Masonry Magazine December 1968 Page. 12
Washington Wire
(Continued from page 11)
Federal spending is murder to curb. That's the lesson to be learned from this year's fight to impose a ceiling. The burden of cooling inflation could again fall upon the Federal Reserve. It may have to keep credit on a leash to keep price index from leaping. Otherwise, economists can only hope that the consumer will surprise them once again by spending somewhat less freely that is, by returning to a somewhat higher rate of saving.
A UNION PUSH FOR UNLIMITED COST-OF-LIVING PAY HIKES
A UNION PUSH FOR UNLIMITED COST-OF-LIVING PAY HIKES is in the making, say government labor experts. The recent sharp rise in prices is the spur. Rank-and-file members are pressuring leaders to fight for bigger adjustments than those allowed under present contracts. Many of today's formulas have ceilings which permit a maximum of, say, 6e in cost-of-living gains a year. Under unlimited formulas, adjustments to the current 4% a year rate of price increases can go considerably higher as much as 11e an hour and probably even more. The drive will get a major test in the coming airline negotiations.
CORPORATE PROFITS, BEFORE TAXES, ARE STILL RISING
CORPORATE PROFITS, BEFORE TAXES, ARE STILL RISING, though the pace is slowing. That is what analysis of the third-quarter earnings reports shows. On the average, pretax profits were 10% to 12% ahead of a year ago. But, compared with the second quarter, the gains are running less than 2%. Best showings include auto, chemical, computer, drug, and paper companies. But declines were suffered by the steel mills and electrical manufacturers.
Earnings after taxes did not do so well, however. They are reflecting the impact of the 10% surtax Congress voted last June. They actually fell a shade during the last quarter. Looking ahead to the fourth quarter, many analysts see some further slowing, and even some good-sized declines in after-tax performance. Indeed, pretax profits might also go down. The business slowdown would finally make its impact visible. Profit margins may be squeezed, as price increases became harder to hold. But the pause in the profits rise is not expected to last beyond mid-1969. By that time, the new boom that is shaping up will be fattening earnings again.
A NEW CRISES FOR THE DOLLAR CAN DEVELOP BY SPRING
A NEW CRISES FOR THE DOLLAR CAN DEVELOP BY SPRING. Today's improved standing is pleasant and welcome. But officials warn it may not persist. Much of Europe's new desire to hold dollars reflects the jitters generated by the Czechoslovakian crisis. But what will happen when those fears fade? If the domestic economy does not really cool off, the demand for imports will stay high. And fast rising prices will keep a lid on American exports. Yet only a big trade balance can end the payments deficit and prevent a rush to cash in dollars held abroad for America's meager remaining supply of gold.
A collapse of the franc-and its devaluation is considered very possible would call the solidity of all currencies (including the dollar) into question. The authorities here would have to take defensive action. That could call for a return to really tight money and higher interest rates.
NEW GUIDELINES ON PROMOTIONAL ALLOWANCES
NEW GUIDELINES ON PROMOTIONAL ALLOWANCES are going into force. They were promulgated by the Federal Trade Commission to regulate practices that can have a harmful effect on the competitive positions of smaller retailers. The new rules require notification to all retailers that such allowances are available stores served by wholesalers as well as those served direct. Manufacturers are responsible for such notification, costly though it is.
VOLUNTARY CURBS ON SHIPMENTS OF FOREIGN STEEL
VOLUNTARY CURBS ON SHIPMENTS OF FOREIGN STEEL to this country are being worked out by representatives of big European and Japanese producers. The aim, of course, is to forestall formal quotas in reaction to the flood of imports that have been pouring into the U.S. more than 14 million tons a month. The $2 billion cost has hurt the payments balance and the dollar.
It will take some hard bargaining to produce an agreement. But, if one is reached, it will extend the pattern set for textile imports. Conceivably, the precedent could later be applied to other products now pouring in-say, TV sets.
GOVERNMENT SPENDING FOR RESEARCH
GOVERNMENT SPENDING FOR RESEARCH SEEMS LIKELY TO RISE under the new Administration. The amounts available have been held down recently by the need to finance the war in Viet Nam without ballooning the Budget further. But now there is pressure to catch up from this country's backlogged need and because of the unrelenting strides that Soviet scientists keep making.
The outlook is for additional funds for military research, atomic projects, and anti-pollution plus medical work. Both public and private installations will get more money.
CONGRESS WILL PLAY A MORE AGGRESSIVE ROLE
CONGRESS WILL PLAY A MORE AGGRESSIVE ROLE in the political life of the nation in the next two -and probably four years. The Presidency will be correspondingly less dominant. One reason is the fact that the new Chief Executive lacks an overwhelming mandate of the sort Lyndon Johnson won in 1964. And another explanation stems from the more even balance of power between the two big parties that will exist at the Capitol after January 1.
A more conservative Congress will be more prone to resist change. It will feel freer to oppose requests for action from the White House. A coalition of Republicans and Southern Democrats can apply a brake on the Great Society.