Masonry Magazine July 1966 Page. 13
the WASHINGTONvire...
THE TEMPO OF BUSINESS ACTIVITY IS PICKING UP THIS SUMMER after the slowdown of the second quarter. That's the way economists in industry and government size up the picture on the basis of fragmentary evidence. The boom is still going strong. The end is not yet in sight. Inflation... not recession ... continues to be the over-riding threat to economic stability.
The slowdown that began in the second quarter -in autos home-building... the stock market isn't deemed a weakening in the boom. Rather, it's a decline from the unsustainable surge of early 1966. As such, it was healthy and welcome. And it leaves the economy in great shape to bounce back.
RISING SPENDING FOR VIET NAM IS THE UNDERPINNING for the confidence in the outlook. The big build-up that began about a year ago was supposed to level off after mid-year. But, with the military effort to intensify on land and in the air, a much greater amount of procurement will be needed. Around $5 billion more is now being talked about for the coming 12 months.
These pluses are also adding to third-quarter strength:
-Business investment in plant and equipment and inventory.
-The start of Medicare, with its expenditure of billions.
-Government pay raises for military and civilian personnel.
Buying of clothing... appliances...and color TV will climb.
Net, the tempo of activity will rise to somewhere between the high first-quarter rate and the lower April-June clip.
-In the first quarter, total output of goods and services (Gross National Product) rose at a rate of $17 billion a year.
-In the second period, the rate fell to an $11 billion clip.
-In the current quarter, it may well be up to $14 billion.
LOOKING A LITTLE FURTHER AHEAD-the tempo could climb even further in the last quarter. It's still very early for firm forecasts, of course. But more and more of the economists appear to be coming to this conclusion. There is some feeling that the end of 1966 will see business roaring again. The worst any pessimists see are moderate gains... not dips in activity. Production will no doubt be pushing a little harder against capacity, despite continued, steady increases in new plant coming on stream. Prices will keep on rising... at both the consumer and wholesale levels... with nonfood items rising, any more than offsetting the declines occurring in foods.
A BOUNCE-BACK IN AUTO SALES IS ONE BIG REASON many analysts give for their optimism over the fourth quarter. On this score, Washington seems to be more hopeful than the car-makers. The brand-new models the 1967's are expected to pep up customer's appetites. And safety features are likely to prove a powerful new sales theme for the industry. Economists say that the recent publicity on safety, generated by the Congressional hearings, may be a blessing in disguise. It makes every existing car more or less obsolete.
Sales probably won't hit the record 10 million-a-year rate reached at times in the first quarter. But they will run 8½ million as against a spring low of 7½ million a year.
TALK OF 500,000 OR 600,000 MEN IN VIET NAM BY LATE '67 is now heard in Washington with growing frequency. There is nothing official about this. But it jibes with Johnson's declaration that we'll make the war more costly for Hanoi. This in turn suggests escalation and a push for a quick victory. The word is that the President wants the peak past before the 1968 election.
Military spending would have to zoom, if this is the course chosen. The economic impact of this big build-up would not be felt until well into 1967. But it may well dwarf the stimulation that will be felt from current increases.
(Please turn to page 26)