0.17 -0.19 -0.20 -0.22 -0.19 -0.19 -0.20 -0.13 -0.10 -0.10 -0.10 -0.04 0.02 0.04 2002 34.94 -0.18 -0.20 -0.19 -0.21 -0.22 -0.24 -0.22 -0.21 -0.22 -0.15 -0.13 -0.13 -0.13 -0.08 -0.01 0.00 2003 34.61 -0.20 -0.22 -0.21 -0.22 -0.24 -0.26 -0.24 -0.23 -0.24 -0.18 -0.16 -0.15 -0.15 -0.11 -0.05 -0.04 2004 34.57 -0.19 -0.22 -0.21 -0.22 -0.24 -0.26 -0.23 -0.23 -0.24 -0.17 -0.15 -0.15 -0.15 -0.11 -0.05 -0.04 2005 34.51 -0.19 -0.21 -0.21 -0.22 -0.24 -0.26 -0.23 -0.23 -0.24 -0.17 -0.15 -0.15 -0.15 -0.11 -0.05 -0.04 2006 34.53 -0.19 -0.21 -0.20 -0.21 -0.23 -0.25 -0.22 -0.22 -0.23 -0.17 -0.15 -0.15 -0.15 -0.10 -0.05 -0.04 2007 34.49 -0.19 -0.21 -0.20 -0.21 -0.23 -0.25 -0.22 -0.22 -0.22 -0.17 -0.15 -0.14 -0.15 -0.10 -0.05 -0.04 2008 34.11 -0.21 -0.23 -0.22 -0.23 -0.25 -0.27 -0.24 -0.24 -0.25 -0.19 -0.17 -0.17 -0.17 -0.13 -0.09 -0.08 2009 33.40 -0.24 -0.27 -0.26 -0.27 -0.29 -0.31 -0.29 -0.29 -0.29 -0.24 -0.22 -0.22 -0.23 -0.19 -0.14 -0.14 2010 33.51 -0.23 -0.25 -0.25 -0.26 -0.28 -0.29 -0.27 -0.27 -0.28 -0.23 -0.21 -0.21 -0.21 -0.18 -0.13 -0.12 2011 33.68 -0.22 -0.24 -0.23 -0.24 -0.26 -0.28 -0.25 -0.25 -0.26 -0.21 -0.19 -0.19 -0.19 -0.16 -0.11 -0.11 2012 33.70 -0.21 -0.23 -0.22 -0.24 -0.25 -0.27 -0.25 -0.25 -0.25 -0.20 -0.19 -0.18 -0.19 -0.15 -0.11 -0.10 2013 33.78 -0.20 -0.22 -0.22 -0.23 -0.24 -0.26 -0.24 -0.24 -0.24 -0.19 -0.18 -0.17 -0.18 -0.14 -0.10 -0.09 2014 33.87 -0.20 -0.21 -0.21 -0.22 -0.23 -0.25 -0.23 -0.23 -0.23 -0.18 -0.17 -0.16 -0.17 -0.13 -0.09 -0.08 2015 34.08 -0.18 -0.20 -0.19 -0.20 -0.22 -0.23 -0.21 -0.21 -0.21 -0.16 -0.15 -0.15 -0.15 -0.11 -0.07 -0.07 2016 33.98 -0.18 -0.20 -0.19 -0.20 -0.22 -0.23 -0.21 -0.21 -0.21 -0.17 -0.15 -0.15 -0.15 -0.12 -0.08 -0.07 2017 33.91 -0.18 -0.20 -0.19 -0.20 -0.22 -0.23 -0.21 -0.21 -0.21 -0.17 -0.15 -0.15 -0.15 -0.12 -0.08 -0.07 2018 34.08 -0.17 -0.19 -0.18 -0.19 -0.20 -0.22 -0.20 -0.19 -0.20 -0.15 -0.14 -0.14 -0.14 -0.11 -0.07 -0.06 2019 33.87 -0.18 -0.19 -0.19 -0.20 -0.21 -0.22 -0.20 -0.20 -0.21 -0.16 -0.15 -0.15 -0.15 -0.12 -0.08 -0.07 2020 33.81 -0.18 -0.19 -0.19 -0.20 -0.21 -0.22 -0.20 -0.20 -0.21 -0.16 -0.15 -0.15 -0.15 -0.12 -0.08 -0.08 2021 34.15 -0.16 -0.17 -0.17 -0.18 -0.19 -0.20 -0.18 -0.18 -0.18 -0.14 -0.13 -0.12 -0.12 -0.09 -0.06 -0.05 
Real Growth in Average OASDI Covered Wage, Page 14 

Table 3.4 (continued): Average Hours Worked per Week, Total U.S.: Compound Annual Rates of Change (%) 

From

To Variable 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 

1981 34.531982 34.16 -1.081983 34.31 -0.31 0.461984 34.59 0.06 0.63 0.811985 34.68 0.11 0.51 0.53 0.261986 34.27 -0.15 0.08 -0.04 -0.46 -1.181987 34.40 -0.07 0.14 0.06 -0.19 -0.41 0.371988 34.56 0.01 0.19 0.14 -0.02 -0.12 0.42 0.461989 34.76 0.08 0.25 0.22 0.10 0.06 0.48 0.53 0.591990 34.67 0.04 0.19 0.15 0.04 -0.01 0.29 0.26 0.16 -0.271991 34.50 -0.01 0.11 0.07 -0.04 -0.09 0.14 0.08 -0.05 -0.37 -0.471992 34.25 -0.07 0.03 -0.02 -0.12 -0.18 -0.01 -0.08 -0.22 -0.49 -0.60 -0.731993 34.53 0.00 0.10 0.06 -0.02 -0.06 0.11 0.06 -0.02 -0.17 -0.13 0.03 0.801994 35.03 0.11 0.21 0.19 0.13 0.11 0.27 0.26 0.23 0.15 0.26 0.51 1.13 1.451995 35.21 0.14 0.23 0.21 0.16 0.15 0.30 0.29 0.27 0.21 0.31 0.51 0.92 0.98 0.511996 35.31 0.15 0.24 0.22 0.17 0.16 0.30 0.29 0.27 0.22 0.31 0.46 0.76 0.75 0.40 0.291997 35.39 0.15 0.24 0.22 0.18 0.17 0.29 0.28 0.26 0.22 0.30 0.42 0.65 0.62 0.34 0.26 0.231998 35.58 0.18 0.26 0.24 0.20 0.20 0.31 0.31 0.29 0.26 0.33 0.44 0.64 0.60 0.39 0.35 0.38 1999 35.61 0.17 0.25 0.23 0.19 0.19 0.30 0.29 0.27 0.24 0.30 0.40 0.56 0.52 0.33 0.29 0.29 2000 35.68 0.17 0.24 0.23 0.19 0.19 0.29 0.28 0.27 0.24 0.29 0.37 0.51 0.47 0.31 0.27 0.26 2001 35.28 0.11 0.17 0.15 0.12 0.11 0.19 0.18 0.16 0.12 0.16 0.22 0.33 0.27 0.10 0.03 -0.02 2002 34.94 0.06 0.11 0.09 0.06 0.04 0.12 0.10 0.08 0.04 0.06 0.11 0.20 0.13 -0.03 -0.11 -0.18 2003 34.61 0.01 0.06 0.04 0.00 -0.01 0.06 0.04 0.01 -0.03 -0.01 0.03 0.09 0.02 -0.13 -0.21 -0.28 2004 34.57 0.01 0.06 0.04 0.00 -0.02 0.05 0.03 0.00 -0.04 -0.02 0.02 0.08 0.01 -0.13 -0.20 -0.26 2005 34.51 0.00 0.05 0.03 -0.01 -0.02 0.04 0.02 -0.01 -0.04 -0.03 0.00 0.06 0.00 -0.13 -0.20 -0.25 2006 34.53 0.00 0.05 0.03 -0.01 -0.02 0.04 0.02 0.00 -0.04 -0.02 0.01 0.06 0.00 -0.12 -0.18 -0.22 2007 34.49 0.00 0.04 0.02 -0.01 -0.02 0.03 0.01 -0.01 -0.04 -0.03 0.00 0.05 -0.01 -0.12 -0.17 -0.21 2008 34.11 -0.05 -0.01 -0.02 -0.06 -0.07 -0.02 -0.04 -0.07 -0.10 -0.09 -0.07 -0.03 -0.08 -0.19 -0.24 -0.29 2009 33.40 -0.12 -0.08 -0.10 -0.14 -0.16 -0.11 -0.13 -0.16 -0.20 -0.20 -0.18 -0.15 -0.21 -0.32 -0.38 -0.43 2010 33.51 -0.10 -0.07 -0.09 -0.12 -0.14 -0.09 -0.11 -0.14 -0.18 -0.17 -0.15 -0.12 -0.18 -0.28 -0.33 -0.37 2011 33.68 -0.08 -0.05 -0.07 -0.10 -0.11 -0.07 -0.09 -0.11 -0.14 -0.14 -0.12 -0.09 -0.14 -0.23 -0.28 -0.31 2012 33.70 -0.08 -0.05 -0.06 -0.09 -0.11 -0.06 -0.08 -0.10 -0.14 -0.13 -0.11 -0.08 -0.13 -0.22 -0.26 -0.29 2013 33.78 -0.07 -0.04 -0.05 -0.08 -0.09 -0.05 -0.07 -0.09 -0.12 -0.11 -0.10 -0.07 -0.11 -0.19 -0.23 -0.26 2014 33.87 -0.06 -0.03 -0.04 -0.07 -0.08 -0.04 -0.06 -0.08 -0.10 -0.10 -0.08 -0.05 -0.09 -0.17 -0.20 -0.23 2015 34.08 -0.04 -0.01 -0.02 -0.05 -0.06 -0.02 -0.03 -0.05 -0.08 -0.07 -0.05 -0.02 -0.06 -0.13 -0.16 -0.19 2016 33.98 -0.05 -0.02 -0.03 -0.06 -0.07 -0.03 -0.04 -0.06 -0.08 -0.08 -0.06 -0.03 -0.07 -0.14 -0.17 -0.19 2017 33.91 -0.05 -0.02 -0.04 -0.06 -0.07 -0.03 -0.05 -0.07 -0.09 -0.08 -0.07 -0.04 -0.08 -0.14 -0.17 -0.19 2018 34.08 -0.04 -0.01 -0.02 -0.04 -0.05 -0.02 -0.03 -0.05 -0.07 -0.06 -0.05 -0.02 -0.05 -0.11 -0.14 -0.16 2019 33.87 -0.05 -0.02 -0.04 -0.06 -0.07 -0.04 -0.05 -0.06 -0.09 -0.08 -0.07 -0.04 -0.07 -0.13 -0.16 -0.18 2020 33.81 -0.05 -0.03 -0.04 -0.06 -0.07 -0.04 -0.05 -0.07 -0.09 -0.08 -0.07 -0.05 -0.08 -0.14 -0.16 -0.18 2021 34.15 -0.03 0.00 -0.01 -0.03 -0.04 -0.01 -0.02 -0.04 -0.06 -0.05 -0.03 -0.01 -0.04 -0.09 -0.12 -0.13 

From

To Variable 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 

2001 35.282002 34.94 -0.972003 34.61 -0.95 -0.932004 34.57 -0.67 -0.52 -0.112005 34.51 -0.55 -0.41 -0.14 -0.182006 34.53 -0.43 -0.29 -0.08 -0.06 0.052007 34.49 -0.37 -0.25 -0.09 -0.08 -0.03 -0.112008 34.11 -0.48 -0.40 -0.29 -0.34 -0.39 -0.62 -1.122009 33.40 -0.68 -0.64 -0.59 -0.69 -0.82 -1.10 -1.60 -2.072010 33.51 -0.57 -0.52 -0.46 -0.52 -0.59 -0.75 -0.96 -0.88 0.322011 33.68 -0.46 -0.41 -0.34 -0.37 -0.41 -0.50 -0.60 -0.42 0.41 0.512012 33.70 -0.42 -0.36 -0.30 -0.32 -0.34 -0.41 -0.47 -0.30 0.30 0.28 0.062013 33.78 -0.36 -0.30 -0.24 -0.26 -0.27 -0.31 -0.35 -0.19 0.28 0.27 0.16 0.252014 33.87 -0.31 -0.26 -0.20 -0.21 -0.21 -0.24 -0.26 -0.12 0.28 0.27 0.19 0.26 0.262015 34.08 -0.25 -0.19 -0.13 -0.13 -0.13 -0.15 -0.15 -0.01 0.33 0.34 0.29 0.37 0.43 0.612016 33.98 -0.25 -0.20 -0.14 -0.14 -0.14 -0.16 -0.17 -0.05 0.25 0.24 0.18 0.21 0.20 0.17 -0.272017 33.91 -0.25 -0.20 -0.15 -0.15 -0.15 -0.17 -0.17 -0.07 0.19 0.17 0.11 0.12 0.09 0.04 -0.25 -0.232018 34.08 -0.20 -0.15 -0.10 -0.10 -0.10 -0.11 -0.11 -0.01 0.23 0.21 0.17 0.19 0.18 0.16 0.01 0.15 2019 33.87 -0.23 -0.18 -0.14 -0.14 -0.13 -0.15 -0.15 -0.06 0.14 0.12 0.07 0.07 0.04 0.00 -0.15 -0.11 2020 33.81 -0.22 -0.18 -0.14 -0.14 -0.14 -0.15 -0.15 -0.07 0.11 0.09 0.04 0.04 0.01 -0.03 -0.16 -0.13 2021 34.15 -0.16 -0.12 -0.07 -0.07 -0.07 -0.07 -0.07 0.01 0.18 0.17 0.14 0.15 0.13 0.12 0.04 0.10 
Real Growth in Average OASDI Covered Wage, Page 15 

3.5 Appendix 

BLS has introduced numerous changes to the Current Population Survey (CPS) concepts over 

the historical period, such that values for employment are not historically comparable (for more 

detail on noncomparability of CPS concepts, see http://www.bls.gov/cps/eetech_methods.pdf). 

To make the total employment series more comparable, OCACT adjusted the published values 

for the following: 

1990 Census: BLS introduced 1990 Census-based population controls in January 1994, 

increasing employment levels for 1990 from the originally-published estimates by about 880,000 

(0.7%). BLS later revised the 1990 to 1993 estimates, but not those for earlier years. 

Consequently, OCACT adjusted the CPS data for 1981 to 1989 using a linear interpolation of the 

0.7% increase. 

2000 Census: BLS introduced population controls based on Census 2000 results in January 2003. 

The revised employment series for 2000 was 1.27% (or 1.724 million persons) higher than the 

previously published series. BLS revised the CPS data only back to January 2000. OCACT 

adjusted the CPS data back to 1991 by linearly interpolating the 1.27% adjustment. 

1994 CPS Methodology Change: In 1994, BLS introduced methodology changes and a complete 

redesign of its CPS. Because the survey redesign and methodology changes raised the aggregate 

employment for 1994, the series was not comparable with earlier years. Thus, OCACT applied a 

multiplicative-adjustment factor estimated by Polivka and Miller (1995)50 to the series for years 

prior to 1994. The aggregate employment series was adjusted for 1993 and earlier years by a 

factor of 1.0053. 

Population Controls since the 2000 Census: In January 2003, the U.S. Census Bureau introduced 

its updated population controls in the CPS estimates. The difference between the updated and 

originally published employment values for December 2002 is an increase of 576,000 persons. 

Data from December 2002 and earlier are not updated by BLS. OCACT adjusted the 

employment series back to 2000. 

In January 2004, the U.S. Census Bureau reflected revised net international migration estimates 

in its updated population controls. The difference between the updated and originally published 

employment values for December 2003 is a decrease of 409,000 persons. Data from December 

2003 and earlier are not updated by BLS. OCACT adjusted the employment series back to 2000. 

In January 2005, the U.S. Census Bureau introduced updated population controls, which 

reflected updated vital statistics information, as well as revised estimates of net international 

50 Anne E. Polivka and Stephen M. Miller, "The CPS after the Redesign: Refocusing the Economic Lens,” 

Labor Statistics Measurement Issues; Studies in Income and Wealth Volume 60, Edited by John Haltiwanger, 

Marilyn E. Manser and Robert Topel, National Bureau of Economic Research, 1998, Table 6. Also available at 

http://www.bls.gov/ore/pdf/ec950090.pdf. Polivka and Miller’s adjustment factors are for employment-population 

ratios, not employment levels. Because the CPS methodology change affected the employment levels, but not the 

civilian noninstitutional population, their multiplicative employment-population ratio factors are used to adjust the 

employment levels. 
Real Growth in Average OASDI Covered Wage, Page 16 

migration. The difference between the updated and originally published employment values for 

December 2004 is a decrease of 45,000 persons. Data from December 2004 and earlier are not 

updated by BLS. OCACT adjusted the employment series back to 2000. 

In January 2006, the U.S. Census Bureau introduced updated population controls, which 

reflected updated vital statistics information, as well as revised estimates of net international 

migration. The difference between the updated and originally published employment values for 

December 2005 is a decrease of 123,000 persons. Data from December 2005 and earlier are not 

updated by BLS. OCACT adjusted the employment series back to 2000. 

In January 2007, the U.S. Census Bureau introduced updated population controls, which 

reflected revised estimates of net international migration and updated vital statistics information. 

The difference between the updated and originally published employment values for December 

2006 is an increase of 153,000 persons. Data from December 2006 and earlier are not updated by 

BLS. OCACT adjusted the employment series back to 2000. 

In January 2008, the U.S. Census Bureau introduced updated population controls, which 

reflected updated vital statistics information, as well as revised estimates of net international 

migration and the institutional population. The difference between the updated and originally 

published employment values for December 2007 is a decrease of 598,000 persons. Data from 

December 2007 and earlier are not updated by BLS. OCACT adjusted the employment series 

back to 2000. 

In January 2009, the U.S. Census Bureau introduced updated population controls, reflecting 

revised net international migration and vital statistics information. The difference between the 

updated and originally published employment values for December 2008 is a decrease of 

407,000 persons. Data from December 2008 and earlier are not updated by BLS. OCACT 

adjusted the employment series back to 2000. 

In January 2010, the U.S. Census Bureau introduced updated population controls, reflecting 

updated vital statistics information, revised estimates of net international migration, as well as 

methodological changes in the population estimation process. The difference between the 

updated and originally published employment values for December 2009 is a decrease of 

243,000 persons. BLS does not update data from December 2009 and earlier. OCACT adjusted 

the employment series back to 2000. 

In January 2011, the U.S. Census Bureau introduced updated population controls, reflecting 

revised net international migration, vital statistics information, and some methodological changes 

in the population estimation process. The difference between the updated and originally 

published employment values for December 2010 is a decrease of 472,000 persons. BLS does 

not update data from December 2010 and earlier. OCACT adjusted the employment series back 

to 2000. 

In January 2012, the U.S. Census Bureau incorporated the Census 2010 population base, as well 

as adjustments for net international migration, updated vital statistics information, and 

methodological changes in the population estimation process. The difference between the 
Real Growth in Average OASDI Covered Wage, Page 17 

updated and originally published employment values for December 2011 is an increase of 

216,000 persons. BLS does not update data from December 2011 and earlier. OCACT adjusted 

the employment series back to 2000. 

In January 2013, the U.S. Census Bureau introduced updated population controls, reflecting net 

international migration adjustments, updated vital statistics information, and some 

methodological changes in the population estimation process. The difference between the 

updated and originally published employment values for December 2012 is an increase of 

127,000 persons. BLS does not update data from December 2012 and earlier. OCACT adjusted 

the employment series back to 2000. 

In January 2014, the U.S. Census Bureau updated their population controls, reflecting net 

international migration adjustments, updated birth and death statistics and other information, and 

some methodological changes in the population estimation process. The difference between the 

updated and originally published employment values for December 2013 is an increase of 22,000 

persons. BLS does not update data from December 2013 and earlier. OCACT adjusted the 

employment series back to 2000. 

In January 2015, the U.S. Census Bureau updated their population controls, reflecting net 

international migration adjustments, updated birth and death statistics and other information, and 

some methodological changes in the population estimation process. The difference between the 

updated and originally published employment values for December 2014 is an increase of 

324,000 persons. BLS does not update data from December 2014 and earlier. OCACT adjusted 

the employment series back to 2000. 

In January 2016, the U.S. Census Bureau updated their population controls, reflecting net 

international migration adjustments, updated birth and death statistics and other information, and 

some methodological changes in the population estimation process. The difference between the 

updated and originally published employment values for December 2015 is an increase of 

265,000 persons. BLS does not update data from December 2015 and earlier. OCACT adjusted 

the employment series back to 2000. 

In January 2017, the U.S. Census Bureau updated their population controls, reflecting net 

international migration adjustments, updated birth and death statistics and other information, and 

some methodological changes in the population estimation process. The Census Bureau’s 

methodological improvements included changes in the estimation of the foreign-born emigration 

subcomponent of net international migration. These method changes resulted in higher foreignborn emigration and lower overall net international migration than previously estimated. The 

difference between the updated and originally published employment values for December 2016 

is a decrease of 831,000 persons. BLS does not update data from December 2016 and earlier. 

OCACT adjusted the employment series back to 2000.

In January 2018, the U.S. Census Bureau updated their population controls, reflecting net 

international migration adjustments, updated birth and death statistics and other information, and 

some methodological changes in the population estimation process. The difference between the 

updated and originally published employment values for December 2017 is an increase of 
Real Growth in Average OASDI Covered Wage, Page 18 

318,000 persons. BLS does not update data from December 2017 and earlier. OCACT adjusted 

the employment series back to 2000. 

In January 2019, the U.S. Census Bureau updated their population controls, reflecting net 

international migration adjustments, updated birth and death statistics and other information, and 

some methodological changes in the population estimation process. The difference between the 

updated and originally published employment values for December 2018 is a decrease of 

488,000 persons. BLS does not update data from December 2018 and earlier. OCACT adjusted 

the employment series back to 2000. 

In January 2020, the U.S. Census Bureau updated their population controls, reflecting net 

international migration adjustments, updated birth and death statistics and other information, and 

some methodological changes in the population estimation process. The difference between the 

updated and originally published employment values for December 2019 is a decrease of 

507,000 persons. BLS does not update data from December 2019 and earlier. OCACT adjusted 

the employment series back to 2000. 

In January 2021, the U.S. Census Bureau updated their population controls, reflecting net 

international migration adjustments, updated birth and death statistics and other information, and 

some methodological changes in the population estimation process. The difference between the 

updated and originally published employment values for December 2020 is a decrease of 

180,000 persons. BLS does not update data from December 2020 and earlier. OCACT adjusted 

the employment series back to 2000. 

In January 2022, the U.S. Census Bureau updated their population estimates, primarily reflecting 

the change in the base population from Census 2010 to the blended Census 2020 base, and also 

net international migration adjustments, updated birth and death statistics and other information, 

and some methodological changes in the population estimation process. The difference between 

the updated and originally published employment values for December 2021 is an increase of 

1,471,000 persons. BLS does not update data from December 2021 and earlier. OCACT adjusted 

the employment series back to 2000. 
Unemployment Rate, Page 1 

4. UNEMPLOYMENT 

THE 2023 TRUSTEES REPORT 

OFFICE OF THE CHIEF ACTUARY, SOCIAL SECURITY ADMINISTRATION 

TABLE OF CONTENTS PAGE 

4 UNEMPLOYMENT RATE .................................................................................................. 2 

4.1 SUMMARY ...................................................................................................................................................... 2

4.2 PAST EXPERIENCE .......................................................................................................................................... 2

4.3 FUTURE EXPECTATIONS ................................................................................................................................. 4

4.4 PROJECTIONS FROM OTHER SOURCES ............................................................................................................. 4

TABLE OF TABLES PAGE 

TABLE 4.1: ASSUMED ULTIMATE TOTAL CIVILIAN UNEMPLOYMENT RATE ................................................................... 2

TABLE 4.2: CIVILIAN UNEMPLOYMENT RATES OVER COMPLETE ECONOMIC CYCLES (PEAK-TO-PEAK) ....................... 3

TABLE 4.3: TOTAL AND AGE-SEX ADJUSTED CIVILIAN UNEMPLOYMENT RATES OVER SELECTED INTERVALS (%) ...... 6
Unemployment Rate, Page 2 

4 Unemployment Rate 

4.1 Summary 

For the 2023 Trustees Report, the ultimate total civilian unemployment rates (adjusted by the age 

and sex distribution of the 2011 civilian labor force) are assumed to be 3.5 percent, 4.5 percent, 

and 5.5 percent for alternatives I, II, and III, respectively (Table 4.1). These assumptions are 

unchanged from those used for the 2022 Trustees Report. 

Table 4.1: Assumed Ultimate Total Civilian Unemployment Rate 

2023 Trustees Report 

Alternative 

2022 Trustees Report 

Alternative 

2023 Trustees Report Less 

2022 Trustees Report 

I II III I II III I II III

Civilian Unemployment Rate 3.5 4.5 5.5 3.5 4.5 5.5 0.0 0.0 0.0 

4.2 Past Experience 

BLS publishes civilian unemployment rates, defined as the proportion of unemployed persons in 

the civilian labor force, by sex and age group as part of its Current Population Survey. The 

ultimate civilian unemployment rate assumptions are based on analysis of historical experience 

and expected future conditions and trends. Because the aggregate unemployment rate is sensitive 

to changes in the age-sex composition of the civilian labor force, OCACT constructed an 

age-sex-adjusted unemployment rate by weighting the unadjusted age-sex unemployment rates 

by the age-sex distribution of the 2011 civilian labor force. Since the civilian unemployment rate 

varies significantly over an economic cycle, it is useful to look at averages over complete 

economic cycles or long periods (decades). Table 4.2 shows average civilian unemployment 

rates (unadjusted and age-sex-adjusted) over complete (peak-to-peak) economic cycles. The 

age-sex-adjusted unemployment rate averaged 5.6 percent over the last six complete economic 

cycles (1969 through 2019), 5.7 percent over the last five cycles (1973 through 2019), 5.8 

percent over the last four cycles (1979 through 2019), 5.6 percent over the last three cycles (1990 

through 2019), and 5.9 percent over the last two cycles (2001 through 2019).51 Table 4.3 shows 

annual values for both the adjusted and unadjusted civilian rates. 

51 Peaks in economic cycles roughly follow the NBER cycle dating, except for short recoveries such as 

1980-1981, which are not counted as separate cycles. 
Unemployment Rate, Page 3 

Table 4.2: Civilian Unemployment Rates Over Complete Economic Cycles (Peak-to-Peak)52

 Total Rate Age-Sex Adjusted Rate 

By Economic Cycles: 

1969-1972 5.0 4.2 

1973-1978 6.6 5.5 

1979-1989 7.1 6.1 

1990-2000 5.6 5.2 

2001-2007 5.2 5.0 

2008-2019 6.4 6.4 

2020-2021 (incomplete cycle) 6.7 6.8 

By Multiple Complete Cycles: 

Last Six: 1969-2019 (50 years) 6.2 5.6 

Last Five: 1973-2019 (46 years) 6.2 5.7 

Last Four: 1979-2019 (40 years) 6.2 5.8 

Last Three: 1990-2019 (29 years) 5.8 5.6 

Last Two: 2001-2019 (18 years) 6.0 5.9 

It is also useful to look at unemployment rates over specific periods. Beginning around 1975, and 

lasting through about 1994, the U.S. experienced generally high unemployment rates. One factor 

contributing to this may have been rapid changes in technology and increased global 

competition, which made job searches and retraining more frequent and longer-lasting. Another 

contributing factor was the huge influx of women and baby boomers into the labor market, which 

likely increased the quantity of labor supplied relative to the quantity demanded in the 1970s and 

1980s. 

Between 1997 and 2000, rapid economic expansion reduced unemployment rates to levels not 

seen since the 1960s. Although interrupted by a mild recession, rates returned to levels below 

long-run average and remained relatively low until 2007. The recession of 2007-2009 resulted in 

rates that were well above the long-run average level for several years. 

Near the peak of the last economic cycle, the unemployment rate was at an extraordinarily low 

level. At the same time, the aggregate labor force participation rate was lower than that projected 

by OCACT’s model based on the observed unemployment rate and other factors. These 

deviations from historical patterns were largely offsetting, so that the resulting employment level 

52 Unlike historical tables in Sections 1–3, which show growth rates, Table 4.2 shows average levels over periods. 

Periods are labeled so that first and last years are included in averaging, and each year is counted in exactly one 

economic cycle. 
Unemployment Rate, Page 4 

predicted by the model was close to the observed employment level. In recent years, the 

relationship between unemployment rates and labor force participation rates has been different 

than in the past. The 2020 and 2021 Trustees Reports indicated the Trustees’ belief that there has 

been a structural change that will persist in the foreseeable future. Accordingly, the Trustees 

lowered both the ultimate average unemployment rate and the labor force participation rates in 

those reports. 

4.3 Future Expectations 

For the 2021 Trustees Report, OCACT updated the labor force model, which is now estimated 

based on data including the latest complete economic cycle. The relationship between 

unemployment and labor force in the updated model is in closer alignment with the structural 

shift mentioned above. 

A significant factor affecting future employment measures is the aging of the baby boom 

generation. As the baby boomers age and are replaced at working ages by the lower-birth-rate 

generations that followed, the working-age population is expected to grow more slowly, 

particularly in relation to the size of the total population. This demographic shift is expected to 

increase the demand for older workers. Meanwhile, the supply of potential older workers is 

expected to increase, as a significant portion of the baby boomers is expected to remain in the 

labor force, in many cases, out of necessity (as their life expectancies increase). Even with 

increases in labor supply from older workers, it is likely that the increasing aged dependency 

ratio will continue to exert downward pressure on the age-sex-adjusted unemployment rate. 

 

The Trustees continue to believe that there are good reasons to assume that the future age-sexadjusted unemployment rates will average somewhat lower than they did over the last six 

complete economic cycles. Therefore, the assumed ultimate average unemployment rate is 4.5 

percent (age-sex adjusted to the 2011 labor force) for alternative II, 3.5 percent for the alternative 

I, and 5.5 percent for the alternative III. These rates are unchanged from those assumed in the 

2022 report. 

4.4 Projections from Other Sources 

At the time assumptions were developed, the following projections from other sources were 

available. 

IHS Markit provided projections through 2052 in its August 2022 30-year trend forecast (see The 

30-Year Focus, Third Quarter, August 2022). IHS Markit projected the civilian unemployment 

rate would average 4.2 percent over the 20-year period for 2032 through 2052. Moody’s 

Analytics in its September 2022 forecast showed a civilian unemployment rate averaging 4.1 

percent for 2032 through 2052. 

The Office of Management and Budget (OMB) Mid-Session Review to the 2023 Fiscal Year 

Budget included projections through 2032. OMB projected an aggregate civilian unemployment 

rate of 3.8 percent for 2024 and later. The Congressional Budget Office (CBO) included 
Unemployment Rate, Page 5 

projections through 2052 in its July 2022 report, The 2022 Long-Term Budget Outlook. CBO 

projected an aggregate civilian unemployment rate averaging 4.3 percent for 2032 through 2052. 

The Social Security Advisory Board’s 2019 Technical Panel on Assumptions and Methods 

recommended assuming an ultimate aggregate civilian age-sex-adjusted unemployment rate of 

4.8 percent for alternative II. The prior technical panel, which met in 2015, recommended no 

changes to the ultimate age-sex-adjusted unemployment rate of 5.5 percent, assumed in the 2015 

Trustees Report, alternative II. 
Unemployment Rate, Page 6 

Table 4.3: Total and Age-Sex Adjusted Civilian Unemployment Rates Over Selected Intervals (%) 

Year 1 5 10 15 20 25 30 35 40 45 50 1 5 10 15 20 25 

1961 6.7 6.3

1962 5.5 5.21963 5.6 5.21964 5.2 4.71965 4.5 5.5 4.0 5.11966 3.8 4.9 3.3 4.51967 3.8 4.6 3.3 4.11968 3.5 4.2 3.0 3.61969 3.5 3.8 2.9 3.31970 5.0 3.9 4.7 4.2 3.3 4.21971 6.0 4.4 4.6 5.1 3.7 4.11972 5.6 4.7 4.7 4.7 4.0 4.01973 4.9 5.0 4.6 3.9 4.2 3.91974 5.6 5.4 4.6 4.5 4.5 3.91975 8.5 6.1 5.0 5.2 7.2 5.1 4.2 4.51976 7.7 6.5 5.4 5.2 6.4 5.3 4.5 4.51977 7.0 6.7 5.7 5.3 5.8 5.6 4.8 4.51978 6.1 7.0 6.0 5.4 4.9 5.8 5.0 4.51979 5.8 7.0 6.2 5.4 4.8 5.8 5.2 4.51980 7.2 6.8 6.4 5.6 5.6 5.9 5.6 5.3 4.7 4.81981 7.6 6.7 6.6 5.9 5.6 6.3 5.5 5.4 4.9 4.81982 9.7 7.3 7.0 6.2 5.8 8.3 6.0 5.8 5.2 4.91983 9.6 8.0 7.5 6.6 6.0 8.3 6.7 6.2 5.6 5.11984 7.5 8.3 7.7 6.9 6.1 6.6 7.1 6.5 5.8 5.21985 7.2 8.3 7.5 7.1 6.3 6.1 6.3 7.2 6.4 5.9 5.3 5.21986 7.0 8.2 7.5 7.1 6.4 6.1 6.1 7.1 6.3 6.0 5.4 5.21987 6.2 7.5 7.4 7.2 6.6 6.2 5.4 6.6 6.3 6.1 5.5 5.21988 5.5 6.7 7.3 7.2 6.7 6.2 4.9 5.9 6.3 6.1 5.6 5.21989 5.3 6.2 7.3 7.2 6.7 6.2 4.7 5.5 6.3 6.1 5.7 5.21990 5.6 5.9 7.1 7.0 6.8 6.2 6.1 5.0 5.2 6.2 6.0 5.8 5.3 1991 6.8 5.9 7.0 6.9 6.8 6.3 6.1 6.2 5.3 6.2 6.0 5.8 5.4 1992 7.5 6.1 6.8 7.0 6.9 6.5 6.2 6.9 5.6 6.1 6.0 5.9 5.5 1993 6.9 6.4 6.6 7.0 7.0 6.6 6.2 6.4 5.9 5.9 6.1 6.1 5.7 1994 6.1 6.6 6.4 7.0 7.0 6.7 6.2 5.7 6.1 5.8 6.2 6.1 5.8 1995 5.6 6.6 6.3 6.9 6.9 6.7 6.3 6.2 5.2 6.1 5.7 6.2 6.0 5.8 1996 5.4 6.3 6.1 6.8 6.8 6.7 6.3 6.1 5.0 5.8 5.5 6.1 5.9 5.8 1997 4.9 5.8 6.0 6.5 6.7 6.7 6.4 6.1 4.6 5.4 5.5 5.8 5.9 5.8 1998 4.5 5.3 5.9 6.1 6.6 6.7 6.4 6.1 4.2 4.9 5.4 5.5 5.8 5.8 1999 4.2 4.9 5.8 5.9 6.5 6.6 6.4 6.0 3.9 4.6 5.3 5.4 5.8 5.8 2000 4.0 4.6 5.6 5.7 6.4 6.4 6.4 6.0 6.0 3.7 4.3 5.2 5.2 5.7 5.7 2001 4.8 4.5 5.4 5.6 6.2 6.3 6.3 6.1 5.9 4.5 4.2 5.0 5.1 5.6 5.6 2002 5.8 4.6 5.2 5.5 6.0 6.3 6.3 6.1 5.9 5.5 4.4 4.9 5.1 5.5 5.6 2003 6.0 4.9 5.1 5.6 5.8 6.3 6.4 6.2 5.9 5.8 4.7 4.8 5.2 5.3 5.6 2004 5.5 5.2 5.1 5.6 5.7 6.3 6.4 6.2 5.9 5.3 5.0 4.8 5.2 5.3 5.6 2005 5.1 5.4 5.0 5.5 5.6 6.2 6.3 6.2 6.0 5.9 4.9 5.2 4.7 5.2 5.2 5.6 2006 4.6 5.4 4.9 5.4 5.5 6.1 6.2 6.2 6.0 5.9 4.5 5.2 4.7 5.1 5.1 5.5 2007 4.6 5.2 4.9 5.2 5.4 5.8 6.1 6.2 6.0 5.8 4.5 5.0 4.7 4.9 5.1 5.4 2008 5.8 5.1 5.0 5.1 5.5 5.7 6.1 6.2 6.1 5.8 5.7 5.0 4.8 4.9 5.1 5.3 2009 9.3 5.9 5.5 5.3 5.7 5.8 6.2 6.3 6.2 5.9 9.2 5.8 5.4 5.1 5.3 5.4 2010 9.6 6.8 6.1 5.6 5.9 5.9 6.3 6.3 6.3 6.0 6.0 9.6 6.7 6.0 5.4 5.6 5.5 2011 8.9 7.7 6.5 5.8 6.0 5.9 6.3 6.4 6.4 6.2 6.0 8.9 7.6 6.4 5.7 5.7 5.6 2012 8.1 8.3 6.8 6.1 6.0 6.0 6.3 6.4 6.5 6.3 6.1 8.1 8.3 6.7 5.9 5.8 5.7 2013 7.4 8.7 6.9 6.2 6.0 6.1 6.2 6.4 6.5 6.3 6.1 7.4 8.6 6.8 6.1 5.8 5.8 2014 6.2 8.0 7.0 6.4 6.0 6.1 6.1 6.5 6.5 6.4 6.1 6.2 8.0 6.9 6.3 5.8 5.9 2015 5.3 7.2 7.0 6.5 6.0 6.1 6.1 6.4 6.4 6.4 6.2 5.3 7.2 6.9 6.4 5.8 5.9 2016 4.9 6.3 7.0 6.5 6.0 6.0 6.0 6.3 6.4 6.4 6.2 4.9 6.4 7.0 6.4 5.8 5.8 2017 4.4 5.6 7.0 6.4 5.9 5.9 5.9 6.2 6.3 6.4 6.2 4.4 5.6 7.0 6.3 5.8 5.7 2018 3.9 4.9 6.8 6.2 5.9 5.8 5.9 6.0 6.3 6.3 6.2 3.9 4.9 6.8 6.2 5.8 5.6 2019 3.7 4.4 6.2 6.1 5.9 5.7 5.8 5.9 6.2 6.3 6.2 3.7 4.4 6.2 6.1 5.8 5.6 2020 8.1 5.0 6.1 6.3 6.1 5.8 5.9 5.9 6.2 6.3 6.3 8.2 5.0 6.1 6.3 6.0 5.7 2021 5.3 5.1 5.7 6.4 6.1 5.8 5.9 5.9 6.2 6.2 6.3 5.4 5.1 5.7 6.4 6.1 5.7 

Total Rate Age-Sex Adjusted R

Annual Average Over the Following Number of Years Annual Average Over the Followin
Annual Trust Fund New-Issue Real Interest Rate, Page 1 

5. ANNUAL TRUST FUND NEW-ISSUE REAL INTEREST RATE 

THE 2023 TRUSTEES REPORT 

OFFICE OF THE CHIEF ACTUARY, SOCIAL SECURITY ADMINISTRATION 

TABLE OF CONTENTS PAGE 

5 ANNUAL TRUST FUND NEW-ISSUE REAL INTEREST RATE ................................. 2

5.1 SUMMARY ...................................................................................................................................................... 2

5.2 PAST EXPERIENCE .......................................................................................................................................... 2

5.3 FUTURE EXPECTATIONS ................................................................................................................................. 4

5.4 PROJECTIONS FROM OTHER SOURCES ............................................................................................................. 4

TABLE OF TABLES PAGE 

TABLE 5.1: ASSUMED ULTIMATE REAL INTEREST RATES .............................................................................................. 2

TABLE 5.2: AVERAGE ANNUAL REAL INTEREST RATE (CALCULATED USING THE ADJUSTED-CPIW) ............................. 3

TABLE 5.3: REAL INTEREST RATES FOR OASDI TRUST FUND NEW ISSUES AND THE COMPOUND AVERAGE REAL 

YIELD OVER SELECTED INTERVALS ....................................................................................................................... 6
 Annual Trust Fund New-Issue Real Interest Rate, Page 2 

5 Annual Trust Fund New-Issue Real Interest Rate 

5.1 Summary 

For the 2023 Trustees Report, the assumed ultimate real interest rates (effective annual real 

yields on special public debt obligations issuable to the trust funds by the U.S. Treasury) are 2.8 

percent, 2.3 percent, and 1.8 percent for alternatives I, II, and III, respectively (Table 5.1). These 

assumed rates are the same as the rates used for the 2022 Trustees Report. 

Table 5.1: Assumed Ultimate Real Interest Rates 

2023 Trustees Report 

Alternative 

2022 Trustees Report 

Alternative 

2023 Trustees Report Less 

2022 Trustees Report 

I II III I II III I II III

Real Interest Rate 2.8 2.3 1.8 2.8 2.3 1.8 0.0 0.0 0.0 

Since October 1960, interest rates on special public debt obligations issuable to the trust funds 

each month have been set equal to the average market yield on all marketable fixed-rate federal 

obligations that are not callable and do not mature within the next 4 years. As such, the rate on 

new issues to the trust funds represents a fair market return for longer-term, highly liquid, 

default-risk-free obligations. The real interest rate (real effective annual yield) on these 

obligations can be computed either as an expected yield (i.e., nominal effective annual yield less 

expected future inflation rate) or as the actual realized yield over some period after issue (i.e., 

nominal effective annual yield less the actual increase in price levels after issue). For the purpose 

of this analysis, actual realized yields over the year after issue will be examined for obligations 

issuable each year. Real interest rates over periods of two or more years are computed as the 

average annual yield of an investment at the beginning of the period that is reinvested annually at 

the new issue rate. 

5.2 Past Experience 

Tables 5.2 and 5.3 show the average annual real interest rates over various decades and 

economic cycles, using an adjusted CPI-W that reflects BLS improvements to the index.53 (See 

Section 2.7 Appendix.) 

The average annual real interest rate on trust fund assets over the last six complete economic 

cycles was 2.70 percent (computed as the average annual return for investments in 1969 that 

were reinvested annually at the new issue rates for years 1969 through 2019). Annual real 

interest rates for individual years within this period varied substantially from this average of 2.70 

percent. Even the average rates of 2.01, -0.12, 5.38, 4.34, 1.96 and 0.83 percent for each 

economic cycle beginning with the 1969-1973 cycle, respectively, varied substantially from one 

53 Peaks in economic cycles roughly follow the NBER cycle dating, except for short recoveries such as 

1980-1981, which are not counted as separate cycles. 
 Annual Trust Fund New-Issue Real Interest Rate, Page 3 

another. The large differences among these periods indicate substantially different conditions 

across these cycles.

Table 5.2: Average Annual Real Interest Rate (calculated using the adjusted CPI-W) 

Average Annual Real Interest Rate 

(percent) 

Long-Term Historical Averages: 

 1971-2021 (50 years) 2.53

 1971-1996 (25 years) 3.56 

 1996-2021 (25 years) 1.51 

By Economic Cycle: 

 1969-1973 2.01 

 1973-1979 -0.12 

 1979-1990 5.38 

 1990-2001 4.34 

 2001-2007 1.96 

 2007-2019 0.83 

 2019-2021 (incomplete cycle) -1.56 

By Multiple Complete Cycles: 

 Last Six: 1969-2019 2.70 

 Last Five: 1973-2019 2.76 

 Last Four: 1979-2019 3.20 

 Last Three: 1990-2019 2.38 

 Last Two: 2001-2019 1.20 

After experiencing negative real yields in investments in U.S. Treasury securities from 1974 

through 1980, caused largely by higher-than-expected price inflation, investors demanded higher 

interest rates to protect their investments. Sustained high real interest rates in the years after 1981 

resulted from the following factors: constrained money supply growth, increased borrowing by 

businesses, reduced savings rates in the U.S. economy, deregulation of banks and other financial 

institutions, and lower than expected inflation in the beginning of that period. 

As the rate of inflation declined from the highs of the early 1980s and remained under control, 

the real interest rate slowly followed suit, declining to 2.34 percent in 2000. In October 2001, the 

federal government, in response to its favorable budget situation, suspended the sale of 30-year 

Treasury securities (leaving the 10-year notes as the longest duration being issued). Since then, 

the federal budget has fallen back into deficit and, beginning in February 2006, the Treasury 

re-introduced regular semi-annual auctions of the 30-year nominal Treasury bond. Neither the 

budget deficits nor the federal funds rate hikes by the Federal Reserve between 2004 and 2006 

resulted in a spike in real interest rates, due in part to foreigners’ increased willingness to 

accumulate Treasury securities. Instead, the real interest rate continued to trend downward, 

reaching 0.60 percent in 2008. Since 2008, the annual real interest rate has averaged only 0.47 

percent, largely due to slow economic growth, unconventional monetary policies such as 

quantitative easing, a global savings glut, as well as a strong demand for safe assets in order to 

satisfy regulatory requirements in the financial sector. 
 Annual Trust Fund New-Issue Real Interest Rate, Page 4 

5.3 Future Expectations 

In 2022, short-term nominal interest rates have been rising as the Federal Reserve attempts to 

bring down inflation, and long-term interest rates have similarly been rising as markets appear to 

expect higher rates in the near future than in the recent past. If The Federal Reserve succeeds in 

achieving the inflation target without a recession, a likely result will be higher real interest rates 

over the near term than in recent years. If inflation persists or the economy slips into a recession, 

however, the path of real interest rates is more uncertain. 

Over the longer term, several factors are expected to result in a return to higher yields on 

Treasury securities. First, federal deficits were large during the pandemic and debt is expected to 

continue rising in the future. Federal Reserve Board Chairman Jerome Powell has said that 

federal debt has been on an unsustainable path,54 as federal debt is growing faster than the 

economy. In The 2022 Long-Term Budget Outlook, CBO projects that the amount of publicly 

held debt will rise from 97.9 percent of GDP at the end of fiscal year 2022 to 112.0 percent in 

2033. Such increases in debt will eventually lead to increases in the yields on Treasury securities, 

and such increases in yields could potentially happen suddenly, as seen in the past. 

Second, the Federal Reserve’s flexible inflation targeting policy should not be presumed to last 

indefinitely, given their explicit indication that they will review all aspects of their monetary 

policy every five years.55 This will likely lead to occasional changes in monetary policy. The 

worsening fiscal situation has been alleviated by recent low interest rates. It is unlikely that such 

an environment of increasing debt and low interest rates can persist in the long run. Elevated 

inflation has prompted the Federal Reserve to raise the short term nominal interest rate. The 

outcome of the Federal Reserve’s efforts to control inflation may impact future changes to 

monetary policy following what has been experienced in 2021 and 2022. 

The low interest rates experienced in the last economic cycle from 2007 to 2019 (averaging 0.83 

percent) do not make a compelling case for further changing the ultimate assumption, which has 

been lowered from 2.7 percent to 2.5 percent for the 2019 Trustees Report and from 2.5 percent 

to 2.3 percent for the 2020 Trustees Report. It remains to be seen for how long the current 

monetary policy regime can co-exist with the increasing federal debt. Additionally, the 

experience so far in 2022 shows that periods of temporarily higher interest rates in the future are 

possible. Thus, the Trustees maintain the ultimate real interest rate assumption at 2.3 percent for 

alternative II. 

5.4 Projections from Other Sources 

At the time assumptions were developed, the following projections from other sources were 

available. 

54 For example, see https://www.npr.org/2020/09/04/909590044/transcript-nprs-full-interview-with-fedchairman-jerome-powell. 55 See https://www.federalreserve.gov/monetarypolicy/review-of-monetary-policy-strategy-tools-andcommunications-statement-on-longer-run-goals-monetary-policy-strategy.htm. 
 Annual Trust Fund New-Issue Real Interest Rate, Page 5 

IHS Markit provided projections through 2052 in its August 2022 30-year trend forecast (see The 

30-Year Focus, Third Quarter, August 2022). They projected real yields on 10-year U.S. 

Treasury notes to rise from -1.3 percent for 2023 to an average of 1.0 percent for 2034 to 2041, 

and then fall to an average of 0.9 percent for 2042 through 2052. Moody’s Analytics’ September 

2022 forecast projected real yields on 10-year U.S. Treasury notes to be in the 1.3 to 1.4 percent 

range from 2038 through 2052. 

The Office of Management and Budget (OMB) Mid-Session Review to the Fiscal Year 2023 

Budget projected the real yield on the trust funds’ special-issue securities to reach 1.3 percent by 

2032. The Congressional Budget Office (CBO) report The 2022 Long-Term Budget Outlook

(published in July 2022) included projections through 2052. CBO projected real yields on 

10-year Treasury notes to rise from 1.4 percent in 2027 to 2.4 percent in 2052. For the 10-year 

period from 2043 to 2052, CBO projected real yields on 10-year Treasury notes to average 2.5 

percent. 

The Social Security Advisory Board’s 2019 Technical Panel on Assumptions and Methods 

recommended lowering the alternative II real interest rate assumption to 2.3 percent, a level to be 

reached in 25 years. The prior technical panel, which met in 2015, recommended lowering the 

alternative II real interest rate assumption to 2.5 percent. 
 Annual Trust Fund New-Issue Real Interest Rate, Page 6 

Table 5.3: Real Interest Rates for OASDI Trust Fund New Issues and the Compound Average Real Yield Over 

Selected Intervals 

Average Annual Percentage Change Over the Prior Period of the Following Length (in years):

To RYINDEX 1 5 10 15 20 25 30 35 40 45 50

1961 22.87

1962 23.56 3.03

1963 24.21 2.74

1964 24.89 2.81

1965 25.57 2.74

1966 25.97 1.56 2.58

1967 26.51 2.08 2.39

1968 26.90 1.49 2.14

1969 27.24 1.27 1.83

1970 27.79 2.00 1.68

1971 28.67 3.18 2.00 2.29

1972 29.49 2.85 2.16 2.27

1973 29.50 0.04 1.86 2.00

1974 28.66 -2.84 1.02 1.42

1975 28.59 -0.25 0.57 1.12

1976 29.14 1.92 0.32 1.16 1.63

1977 29.46 1.08 -0.02 1.06 1.50

1978 29.62 0.54 0.08 0.97 1.35

1979 29.29 -1.10 0.43 0.73 1.09

1980 28.82 -1.61 0.16 0.36 0.80

1981 29.33 1.76 0.13 0.23 0.81 1.25

1982 31.51 7.44 1.36 0.66 1.16 1.46

1983 34.24 8.66 2.94 1.50 1.62 1.75

1984 36.63 6.99 4.57 2.48 1.99 1.95

1985 39.97 9.12 6.76 3.41 2.45 2.26

1986 43.75 9.45 8.33 4.15 2.86 2.64 2.63

1987 45.77 4.61 7.75 4.50 2.97 2.77 2.69

1988 48.02 4.93 7.00 4.95 3.30 2.94 2.78

1989 50.17 4.48 6.49 5.53 3.80 3.10 2.84

1990 52.14 3.91 5.46 6.11 4.09 3.20 2.89

1991 54.79 5.09 4.60 6.45 4.30 3.29 3.03 2.96

1992 57.86 5.60 4.80 6.27 4.60 3.43 3.17 3.04

1993 60.61 4.75 4.77 5.88 4.89 3.67 3.30 3.11

1994 63.08 4.08 4.69 5.59 5.25 4.02 3.42 3.15

1995 65.99 4.60 4.82 5.14 5.68 4.27 3.52 3.21

1996 68.82 4.30 4.67 4.63 5.85 4.39 3.56 3.30 3.20

1997 71.90 4.47 4.44 4.62 5.65 4.56 3.63 3.38 3.24

1998 75.86 5.51 4.59 4.68 5.45 4.82 3.85 3.52 3.32

1999 78.53 3.52 4.48 4.58 5.22 5.05 4.11 3.59 3.34

2000 80.37 2.34 4.02 4.42 4.77 5.26 4.22 3.60 3.33

2001 83.20 3.52 3.87 4.27 4.38 5.35 4.29 3.61 3.38 3.28

2002 86.41 3.87 3.75 4.09 4.33 5.17 4.40 3.65 3.43 3.30

2003 88.71 2.66 3.18 3.88 4.18 4.88 4.49 3.74 3.47 3.30

2004 89.97 1.42 2.76 3.61 3.97 4.60 4.59 3.89 3.47 3.27

2005 90.66 0.77 2.44 3.23 3.76 4.18 4.69 3.92 3.44 3.22

2006 91.67 1.11 1.96 2.91 3.49 3.77 4.66 3.89 3.38 3.20 3.13

2007 93.47 1.96 1.58 2.66 3.25 3.63 4.45 3.92 3.35 3.20 3.11

2008 94.03 0.60 1.17 2.17 2.97 3.42 4.12 3.93 3.37 3.18 3.06

2009 98.13 4.36 1.75 2.25 2.99 3.41 4.02 4.11 3.58 3.26 3.10

2010 98.96 0.84 1.77 2.10 2.74 3.26 3.69 4.20 3.61 3.23 3.05

2011 98.22 -0.75 1.39 1.67 2.40 2.96 3.29 4.11 3.53 3.13 3.00 2.96

2012 98.49 0.28 1.05 1.32 2.12 2.70 3.11 3.87 3.51 3.06 2.96 2.90

2013 98.57 0.08 0.95 1.06 1.76 2.46 2.92 3.59 3.50 3.06 2.93 2.85

2014 98.87 0.30 0.15 0.95 1.55 2.27 2.75 3.36 3.54 3.14 2.91 2.80

2015 101.49 2.65 0.51 1.13 1.57 2.18 2.70 3.15 3.66 3.22 2.92 2.80

2016 102.52 1.02 0.86 1.12 1.40 2.01 2.54 2.88 3.64 3.19 2.87 2.78

2017 102.19 -0.32 0.74 0.90 1.12 1.77 2.30 2.71 3.42 3.16 2.80 2.74

2018 101.98 -0.21 0.68 0.81 0.93 1.49 2.10 2.54 3.17 3.14 2.79 2.70

2019 103.20 1.20 0.86 0.51 0.92 1.38 1.99 2.43 3.00 3.20 2.89 2.70

2020 104.22 0.99 0.53 0.52 0.93 1.31 1.85 2.34 2.78 3.27 2.92 2.68

2021 100.00 -4.05 -0.50 0.18 0.58 0.92 1.51 2.03 2.39 3.11 2.78 2.53

Note: The index for each year is the accumulated value in that year of an investment made in the prior year in the amount of the prior year's index, with 

interest paid at the average rate for special public debt obligations issuable to the OASI and DI Trust Funds during the prior year.
 Ratio of OASDI Taxable Payroll to Covered Earnings, Page 1 

6. RATIO OF OASDI TAXABLE PAYROLL TO COVERED EARNINGS 

THE 2023 TRUSTEES REPORT 

OFFICE OF THE CHIEF ACTUARY, SOCIAL SECURITY ADMINISTRATION 

TABLE OF CONTENTS PAGE 

6 RATIO OF OASDI TAXABLE PAYROLL TO COVERED EARNINGS ...................... 2 

6.1 SUMMARY ...................................................................................................................................................... 2

6.2 PAST EXPERIENCE .......................................................................................................................................... 2

6.3 FUTURE EXPECTATIONS ................................................................................................................................. 4

6.4 PROJECTIONS FROM OTHER SOURCES ............................................................................................................. 4

TABLE OF TABLES PAGE 

TABLE 6.1: ASSUMED TAXABLE EARNINGS RATIOS REACHED IN TENTH YEAR OF PROJECTION PERIOD ....................... 2

TABLE 6.2: OASDI TAXABLE RATIO, 1983 TO 2021 ...................................................................................................... 5

TABLE OF FIGURES PAGE 

FIGURE 6.1: PERCENTAGE OF OASDI COVERED EARNINGS BELOW THE TAXABLE MAXIMUM: 1983 TO 2021 .............. 3
 Ratio of OASDI Taxable Payroll to Covered Earnings, Page 2 

6 Ratio of OASDI Taxable Payroll to Covered Earnings 

6.1 Summary 

For the 2023 Trustees Report, the assumed ratios of OASDI effective taxable payroll to covered 

earnings (taxable ratio) for 2032 (the tenth year of the projection period), are 84.0 percent, 82.5 

percent, and 81.0 percent for alternatives I, II and III, respectively (Table 6.1). These assumed 

ratios for the tenth year of the projection period are the same as those used for the 2022 Trustees 

Report. The overall taxable earnings ratio varies slightly after 2032 due to changes in the taxable 

ratio for self-employment earnings. 

Table 6.1: Assumed Taxable Earnings Ratios Reached in Tenth Year of Projection Period 

2023 Trustees Report 

Alternative 

2022 Trustees Report 

Alternative 

2023 Trustees Report Less 

2022 Trustees Report 

I II III I II III I II III

Taxable Ratio (percent) 84.0 82.5 81.0 84.0 82.5 81.0 0.0 0.0 0.0 

The OASDI taxable payroll for a year is computed as the amount of earnings which, when 

multiplied by the combined OASDI employee-employer payroll tax rate for that year, yields the 

total amount of payroll taxes due from wages paid and self-employment net earnings for the 

year. Taxable wages for an employee are the total OASDI covered wages from all wage 

employment up to the taxable maximum (also known as the contribution and benefit base). 

Taxable wages for an employer are the sum of all OASDI covered wages paid to each employee 

up to the taxable maximum. Employees with multiple jobs whose total wages exceed the taxable 

maximum are eligible for a refund of excess employee taxes withheld; employers are not eligible 

for a refund on this basis. For self-employed workers with no taxable wages, taxable earnings are 

the amount of OASDI covered self-employment net earnings up to the taxable maximum. For 

self-employed workers with taxable wages, OASDI covered self-employment net earnings are 

taxable to the extent that they do not exceed the taxable maximum when added to taxable wages 

for the year. The taxable ratio is essentially the proportion of OASDI covered earnings that is at 

or below the taxable maximum. 

6.2 Past Experience 

Table 6.2 shows historical values for the taxable ratio from 1983 through 2021. The taxable ratio 

fell from over 89 percent in 1983 to 84.3 percent in 2001, resulting in an average annual rate of 

change in the taxable ratio of about -0.34 percent (see Figure 6.1). The decline was related to 

several factors that increased the concentration of earnings among the very high earners 

compared to all other earners. Some of the drop in the taxable ratio in the late 1980s was due to 

the Tax Reform Act of 1986, which lowered the top marginal income tax rate from 50 percent in 

1986 to 28 percent in 1988. The drop in the income tax rate induced some high earners to shift 

some non-covered income to OASDI covered earnings, thereby lowering the taxable ratio. In the 
 Ratio of OASDI Taxable Payroll to Covered Earnings, Page 3 

1990s, the growth in the use of stock options56 in the pay packages of the very high earners, 

combined with a rapid increase in stock prices, contributed to the drop in the taxable ratio. An 

unprecedented expansion of the financial sector in the 1980s and 1990s also contributed to the 

concentration of very high earnings. 

Between 2001 and 2021, the taxable ratio has varied with the business cycle, generally rising 

during economic downturns and falling during economic recoveries. The average annual rate of 

change in the taxable ratio between 2001 and 2019 was -0.08 percent. In 2020, the taxable ratio 

fell, atypically for a period of recession, to 82.3 percent, in part due to the loss of earnings among 

many lower-paid workers during the pandemic-induced recession. For 2021, the ratio dropped 

even further, to 80.6 percent. This appears mainly to be due to large increases in bonuses paid to 

higher earners, as well as an increase in the exercising of stock options. Except for the unusual 

experience since 2020, the taxable ratio has remained largely at or above the low level of 82.7 

percent experienced for 2000, roughly stabilizing since 2012. 

Figure 6.1: Percentage of OASDI Covered Earnings Below the Taxable Maximum: 1983 to 2021 

Note: Shaded areas on the chart indicate U.S. recessions. 

56 Nonqualified stock options are subject to the OASDI tax. For more information on the tax treatment of 

stock options, see publication by Grant Thornton’s G. Edgar Adkins, Jr., entitled “Taxation of Stock Options and 

Restricted Stock: the Basics and Beyond” (https://www.grantthornton.com/~/media/content-pagefiles/tax/pdfs/white-papers-survey-reports-articles/2013/Taxation-of-stock-options-Adkins.ashx). 
 Ratio of OASDI Taxable Payroll to Covered Earnings, Page 4 

6.3 Future Expectations 

In spite of ten years of economic expansion since 2009 and record stock prices as measured by 

the S&P 500 index, which have been positively correlated with the share of income reported by 

the very high earners, the taxable ratio through 2019 did not fall below the lows reached in 

previous economic cycle peaks. In fact, the average annual rate of decline in the taxable ratio 

from 2001 to 2019 was lower by about three-quarters than the rate for the period 1983 to 2001, 

and the ratio has been relatively stable between 2012 and 2019. 

As mentioned above, the taxable ratio reached a low level of 80.6 percent for the unusual year of 

2021, in part due to the loss of earnings among many lower paid workers during the COVID-19 

pandemic and its aftermath, as well as large increases in bonuses paid to higher earners, and an 

increase in the exercising of stock options in the booming stock market. OCACT expects that 

this unusually low level of the taxable ratio is a temporary phenomenon, and the taxable ratio 

will recover to 82.5 percent by the end of 2032 for the alternative II assumption. Thereafter, the 

wage taxable ratio is assumed to remain constant. For the self-employed, the taxable ratio is 

expected to drift slightly lower, because the taxable maximum is driven by the growth in the 

average wage, which is projected to grow more slowly than average self-employment earnings. 

As the share of self-employment earnings above the taxable maximum grows over time, the 

overall taxable earnings ratio will drift downward. 

6.4 Projections from Other Sources 

At the time assumptions were developed, the following projections from other sources were 

available. 

In The 2021 Long-Term Budget Outlook published in March 2021, the Congressional Budget 

Office (CBO) projected the taxable ratio to fall from 83.4 percent in 2020 to 82.4 percent by 

2026 and to gradually decline to 81.4 percent by 2051. 

The Social Security Advisory Board’s 2019 Technical Panel on Assumptions and Methods 

recommended lowering the alternative II long-range taxable ratio from 82.5 percent to about 

80.8 percent, to be reached by the 25th year of the projection period. The 2015 Technical Panel 

recommended long-range taxable ratios of 84.0 percent, 82.2 percent and 79.0 percent for 

alternatives I, II, and III, respectively. 

 
 Ratio of OASDI Taxable Payroll to Covered Earnings, Page 5 

Table 6.2: OASDI Taxable Ratio, 1983 to 2021 

Year OASDI Taxable Ratio (percentage) 

1983 89.6

1984 88.6

1985 88.2

1986 88.0

1987 87.0

1988 85.5

1989 86.4

1990 86.8

1991 87.2

1992 86.3

1993 86.8

1994 86.8

1995 85.6

1996 85.2

1997 84.6

1998 83.9

1999 83.6

2000 82.7

2001 84.3

2002 85.7

2003 85.6

2004 84.2

2005 83.5

2006 83.1

2007 82.4

2008 83.4

2009 85.2

2010 84.0

2011 83.3

2012 82.5

2013 83.3

2014 82.8

2015 82.6

2016 82.8

2017 83.2

2018 82.9

2019 83.1

2020 82.3

2021 80.6