Masonry Magazine August 1976 Page. 19
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THE SPRING'S SLOWING IN BUSINESS ACTIVITY IS NOW OVER. Economists in government and industry believe the second-quarter hesitation was only a pause. They already see evidence that the economy is accelerating again. The forecasters are just as optimistic now as they were earlier this year. The expansion continues strong and well balanced, and certain to continue. The analysts are now predicting good gains for the economy on through 1977.
To be sure, the slowing that occurred in the second quarter was sharp. Real Gross National Product-output of goods and services, with the inflation needed out-rose at a 42%-a-year rate, compared with 9.2% in the first quarter. Some slowing was expected following the unsustainable first-quarter rate. But part reflected the slower growth in some key sectors.
Hesitation was clear in the pace of consumer buying in the spring. Total retail sales flattened out during April, then declined in May, after the rapid advance from December, sparked by vigorous Christmas sales. This softness soon led to a reduction in ordering and inventory-building. It wasn't long before production began to case in some lines.
BUT THE SLOWING PROVED TO BE ONLY TEMPORARY... as analysts predicted. Retail sales advanced smartly in June; the 2.7% gain recouped May's drop. Demand for new cars continues strong, curbed only by shortages of big cars. Temporary pauses are not at all uncommon in periods of cyclical expansion. The lull in consumer buying last fall gave way to the first-quarter surge.
There is good reason to think consumers will continue to spend freely. The basic determinants of consumer buying are clearly on the favorable side. Job conditions are improving, with more Americans at work than ever before.
A FURTHER RISE IN INVENTORY-BUILDING WILL ALSO PROVIDE some thrust, though the non-durable-goods industries may be cautious in adding to stocks. Holdings in these lines now seem adequate to meet current rates of sales. It will take a few more months of good sales to work off current supplies. On the other hand, durable-goods lines will be adding to their inventories. New orders for durable goods are now rising briskly; this should continue.
EVEN MORE STIMULATION CAN BE EXPECTED from spending for new plant. Business capital spending typically materializes quite late in a recovery. Although such a development has been somewhat delayed in this expansion, economists still believe the traditional pattern is in process of emerging.
Production of business equipment has been rising at an 11% annual rate. New orders for nondefense capital goods have risen for six straight months, and in June were 18% above their level at the end of 1975 -a very favorable indicator.
NET, THE ECONOMY WILL ACCELERATE from the second-quarter's pace. Most analysts are expecting real GNP to grow at around 6%-a-year rate for both the current period and the fourth quarter. For 1976 as a whole, total output could read a 6.8% rate, a half-point above earlier guesses.
WHAT'S MORE, THE ANALYSTS ARE ENCOURAGED about business next year. There are too many orders in process to allow a sudden slowing during 1977. This expansion is simply too well-balanced to develop drags on the upswing. The classic workings of the business cycle are on the side of the optimists. History shows that, despite pauses or even lurches in an upturn's progress, up-phases of cycles rarely peter out after only two short years of growth. The typical upturn of the last 30 years has run much longer than two years. The median duration as many longer as shorter has been around 39 months.
If this expansion's rise were just to match the median of 39 months, it wouldn't peter out till the summer of 1978. For 1977, economists think output could rise 5%-6%. They count on big jumps in investment to boost activity. These gains will replace consumer buying when this sector falters.
SMALL BUSINESS CAN EXPECT A PRIORITY for its problems from OSHA-the government's "watchdog" Occupational Safety and Health Administration. The agency has released a policy paper recommending help for small business. It suggests designation of a small business liaison officer in area offices, expediting of Small Business Administration loans for compliance expenses, and exploration of the possibility of tax credits for safety improvements.
The new stance follows a fight in Congress over small-firm exemptions. Although organized labor was able to beat the proposed exemptions from the law, Congress did indicate a willingness to help small businessmen cope. The lawmakers voted to eliminate fines for first, non-serious violations.
FIRMS GIVING CREDIT MUST SOON COMPLY with antidiscrimination rules. The rules as proposed by (Please turn page)