Masonry Magazine October 1968 Page. 11
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MANY ECONOMISTS ARE RAISING THEIR FORECASTS of business growth for the rest of 1968 because of stronger than expected gains this summer. But, paradoxically, these analysts still believe an economic slow-down is on the way. Not a recession, to be sure... but a markedly lower rate of expansion. It is expected to become unmistakably apparent in the next several months.
Actually, output of goods and services still rose less in the third quarter than in the second. The point is, though, that the showing was substantially above projections. That spurt in consumer outlay was mainly responsible for the shortfall.
Some analysts think the summer spurt is convincing evidence that the business boom will go on. It bears out their basic belief that recent rapid increases in the money supply all but guarantee big jumps in income. But these are in the minority.
THE STAGE IS NOW SET FOR A REBOUND IN HOME-BUILDING
THE STAGE IS NOW SET FOR A REBOUND IN HOME-BUILDING-a development that will strongly influence the trend of business in 1969. For the first time in more than three years, all factors are "go." The number of homes to be started will increase steadily. And the impact of the expansion will make itself felt, both directly and indirectly, in ever-widening waves.
Directly, the stimulus will show up in extra on-site jobs, building-material output, and appliance sales.
Indirectly, the pick-up in construction will be felt -through the income thus generated in consumer spending generally. This, in turn, would influence business decisions to build new plant.
Economists in government and industry are counting heavily on a revival in home-building as a major bulwark against a too-precipitous decline in the economy. Indeed, housing is the one big plus-force in sight for the first half of 1969.
MOST EXPERTS DON'T BELIEVE THE CON-SUMER WILL KEEP BUYING
MOST EXPERTS DON'T BELIEVE THE CON-SUMER WILL KEEP BUYING at the high summer rate. The 10% surtax-and a leveling in Federal spending are sure to make their impact felt. (A big tax change needs time to show up.) And, as if that were not enough, an increase in Social Security payroll taxes will start taking $3 billion a year out of the spending stream in January.
This view of the near future is a much-repeated story. But it must be repeated again. Rechecks with top economists in government and industry show that a large majority is still firmly wedded to the standard forecast of a cooling economy.
BUT TALK OF "OVER-KILL" HAS DIMINISH-ED SHARPLY
BUT TALK OF "OVER-KILL" HAS DIMINISH-ED SHARPLY with the economy's strong summer showing. It hasn't disappeared entirely from the analysts' expectations. It is still a risk perhaps even a slightly greater one than "under-kill"... that is, of worse inflation. And the unpredictable consumer could again upset calculations-specifically, the new, more moderate outlook. By finally gearing his buying to his tax-crimped income, he could prompt the pronounced slowing that was originally seen as long ago as last spring.
Total output of goods and services would rise by 1% or 2%- rather than the 5% to 6% that prevailed in the first half.
THE PICK-UP IN HOME-BUILDING HAS AL-READY STARTED
THE PICK-UP IN HOME-BUILDING HAS AL-READY STARTED, according to the latest figures available. Housing starts climbed to a seasonably- adjusted rate of 1.5 million a year from the 1.3 million rate of the first quarter. There is some doubt about the reliability of these statistics, as officials readily admit. But they clearly reveal a significant, unmistakable trend, Population trends and the marriage rate show that demand for homes is big.
This year began with starts at a low 1.2 million rate. So even the stronger second-half showing won't bring the actual total for the year much above 1.4 million. But next year should bring a jump of 300,000 units possibly even more.
AN INCREASE IN THE FLOW OF MORTGAGE MONEY
AN INCREASE IN THE FLOW OF MORTGAGE MONEY WILL FUEL the expansion in housing activity. The slackening in the economy will reduce demand for credit on the part of business and consumers. (The tax increase and spending cuts are reducing Federal borrowing needs.) Interest rates will come down and make the rates paid by savings institutions relatively more attractive. As a result, the lenders will attract more of savings to lend on new homes. In other words,