Masonry Magazine April 1976 Page. 17
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THE RATE OF INFLATION IS LIKELY TO SUBSIDE still further this year to a somewhat greater degree that had seemed likely just three months ago. Economists in government and industry now expect price increases measurably below those forecast last fall. The optimism stems from a steady slowing in the price indexes as well as some signs that business and labor are acting more responsibly. The inflation rate could fall to 5% or less by January.
To be sure, the economy is not out of the woods on inflation. There is some concern that the drop in food prices may come to an end soon. And the accelerating economic recovery could spell trouble in months ahead - encouraging unions to recoup past inflation-caused lags in purchasing power and prompting businessmen to recover past cost increases by hiking prices. But these fears have eased a lot with the recent price trend.
CONSUMER PRICES ROSE AT AN ANNUAL RATE OF ONLY 3% during the first quarter of 1976. Three months don't define a meaningful trend, to be sure. But the declines in wholesale prices of the recent months are encouraging-suggesting the drop will be reflected in further small cost-of-living gains when the numbers for April, May, and several months thereafter come out.
WHAT'S MORE, ANALYSTS POINT TO FUTURE TRENDS that appear encouraging. Some causes of the hyperinflation in the 1970's are passing from the scene. For one thing, the price of oil is not due to go up much if at all in 1976; big oil-price hikes were a very big contributor to the inflation of 1974-75. But now there is a glut of oil because of the recession and conservation. And, in fact, some modest price-shaving is going on, most recently by Russia.
For another thing, world food crops should be getting back to normal. Russia now has met its big crisis needs for grain from abroad, for example. And prospects for the U.S. winter wheat crop have improved markedly in recent weeks.
Union pressures for outsized wage hikes seem to have eased somewhat, too. The slower-rising price indexes have taken some of the edge from union demands, especially where there are cost-of-living clauses in bargaining contracts. Recent increases in wages have run 6% to 7%-quite modest advances.
INDUSTRY DOESN'T SEEM TO BE GOING OVERBOARD ON RAISING PRICES, either, surprising many experts who were fearful of substantial increases this year, once demand for its products strengthened with the recovery in the economy. Business economists cite a number of reasons for the recent small increases. To begin with, the sharp hikes last summer may have been a one-shot affair, reflecting attempts by businessmen to restore their eroded profit margins. Now that these margins have improved, there is less need for further raises.
Then, too, corporations are now registering huge increases in profits, suggesting less need for big price adjustments.
WHITE HOUSE ECONOMISTS ORIGINALLY SAW AN INFLATION RATE of 6 to 7% for 1976, down a shade from the 7% of 1975 and a lot from the 10% of 1974. Now there's a chance for ending the year with inflation near the 5% level. There are even a few analysts who wouldn't rule out something close to 4%.
THE PRESENT INCOME-TAX RATES will be extended for the rest of 1976. And there is growing talk in Congress of letting individuals and businesses continue to enjoy through 1977 the reduced burden first voted last spring. The $17.3 billion in tax reductions is due to expire this coming June 30. But the lawmakers wouldn't want taxes to rise four months before elections. Both Senate and House tax-writing committees seem inclined to go further. They tentatively decided to extend through next year in adopting fiscal 1977 revenue estimates that imply the tax cuts will stay in force in that year.
To be sure, Congress may decide to end the tax cuts if the economy is booming ahead. Continuation might then risk too much in fiscal stimulation and threaten new inflation.
COMPANIES LEASING THEIR PRODUCTS FACE NEW REGULATION by the government. Legislation passed by the Congress demands full disclosure of leasing terms. It would restrict the final payment to only three times the monthly payment. Advertising of leasing costs would have to follow coming disclosure rules.
A buyer's contractual obligation would be held to $25,000 by the bill. Class-action lawsuits for up to $500,000 could be brought by consumers for violations of the leasing statute.
CREDIT DISCRIMINATION WILL SOON BE BANNED on the basis of age and sex. A bill to amend the equal-credit-opportunity act has been signed into law. It requires creditors to give written notice on rejecting a credit request. On request, a creditor must disclose specific reasons why credit was denied. A creditor will be allowed.