Masonry Magazine August 1971 Page. 13
theWASHINGTONvire...
Optimism over the recovery is beginning to spread among business and government economists. You hear it from professional analysts throughout the nation these days-not just from White House people who, understandably, see what they want to. It is still cautious optimism. The experts are not predicting a new boom. But they do see further signs that the consumer is beginning to spend more. They are confident that the recovery will broaden.
There was genuine concern over the recovery's strength only weeks ago. Consumers had shown little inclination to take off on a new buying spree. Besides construction and state-local spending, nothing else had provided real upthrust.
Key indicators simply seemed to lack real zip:
* New durable-goods orders had gone nowhere since summer, 1970.
* Plant outlays were level in dollars, down in physical terms.
* Car sales were so-so, with only imports showing real strength.
* Inventory, except for steel and autos, wasn't being increased. Some economists feared the economy could slide back and that unemployment could end this year higher than it is right now.
As a result, the Administration has shaded down its economic goal for 1971, an optimistic Gross National Product-total output of goods and services of $1,065 billion. Top government officials concede this openly. To push GNP up to that level would only add new fuel to today's inflation.
But new stirrings by consumers make any pessimism now seem unwarranted. Retail sales in June turned out to be quite strong. Over-all performance was all the more impressive because autos were soggy. In addition, both April and May retail sales have now been revised upward. Net, economists view consumption during the second quarter as quite strong.
The White House has been betting on the consumer to lift the economy. Now there is reason to hope that he is definitely heading in that direction. Another plus sign: initial claims for unemployment insurance are declining. And machine-tool orders have been climbing for two months now a good sign. As a result, businessmen can expect their orders to improve...at long last.
The pick-up could help revive confidence of consumers and businessmen. With renewed confidence, consumers may well start buying even more freely. And capital investment by businessmen, the key to a new boom, would start picking up.
masonry
• August, 1971
The brighter outlook doesn't mean a new boom is developing this year. In fact, economic activity is advancing only moderately. along the track that was predicted by a consensus of economists when the year first began. They projected GNP at a more restrained level than Nixon at $1,050 billion. And this kind of growth is not enough to cut into unemployment very deeply.
Inflation is a greater enemy than unemployment in Nixon's eyes. His decision not to stimulate the economy now points this up quite clearly. Progress made in slowing inflation would be wiped out by new stimulus. Anyway, the President feels certain his policies assure a steady, solid recovery.
JANUARY 8-12, 1972
MCAA
CONVENTION & SHOW
at the Americana
Bal Harbour, Fla.
The Federal Reserve is disappointed with current White House policy. It has lined up behind Chairman Burns in pushing for more active policies-specifically, Presidential efforts to curb soaring wage and price increases. The President's failure to act could result in further tightening of credit. The money-controllers don't want to add to inflation by continuing too easy. They worry that they may be dooming the economy to perpetual high inflation.
The "Fed" can't ignore the current high rate of unemployment, either. Thus, its desire to tighten is limited by the fear of adding to joblessness. For the present, though, inflation is still the dominant and over-riding concern of all officials. Meanwhile, slightly higher interest rates must be tolerated, even if they might slow down home-building and the economy.
The economy still could get further stimulation before 1971 is out. The President's "no" to tax cuts and an income policy wasn't flat and firm. Secretary Connally hinted recently that the decision may still be reversed. If unemployment doesn't decline soon, the