Masonry Magazine September 1969 Page. 29
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BUSINESS ACTIVITY WILL STAY STRONGER FOR A LITTLE LONGER than most economists were forecasting barely a month or so ago. The latest figures to come along show slightly more zip, slightly more inflation, than had been projected. The analysts still believe that there will be a slowdown in activity this fall. Many signs of ease are already evident. But curbs, like tight money, must be kept in force till the softness is more apparent.
The authorities are disappointed at the recent trend. They have been compelled to revise their forecasts in some cases for the third time this year. The revisions were forced by a vigor in the economy that has simply refused to die down.
You hear less talk these days from officials in Washington about all the progress made against inflation. The stress now is on the job that must still be done to curb the boom.
THE ECONOMISTS AREN'T SUDDENLY MINI-
MIZING THE SIGNS of softness that have been appearing. They are too numerous to be ignored as insignificant. For example, government spending is leveling off and beginning to turn down. The consumer's buying is lackadaisical. Outlays for services keep climbing, but store sales are flat-autos, too. Price hikes only seem to lift volume. And there's some evidence-still inconclusive-that credit demand is easing.
Home-building has been suffering the biggest slump of all. What's more, the slide isn't yet over. New private starts may drop from 1.3 million a year to 1 million by year-end.
BUT SURGES OF STRENGTH KEEP POPPING
UP-perversely and repeatedly. They challenge those projections of slower growth and confuse forecasters. Take industrial production. It was strong through much of the past summer. Sure, some of this reflected the early model changes in autos-but not all. Or take business outlays for new plant and equipment. Some recent surveys show a leveling off. But certain others still point to continuing thrust.
The latest figures on new orders for durable goods were a shocker. They have jumped, partly on volatile, hard-to-analyze defense business. But bookings for consumer hard goods, steel, and electrical machinery showed increases.
THE CURRENT TREND POSES DISQUIETING
QUESTIONS to inflation fighters: Is there really so much more strength in the economy than they seem to see? Have they really made any companies or consumers stop counting on inflation? The President's economic advisers think that the answer is yes-definitely. They still expect to engineer that gradual slowdown ...without a recession, though some concede that unemployment may climb higher than first forecast.
THERE'S NO NEED TO TIGHTEN MONEY
FURTHER because of all the strength the economy is showing, say the credit-controllers at the Federal Reserve. A spurt of strong orders does not necessarily establish a continuing trend. And, as noted, housing is getting a lot more than its share of punishment.
Officials know that curbs need time to work. They concede that the lags are running longer than they expected. So why bear down harder if you will soon be achieving your goal?
BUT THERE'S NO GREAT NEED TO EASE in
the current business outlook. Premature relaxation by the Fed could reverse the progress that's been made toward dampening inflation psychology. Spending and investment could spurt. All the sweat and pain suffered under tight money to date would be wasted. So the time for easing credit has probably been put off for a short while-not by much, really, perhaps by only a matter of three or six weeks or so.
-Interest rates won't come down as soon or as fast as hoped.
-The stock market must endure tight money a little longer.
DON'T COUNT ON A NERVOUS WHITE HOUSE
TO NUDGE the Federal Reserve into easing up as soon as unemployment climbs a bit or housing is hurt more. To be sure, allowing even a threat of recession is said to be bad politics. And Nixon is deemed sensitive on this, having lost because of the 1960 dip. But the Administration shows no sign of wavering in its support of the Fed.
Indeed, holding fast may be good politics. Steady inflation can be a liability. Besides, Nixon's suburban-middle class backers are not the people who are most affected by lay-offs.