Masonry Magazine June 1976 Page. 9
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THIS BUSINESS RECOVERY COULD WELL TURN INTO A BOOM during the next year or so. Economists in government and industry are concerned that the upturn could go too fast rekindling the fires of inflation and bringing on another recession. As yet, the analysts' fears are still vague only mild possibilities. There's still a lot of unemployed manpower and idle capacity to put to work before bottlenecks begin to accelerate the price rise and end the expansion. But pressures could start to materialize before much longer.
Six months ago, many were concerned that the recovery would peter out. But, at the moment, the pendulum appears to be going in the other direction. Worry about overdoing grows with each new sign of the economy's vigor. All the incoming statistics now point to continuation of a brisk expansion.
BUSINESSMEN ARE NOW STEPPING UP THEIR ORDERING and adding inventory. There was a good-sized rise in holdings in the first quarter of this year-and the evidence suggests that the accumulation should continue for a while. And now the last ingredient of a vigorous expansion is falling into place. Businessmen plan to step up their expenditures for new plant and equipment. A recent survey suggested a rise of 13.7% in the second half of 1976 over that period last year. Only a month or so ago, the expectation was for 6.4%.
What's more, capacity utilization is growing in commodity industries. Materials-producing lines are now operating at more than 80% of capacity, as against little more than 70% a year or so ago. This is still far below the 92%-93% that's viewed as an optimum rate, but the gap is closing very fast.
In fact, there are already some spot production bottlenecks showing up now. Such industries as paper, textiles, aluminum and steel are reporting trouble in meeting growing demands.
THE ECONOMY HAS BEGUN TO SEE SOME SHARP JUMPS in commodity prices. Wholesale prices, for example, showed a large spurt in April. To be sure, much of the rise came in the volatile farm component of the over-all index. But such jumps eventually show up at supermarkets, eroding consumer income and sparking demands for higher wages, which can start inflation up again.
Economists are also concerned about rapid growth of the money supply. If unchecked, money growth could make the expansion accelerate again. There would clearly be enough money around, as well as the temptation, to finance a wave of speculative schemes that strain available resources. The Federal Reserve has begun to move against excessive money growth.
masonry • June, 1976
It would not hesitate to raise interest rates further to halt a boom.
OVER-ALL, MOST ECONOMISTS ARE STILL BETTING on a moderate expansion. They don't believe the surging pace of the first quarter can be maintained. Gains this quarter and in coming periods will be good... but not that good. And there is still that slack in manpower and machines to hold things down.
But many have their fingers crossed. A surge may yet erupt. The experts will study all the new statistics closely in the months ahead, to see whether the upturn is rolling too fast.
THE DEMOCRATS" "GUARANTEED-JOBS-FOR-ALL" BILL IS MOVING through the Congress. It's the heart of their program, but the White House is opposed. The House Labor Committee has approved the legislation by a lopsided vote. It guarantees every willing American the right to a job and calls for broad economic planning by the Federal government. Organized labor is backing it. The measure sets a goal of slashing adult unemployment to 3% in four years. It would order the government to adopt employment programs to meet the goal. The bill also mandates common economic goals to be set by the White House, Congress, and the "Fed." The President would devise implementing programs.
This Humphrey-Hawkins bill isn't likely to pass during 1976. Business groups and the Federal Reserve have joined to oppose it. The Senate isn't likely to take action, even if the bill passes the House. And President Ford would surely veto it if Congress were to pass it. But the Democrats are pushing the bill, anyway, as an election issue. And should they win next November, they will have some momentum for passage in 1977.
ANOTHER RAISE IN THE MINIMUM WAGE IS UNDER CONSIDERATION by Congress. Pending legislation would hike the minimum wage most employers must pay to $2.65 an hour beginning after mid-year, and $3 an hour after January 1, 1977. The new scheme sets automatic increases based on the Consumer Price Index. Rate increases would begin in the third month after any 3% rise in the CPI. The overtime rate would be changed, too. After this July 1, it would go up to two and a half times regular rates. Today, it is just time and a half.
Minimum-wage legislation is likely to hit the House floor this summer, with the Senate taking it up later in 1976.