Masonry Magazine September 1970 Page. 8
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Washington Wire
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You cannot rule out a request for new taxes in early 1971, even though officials blow hot and cold from week to week. (These would be in addition to or as a substitute for the leaded-gas tax and the estate-tax speed-up.) Congress would be much less opposed to necessary action after the election.
CREDIT WILL KEEP GETTING EASIER in the months ahead. Officials of the Federal Reserve Board are not at all disturbed by the signs of reviving economic growth. It is what they want to see and, as noted, it does not automatically foreshadow a new surge of inflation. Actually, the "Fed" is eager to foster the two areas that show greatest promise of assuring a rise in activity-home-building and state-local spending. To help these, though, more money must be made available and interest rates must come down further.
Rates will come down steadily, in addition to the rapid one-percentage-point-plus drop already shown on certain types of bonds. For example, many analysts think top-grade corporate issues, which peaked at 9.30% in the spring, will drop down to 72% or less by the end of the year. Bank-loan rates are coming down further, too. Even slow-moving mortgage rates now show some signs of joining the parade to lower levels.
HOME-BUILDING IS THE ONE AREA THAT PROMISES to exceed the experts' expectations this year. The rate of new starts may get up to 1.7 million units a year in the fourth quarter-100,000 to 150,000 more than projected only a few months ago. Main reason for the better outlook: Greater-than-expected savings inflows to banks and other mortgage-lending institutions, in the wake of steps already taken to let the money supply grow once again.
CORPORATE PROFITS WON'T BE TURNING UPWARD as rapidly as some buyers of stock seem to feel. Government statisticians think the over-all second-quarter leveling was heavily a result of jumps in earnings of auto companies (reflecting heavy spring promotions) and electrical equipment (reflecting recovery from the GE strike). Many other fields saw profits fall further.
The experts believe that too much hope for improvement is being placed on the gains in productivity now coming along. The gains are solid and important. But production is likely to be lagging the rate of additions to capacity. Thus, the utilization rate could fall further implying higher fixed unit costs to offset lower variables. Summed up, the feeling is that profits will soon trend up...but only moderately.
STEEL WARNING: Auto-makers will be ordering more heavily now that the deadline for the strike has passed. They are placing orders for metal again. Mills will have to strain to deliver and some users may have to wait. So a careful measure of inventory protection seems called for at this time.
THERE WILL BE AN EVEN MORE CONSERVATIVE CAST TO NLRB-the National Labor Relations Board when the President's second appointee takes his (Continued on page 30)