Masonry Magazine May 1967 Page. 17
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THE BUSINESS READJUSTMENT APPEARS TO BE ENDING-that's the message the latest economic statistics are signaling. Many weak areas are showing strength again. Over-all, the outlook is substantially brighter than it was at winter's end. The hoped-for return to brisk expansion now seems certain to come along during the second half, perhaps even a bit ahead of schedule.
Economists in government and industry see a good number of reasons for feeling so much more confident about the trend of business activity. Things are going even better and are firming up even faster than had been expected in January.
-Retail sales including autos-have now perked up smartly.
-Inventories have leveled out and are now getting into line
-Construction has bottomed out; contract awards are rising.
-Unemployment has actually been edging down by a whisker.
-Industrial output has risen again after a brief downturn.
SOME OF THE BETTER TONE MAY REFLECT THE NATURAL EUPHORIA of spring. And some of the plus-figures may exaggerate the trend; they may have to be revised. But there's strong basis for optimism in the underlying picture. The Federal Budget was meant to stimulate and war spending is exceeding it. Social Security benefits will go up. Home-building is getting more money. And repeal of the 7% investment credit will boost plant spending noticeably.
Now there is evidence that the slowing has been milder than foreseen. The inventory overhang is melting. Employment and income have held up. So people are loosening the purse-strings again as the retail sales figures clearly show.
GOVERNMENT ECONOMISTS ARE NOW FORECASTING GAINS in output of goods and services that is, in Gross National Product as 1967 moves along. The first quarter saw an increase of $5 billion a year in GNP-all of it a result of price increases. A gain of $9 to $10 billion is expected in the second three months, with $14 to $15 billion projected for July-September. For the last quarter, you hear estimates that go to $17 $18... $20 billion.
Officials worry about a new surge of inflation, to begin in the fall. All the factors in the picture could be pluses by then and big ones, too. Government spending is sure to be going strong. Now comes the promise of a sooner-than-expected upswing in buying by consumers and business firms. Industry could be working at 90% of plant capacity up from today's level of 85% before many more months pass. That appears to be the point at which demand zooms prices again.
THE BETTER OUTLOOK IMPROVES CHANCES FOR A TAX HIKE later this year. The on-again-off-again situation is now changing back toward a "yes" vote by Congress. It is no longer fashionable to assume that passage of the tax surcharge is a political impossibility. Action no longer seems so unlikely.
With rising defense spending threatening to bring a renewal of last year's boom. President Johnson will have two strong "pro" arguments: Checking inflation and paying for the war.
THE FASTER FALL TEMPO WILL END THE LULL IN PRICES of recent months. Special, temporary factors account for the stability. But they will pass. Demand for materials will tighten up current loose supply-demand situations. Equally important: Wages are rising faster than productivity of employees. Business is absorbing some of the hikes, but will raise prices when it can.
CONSUMER PRICES WILL BEGIN TO CLIMB MORE RAPIDLY before very long. The government's Index has been largely level because of declining food prices have offset increases in other groups during the past few months. But food costs are about to turn up. And there will be other important increases.
-Autos-Prices will ease into Summer; 1968's will be up $100.
-Clothing-Labor costs will lift prices by 5% in the fall.
-Rents-Elimination of vacancies will bring new