The 1972-75 Commodity Boom

Richard N. Cooper and

RNC

Richard N. Cooper

Robert Z. Lawrence

RZL

Robert Z. Lawrence

Discussants: Barry P. Bosworth and

Barry P. Bosworth Nonresident Senior Fellow - Economic Studies

Hendrik S. Houthakker

HSH

Hendrik S. Houthakker

AN EXTRAORDINARY increase in commodity prices occurred in 1973-74. Even leaving aside crude oil as a special case, primary commodity prices on one index more than doubled between mid-1972 and mid-1974, while the prices of some individual commodities, such as sugar and urea (nitrogenous fertilizer), rose more than five times. While the timing differed from commodity to commodity, the sharp upward movement was widespread, affecting virtually all commodities. Most rose dramatically to twenty-year highs, and many went to historical highs. (This is not the innocuous statement it would be for manufactures, whose prices have been subject to a slow upward creep; many commodities had lower prices in 1970 than they did in 1953.)