Masonry Magazine May 1967 Page. 18
APPLIANCES BRISKER HOME-BUILDING WILL END THE RECENT DROPS
MEDICAL CARE-COSTS RISE AS NURSES, ETC., WIN BIG WAGE HIKES
The Consumer Price Index will go up 2%%. Last year? 3½.
METALS PRICES WILL TURN FIRMER THIS FALL
The first wholesale costs to respond to the quickening. Steel-makers will be able to catch up faster with past cost hikes if higher auto sales lead to large orders, as expected. Certain items, in tight supply now, will go up rapidly as business quickens. They include nickel, rubber, mercury and sulfur; they are critically short. Zinc, lead, and textiles will enjoy gradual gains. Copper could turn fast.
CORPORATE PROFITS ARE DOING BETTER THAN EXPECTED
A hopeful sign for the period ahead. For one thing, industry will be encouraged to invest in new plant. For another, the showing implies an earlier profits upturn. Some reasons for the better showing? The gloom was too deep to begin with. Sales held up surprisingly, except for autos. And there was cost cutting.
Declines in earnings were common among the auto-makers and auto suppliers, steels, appliances, building materials, television, and the chemicals group. But, in case after case, the dip was only half or two-thirds of early guesses.
There were gains, too, of course in roughly 50% of those companies reporting. Generally, the glamour issues-like Xerox and Polaroid, for example -have performed very well.
THE SOLID EARNINGS PICTURE GOES FAR TO EXPLAIN THE SURGE
In stocks. As noted, many had discounted deeper gains. They have now turned bullish, in reaction. Also, the recent better business news implies better profits. And the recent trend to lower interest rates has helped boost share prices. A given stock yield looks that much better when the return on bonds drops.
INTEREST RATES MAY NOT DECLINE MUCH MORE
Except maybe on mortgages. With the better business news and those inflation fears... there are doubts among officials at the Federal Reserve as to how much more ease is needed. The Fed has done a tremendous amount to ease. Banks and corporations have rebuilt "liquidity" their holdings of cash or quickly cashable securities. This can be used to make loans or buy equipment later on maybe in a boom. The Fed won't tighten again soon. That point will come when demand again presses on resources. But the interest-rate dip will slow with less easing.
FURTHER DECLINES IN MORTGAGE RATES ARE STILL ON THE WAY
Government economists say even if other rates level out. Savings institutions are now getting big inflows of money. But mortgage demand still hasn't started to expand with vigor. So profitable outlets for this cash are sometimes hard to find. Many lenders find they are paying out too much relative to income.
One solution would be to cut payments paid to savers. And many lending institutions are considering just that. They are getting plenty of encouragement from U.S. financial officials. Rates on savings will likely come down July 1.
THE EASY MONEY ALREADY HERE ASSURES A REBOUND IN HOUSING
This year. It may be a little slower in coming than some optimists had been expecting. Builders seem to have needed a bit more time to assemble land and work crews. But now the signs of a bounce-back are unmistakeable. Starts on new homes are on a rising though erratic trend. Builders now see gains where drops were expected a few months ago. Lenders are making commitments on mortgages.
Officials expect new home starts to reach a 1.5 million-a-year rate by fall, up from 1 million last fall. Housing will play a major role in sparking the general quickening.
APPLIANCE SALES WILL TURN UP THIS SPRING
Partly because the pick-up in home-building will be increasing the demand. But continued high incomes will help the replacement market... by prompting people to modernize sooner or to spend for a long-wanted improvement, such as a room air conditioner. Volume could top year-ago levels by 10% against only 5% in the last quarter. Air conditioners will lead the way. The sales of refrigerators, washers, and ranges will firm.
THE CURRENT RASH OF STRIKES WILL GET WORSE
Before it gets better. Much of the problem reflects militancy on the part of union rank-and-file, rather than the leaders. Members won't accept a change in economic climate as reason for taking 5% a year or less. Note the fussing by the Teamsters at the pact negotiated in trucking. There will be more such turbulence.
The Auto Workers are not going to let lower profits deter them from pushing all out for a Guaranteed Annual Wage. The leaders of this union are now fully committed to this. Government officials are dismayed at this attitude. They fear what a strike wave can do to a young business upturn.
DEMOCRATS IN WASHINGTON REFUSE TO BE DOWNCAST
At Johnson's chances for reelection next year. Some of their "cool" may be whistling in the dark. But they profess to see some realistic rays of hope as well. Here is why:
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MASONRY
May, 1967