Masonry Magazine June 1972 Page. 31
space and coal. Economists were quite disturbed by price results in the first quarter. The rate of inflation reached 6%-higher than the level before the freeze.
BUT THE PRICE INDEXES HAVE SHOWN MARKED IMPROVEMENT in recent months. Food prices have slowed. In fact, they actually declined at the wholesale level in March and April. This turnaround is now holding the indexes down. Consumer prices in April rose at a 2.4%-a-year rate, easily in line with the President's target of getting that index below 3% by the end of this year.
Industrial price boosts have also moderated since the post-freeze surge. They slowed to a 3.6% annual rate in April after rising 4.8% in the first quarter. Economists are now convinced the tapering off in prices they expected has begun.
WHAT'S MORE, THE PRICE COMMISSION IS STILL TIGHTENING UP its rules. It has coaxed some firms voluntarily to reduce or hold the line on prices. Some companies violating profit margin rules have been forced to make cuts. Industry-wide productivity guidelines have been set to trim price boosts. Firms below industry levels still must use the standards to justify hikes.
The control program will be more effective now that many small firms are exempt. The Commission can direct its limited manpower resources to policing larger companies.
THE PAY BOARD IS STILL OPERATING, despite the walkout of labor members. It has trimmed big wage hikes negotiated by East and West Coast dockworkers. And wage boosts in new labor contracts fell in the first quarter from 1971, averaging 23.1 cents in the first quarter, down from 28.6 cents for 1971. Construction wage hikes have slowed considerably since last year. First quarter building pay gains averaged 6%-sharply below the 18% of last year.
SO THE PRESIDENT'S CONTROL PROGRAM IS HAVING ITS IMPACT on inflation. The inflationary spiral that gripped the nation's economy is being checked. Some officials believe there are bigger dividends ahead from the controls. They contend the program can still reach the President's ambitious targets.
BUT MOST ANALYSTS OUTSIDE THE GOVERNMENT AREN'T PREDICTING complete success for Nixon. They are skeptical that even a 3% inflation rate can be reached by year-end. That would require a very steep decline in the rate of inflation in just nine months. They note a large segment of the economy is exempt from the price controls. These areas have been principally responsible for price hikes so far, and they will continue to cause some price increases.
What's more, the doubters point to the steam building in the economy. As the pace of business activity gains momentum, they contend it will be even more difficult to curb prices.
SO NIXON MAY HAVE TO SETTLE FOR INFLATION OF 34% TO 32% by year-end. This would be a big improvement from the dangerous rates of recent years, to be sure. But because it is still short of President Nixon's target, it may be necessary to keep controls in effect all through this year. In fact, it may be the spring of 1973, or later, before they can be removed.
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