Masonry Magazine May 1976 Page. 19
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THE U.S. IS GOING TO SEE STRONGER ECONOMIC GAINS this year and in 1977 than seemed likely a month or so ago. This is what economists in government and industry are now saying. They are impressed by the brisk first-quarter performance of so many business sectors. They see the country on the brink of a period of moderate, sustained, noninflationary growth. The moderate pace to date is considered a major plus, because it suggests that the kind of excesses that always end a recovery have still to materialize. And, as present sources of lift diminish, business investment will be picking up.
Any doubts about an early halt to this expansion have now evaporated. The first quarter's 7½% rate of climb in Gross National Product-total output of goods and services, net of price increases-has now ended the once broad concern that the upturn could lose momentum any time soon. Equally encouraging has been the sharp slowing in the inflation rate. The first quarter's 3.7% was the best behavior since 1972.
CONSUMER BUYING IS LIKELY TO KEEP ON POWERING the upturn for awhile. It was up quite strongly in the first quarter, with auto sales leading off. The declining inflation rate will likely keep raising consumer confidence, and thus keep people spending for cars and other products at a high level. Then, expanding sales will encourage businessmen to lift their ordering. They will have to build their inventories to handle the increasing demand. Inventory accumulation isn't roaring yet, but some moderately good growth did contribute to a better-than-expected performance in the first quarter.
The White House originally forecast a 6.2% gain in real GNP in 1976. Now, the economists expect 1976 growth of at least 6½% and maybe 7%. Such growth would assure a continued fall in the unemployment rate. The jobless figure could easily slide to 7% by the end of 1977. Some say it will go lower.
ALL THIS WOULD OCCUR IN THE ABSENCE OF A USUAL SOURCE of strength-business outlay for new plant and equipment. But officials aren't worried. They are counting on new-plant spending to expand activity later in 1976. Consumer spending may well slow down at some point as the recovery matures. And the bulk of the inventory buildup will probably take place during 1976. So business will need some further stimulus in 1977 to take up the slack.
Real capital spending was originally expected to rise 4-5% in 1976, in physical terms, rather than inflated dollars. Clearly, this sector will be coming along later than usual in a cycle. But major pickups in plant outlays are coming. Corporate appropriations for plant have already turned up. In time, such decisions will show up in actual construction, to provide new thrust as other sectors begin to slow down.
WHAT'S MORE, HOME CONSTRUCTION SHOULD GAIN SOME MOMENTUM next year. The big overhang of unsold homes has now been worked way down by developers. Thus, they will be in a better position to begin construction of new units.
NET, ANALYSTS ARE BETTING ON ECONOMIC GROWTH OF ABOUT 6% next year, instead of the only 5.7% increase forecast by President Ford back in January. They think the unemployment rate could fall to around 6% by year-end 1977.
TAX REVISION LOOKS INCREASINGLY DOUBTFUL IN 1976, despite the talk. Congressional Budget Committees would like to close $2 billion in loopholes. Legislation already passed by the House would account for some $1.2 billion. But Senate Finance Committee Chairman Long threatens to block all action. He sees the danger of cramping capital investment and deepening unemployment. Long prefers a higher minimum tax on the wealthy over the House changes even though his scheme would have slight tax-raising impact for many years.
The Senator has a potent lever to push through his own tax proposals. The tax cuts Congress extended last fall, some $17 billion, expire June 30. No one wants to see individual income taxes go up in an election year. So Long may wait until late June, then demand abandoning of the House plan. In exchange, he would agree to extend the tax reductions.
CONGRESS' NEW BUDGET PROCESS IS MAKING HEADWAY in curbing spending. The method requires the Budget Committees to set over-all spending targets. Results have been good. Other committees failed to overturn restrictions. Conservatives accept deficits for now. Liberals vote to hold outlays down.
The spending target does actually top Ford's Budget by $17 billion. But Administration economists privately find the addition quite acceptable. Dropping Ford's proposed extra tax cuts means the Federal deficit won't be much bigger.
EQUAL PENSIONS WOULD BE ASSURED FOR WOMEN WORKERS under a proposed law. The Administration is now considering a bill for submission to the