Masonry Magazine March 1972 Page. 16
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The business outlook has a new, brighter cast these days. Almost overnight, economists have begun to see increasing signs that the hoped-for upsurge in business activity is finally underway. To be sure, such optimism has proven groundless before over the past year. Rather than a return to full employment and production, past promises have yielded only a sluggish upturn and persistent unemployment. But plus-signs are more numerous now.
Some forecasters were ready to pare down their projections for the year 1972 after the discouraging performance of the economy last fall. What's more, the unimpressive recovery was promising to continue through the first quarter of 1972. But, in just the past month, thinking has changed abruptly.
NOW THE ECONOMIC PICTURE LOOKS CONSIDERABLY BETTER. There are strong indications that things are beginning to pop-that a snow-balling effect is a beginning that will push the economy toward solid growth this year. This is apparent in a number of statistics that usually foreshadow the coming trend.
New orders jumped in January-especially in defense industries-from efforts to stimulate by higher spending. This is crucial; falling outlays have been a big cause of recent sluggishness.
HOUSING STARTS HAVE BEEN RUNNING AT A HIGHER than expected rate. Most analysts once thought the 21/2 million-plus-a-year clip of December was only a one-month affair. But that rate was actually topped in January. What's more, building permits a measure of construction to come have held up very well.
Housing-connected areas are booming, too. As the high volume of homes started comes to completion, buying of furniture and appliances is zooming. Sales of television sets are soaring.
FAILURE OF UNEMPLOYMENT TO RECEDE FAST ENOUGH IS LEADING to talk of a new WPA toward Federal public-service jobs reminiscent of the 1930's. Democrats have pushed for use of the government as employer of last resort, because the other stimulations have not succeeded in reducing joblessness. More of the unemployed these days are young or female or the disadvantaged.
Fear of new inflation argues against a quick drop to a 4% unemployment rate. Setting a 4% jobless goal might mean acceptance of 4% or more in inflation. But public jobs could trim unemployment to 5% and hold inflation to 3%.
BUSINESSMEN ARE IN A MORE OPTIMISTIC MOOD NOW. Their intentions to invest in new plant and equipment a dynamic, stimulative force are being revised upward, according to recent surveys. Companies in manufacturing are making especially large increases in their plant-investment programs. And firms are beginning to add to inventories after a long, long run-off.
What's more, easy money will continue to stimulate for quite some time. The Federal Reserve is committed to trying to get activity moving faster. Chairman Burns has made this clear.
THE ONE BIG SOFT SPOT IN THE PICTURE IS THE CONSUMER. He will have to step up his buying to assure that a solid, well-grounded expansion goes on. Economists are hoping that he will soon respond to the income that is being generated by the strength that is emerging in all the other sectors.
BUT THERE'S NO EVIDENCE THAT CONSUMERS are starting a spending spree. Retail sales have been largely unimpressive in the period since Christmas. Auto deliveries have fallen back since the price freeze was ended last fall; sales haven't been strong enough to lead car-makers to lift assembly totals.
If the consumer jumps on the band-wagon, that solid upswing will finally, unmistakably, be under way. Some indexes are now reflecting more confidence-the stock market, for example.
ECONOMISTS ARE CELEBRATING THE RESUMPTION OF RAPID GROWTH in the money supply-a factor they consider to be a powerful stimulus for economic growth. The money supply-defined as checking deposits plus currency in circulation is estimated to have risen at a 15%-a-year rate in February. That's a rate that is high by any historical standard and hasn't been seen for a year or so. And some experts believe that monetary growth will continue high in the months ahead. Gains were 3.7% in January and 1.1% during October-December.
A rising money supply suggests that people are accumulating cash-presumably, with the intention to spend at much more.
THE OUTLOOK FOR PROFITS IS TURNING BRIGHTER for this year. Though White House economists officially forecast an increase of 16%, before taxes, most experts began the year expecting a more realistic 13% or 14%. And, until a few weeks ago, some were even shading down these modest projections. With the business outlook improved, profit forecasts are back to original levels.