Masonry Magazine October 1966 Page. 18
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THIS IS AS TOUGH A TIME FOR MAKING BUSINESS DECISIONS as any we have faced in the last five years. The economy's expansion is old by standards of the past. Growth may have been too rapid in 1966. Business activity now is vulnerable to the loss of either of its two main underpinnings... spending for the Viet Nam war and industry's outlay for new plant and equipment. Many pessimistic appraisals of 1967 reflect doubts over strength in these areas.
There is no definite evidence of weakness in these sectors yet. But the Viet Nam build-up could be approaching a peak, especially if Washington talk of post-election de-escalation proves true. And business investment could lose vigor in the face of recent building, plus repeal of the 7% credit.
On the other hand, many expect the President to step up the pace of the war-and of war spending to achieve a decisive victory by campaign time in 1968. As for business outlay for new plant, some analysts believe that present capacity operations warrant continued heavy expansion. After all, construction costs are rising and any slowing in business activity appears highly likely to be temporary and slight.
THERE IS A SHARP CLEAVAGE IN THE FORECASTS FOR 1967 between experts in Washington and many economists for industry. The government analysts are almost uniformly optimistic. They expect a year almost as good as this one. They foresee continued high spending for Viet Nam. And they don't believe that spending for new capacity will stop growing. Any slow-down, in fact, would be healthy in that it would serve to ease the pressures of inflation.
Economists in the business community lean to the gloomier side. They doubt if Viet Nam or plant expansion can keep things moving briskly enough in the face of inflation, tax increases on incomes, and tight money. In one recent poll, one-third of the experts saw a recession starting in 1967.
YOU HAVE TO BE CAREFUL IN INTERPRETING the latest business figures. They can be misleading in the short run. Take new orders. The recent dip can be explained by the fact that aircraft and defense orders usually bunch. July was big. August slipped. The months ahead could see increases again. Or take machinery output. It has stopped leaping-because it hit capacity.
Some day, such figures will mean easing-maybe a recession. But orders and machinery output are not necessarily flashing one for next year. Other indicators are still strong-total production, for one. And incomes are still rising briskly. Rising incomes, in turn, mean consumer spending will climb.
ON BALANCE, THE ECONOMY IS SETTLING DOWN to a more sedate pace these days than in feverish periods earlier in the year. But business is still good by any standard. A fine last quarter is in the bag. None of the steps designed to slow the economy to a more lasting tempo has had much time to work. Their main impact may not become visible till late winter or spring.
The U.S. will enjoy the busiest Christmas ever-with nice gains over 1965. Production and retail sales will climb.
THE ODDS ON INCOME TAX INCREASES HAVEN'T BEEN CUT by the talk of a recession in 1967. Officials in Washington still assume that the President will ask for higher levies. They rate the probabilities at 2 to 1 or better, on the theory that there's too much strength around rather than too little. Formal word is due from the White House some time in the next few months.
Simple budget arithmetic points to hikes in present rates.
The need to check inflation also makes some move a "must."
THE PRESIDENT IS WORRIED ENOUGH ABOUT INFLATION to take big steps. His wage-price guide posts have broken down. Consumer prices keep leaping, upsetting the voters. The economy is ex-