Masonry Magazine September 1970 Page. 7
THE ECONOMY HAS NOT YET BEGUN TO TURN
UP with any great zip, though it has now clearly bottomed
out. That's the view that most economists in government
and business hold at this time. It is not quite as optimistic,
understandably, as the pronouncements of Administration
officials, who must worry about the political implications of
a sluggish, unsatisfactory climb.
The analysts still expect the pace of business activity
to pick up this fall. But they are not as confident about
the trend as they would like to be. And, even if the
rise does come along, there is a danger that it will be
a little slow.
EVIDENCE OF LEVELING IS GROWING THESE
DAYS, and that is certainly a healthy development. The
signs of stability are becoming quite numerous and per-
suasive, though there are still some scattered weak spots
like declining employment. These soft areas mean that
some further set-backs are possible, theoretically, though
this is unlikely in the light of the latest figures.
The most recent business statistics document a modest
upturn:
-Industrial production started to edge up during the
summer.
-Personal income is climbing-moderately to be sure,
but now without the support of Federal pay or
Social Security hikes.
-Home-building is reviving, as credit becomes more
available.
Consumer spending keeps rising-sedately for now,
but with the possibility that people will soon save
less, buy more.
-New orders for durable goods have shown moderate
increases.
-Corporate profits leveled out from first to second
quarters.
THE TREND IS SUMMED UP in the behavior of total
output of goods and services. After a slide in the first
quarter, "real" Gross National Product climbed 1%-
twice the gain originally estimated, (Such upward revisions
are hopeful, promising signs-hints that things are not as
gloomy as believed.) And the third quarter is expected to
wind up with increases of 14% or 2%.
But this rate of growth is well below the 4% to 42%
that is considered normal. healthy...capable of gen-
erating enough new jobs for a growing labor force.
And the longer the rate lags, the larger and higher-
unemployment is bound to go.
THE ECONOMY IS NOW IN DELICATE BALANCE
between positive and negative forces. Most attention is
being focused on the plus-factors, and economists do
believe that they are now dominant, as the roster of plus-
masonry • September, 1970
figures shows. But there are also drags to reckon with,
though their significance can be obscured when improving
figures make for growing optimism about the outlook.
The positive forces now at work include, of course,
the rise in home-building activity. In addition, the
economy can count on stepped-up spending by state
and local governments, responding to the same credit
ease now helping home-building.
The negative forces center mainly in the softness in
business investment. For one thing, inventory accum-
ulation may not be depressing the economy, but, with
sales rising only moderately, industry will not be
adding heavily to stocks. For another thing, expen-
ditures for new plant appear to have peaked out.
THE CONSUMER WILL DECIDE whether a sustained
upturn really develops or whether the economy stays com-
pletely flat. Till now, he has been saving an unusually high
75% of his rising income. (Rising unemployment and
talk of a recession have made him nervous.) But if he de-
cides to spend relatively more, his outlays would tip the
balance toward a renewal of economic growth.
Most economists believe that this is precisely what
consumers will do. They will spend more especially
for hard goods. But it will be a moderate step-up...
not a spending spree and not enough to assure a quick
return to full employment.
YOU DON'T OFTEN SEE A VIGOROUS UPTURN
in business activity in the absence of strength in business
investment. This, in a nutshell, explains the experts' feeling
that the expansion will be a tentative, moderate one, vul-
nerable to sharp shocks such as a prolonged strike in any
major field.
Economists generally see a slow recovery for the next
four or five months. Then, a pick-up in the tempo
is projected for 1971's first half. With luck, there won't
be a new boom.
With luck, inflation will keep on ebbing, and interest
rates will continue to decline. At the same time, a size-
able Budget deficit and added credit ease will main-
tain an upward trend. But the problem a year from
now could be a repeat of 1962-how to grow fast
enough to make jobs for all the new workers.
THIS YEAR'S BUDGET DEFICIT COULD HIT $10
BILLION, rather than the $1.3 billion the President pre-
dicted last May. The fatter appropriations being voted by
Congress are only part of the cause. Less-than-expected
tax collections-from declining profits and slower-than-
projected income gains are the main reason. Rising costs
of purchased items also swell the total. And Congress seems
reluctant to vote the extra taxes Nixon has requested.
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