1973-04 April IBEW Journal.pdf - International Brotherhood of ...

departlnent of Research
and Ed'ication
ACCELERATION OR SLOWDOWN
• .. rh..: \(ugo.: is ~..:t for wide­
.-,prcad guin~" in Ih..: U.S. cl'onllmy
this ycar, Ih~ C()l1lm~'rcc Ikpaftmen!
foro.:casts in tho.: 1973 edition
of the U.S. /I/(/mlria/ Ow/vol.. Yo:t.
a somewhat opposing vicw up­
J>l.'an:d in the February 27th iS~lIo.:
of the !Vall Sfrt'el lUl/rlwl. In essence,
Ihe JO//l"/la/ article rcporlo.:d
that many ..:conomists see a l>harp
slowdown increasingly probabk in
the latter p:lrt or (hb year.
And. then. thl' January issue of
FlJrllllU'. in ils arlicle on "Bu... in c\'~
Roundup," had this to say: "... in
terms of the economic growth. 1973
prnmiscs to be at feasl as good a
year a:. ]l)72-and probably even
a bit bcltcr."
To !oay that our nalion\ economic
ftHure I:' ::,olllcwhal uncertain
coulll well be rccorckd as tilt' un­
(h,:rstatcm..:nt of the ).:ar. Vil'WS on
the economy run the full gamutfrolll
such expectation" as boom
and continul':d cxpan).ion to the
pussibility of i\ lI1ini -rece~s ion.
A l:iudul \vcishins of somc of
the mon.: reccnt and :.ignificant development:.
ill our economy even
makes th .:- task of predicting its per
formance more diflicult. The go\'­
ernment":. gO:11 of curbing intJation
and thus limiting tho.; Consumcr
Price 1 ndcx (CPI) to an annual illcrea).e
of 2.5 pl'r cent seems hardly
at(ainabk in view of the f\·c·l"rlt.
walloping incrca).cs in the Whole­
).alc Price IrKkx (WPI ). which i:-,
a fnrcrullIll'r 10 the C PI and corn he
u,>cd 10 imcrprl't forthcoming C PI
behavior. Morcowr. the cpr ihelf
Tu:.e at an annual rate of 6 per cent
in the month of January. To add to
OUT co~ t -()f-living problems, wc
have expcricllced two dl':valuation ..
of the American dollar in a period
of 14 month).: ncedJc~~ to mention
its intt'rllalional cconomic ramifie:ltions.
Many domestIcally-manufactured
products usc imported COrllponcnts
or raw materials, such as
oil, copper, aluminum anu iron 01'1..\
rublK'r, i\nu ).il1lilar material. Thdr
in!;fI:>r"'':i.I price will be pa!>..,ed
through 10 the consuml'r~with a
,mall upw:lru impact on the overall
Amcrican pricc Ic\'d.
Oullook
The outlOOK for economic Jcvclopments
Juring the cour!>c of
1973. particularly in thl': laller p:lrI
of the )ear. i~ further clouded. The
::rdmini~tnrtiun·'" propoM:d Cllts of
c'»enll:11 government program'> an(1
prcdktilllh of tightcn..:d monctary
pohcy~\\lth Ir1tere~t r(ltes already
moving up---can bring a sub!>tantial
~ lowJO\\n in the pacc of the economy's
~'xpamion, if they becoml.) (l
rl':ality. Morcovcr, the probabk
slowing in the riSl' of consumer expo.!nuiture~.
which account for do~
to two-third ... uf the lowl n:ltional
o utput. clIn add to the l'mcrg..:nce
of growing economic difficulties befo
re thl! cud of the year.
NOlldhck..,.." with 4A-million
workcr~. or 5 per C~llt of the labor
fon:l·. still uncmployeu in January.
it h obligatory for thc Nixon Ad·
ministr:ltion 10 pur~uc a rate of
cconomic cxpansion so that furthl.'r
reductions in Ihis un ~at i s facto ry
Icwl of urll'mployment nr,' ;'lchi\'vccl.
This would bc con:.onant with the
sharp g:lins made in the rate of
prouuctivity, which many ecollomi..,b
claim i, a I..cy dement in thc
U.S. l'COnOrH} 's prosp.:cls for
growth and ~lab ilil\ .
Economic T re nds
In 1971. productivity in the priv>rtc
economy rose 3.6 pel' cent-a
fa).tl'r pael': than the long-term trend
since World War I I, and ill 1972.
productivit}' accekr.Hcd to 4.2 I)C~
~ent. This ).harp ris..: in productivity,
combinl'd with the ).I{muown in the
increase or wage).. re).ulied in a considerablc
slowdown in the ri).e of
unit labor costs on the onc hand,
but on the oth ... r hand, il rl'~ultl'd in
a ).ub!>tantial widening of profit margim.
Hence, with thc ('xpan).ion of
salcs, corporate profib. after taxl.!s,
..,hot up :n 1e:I..,t 15 per c\.·nt in 1972,
f\)lIowing a 14 per cent ri~ in
1971. and arc eXpl'(·ted to ri,c b}
an ewn greatcr IlwgnilUu,,: in 11)73.
IncJmtrinl prnductinn wa.., up
over 10 pcr cent in 1912 and i,
expected 10 continue to ris..: on
throu,gh 1973. HOUlIillg Slarh, ho\\­
ever. another important ..:conomic
inuicator of our econom)·:. behavior.
afe \.·xpected (0 t1cclin..:.
according 10 \0urc('s in the homebuilding
indu~lry.
Last yellr. the core of the l':COnomy').
rapid ex pansion was ill
rC'iidcntial comlruction and con­
,>umer ,>pending Hom,i ng :.tarts
rose from the depre:;!>ed level of
lA-million in 1970 to 2.I-million
in 1971 and 2.+tlIillion in 1972-
,purrcd by govcrnment programs, a
widespread housing shortage, :111(1
increasing rea l irl!;(Jmes of many
families. The volume of con).Ul11l':1'
c .. pcnditurc).. after accounting for
increal>l:d pl'ice:;, rose 6 per cent in
1972. folio" ing a nearly 4 per ccnt
gain in the pre\'jous year.
Thl' pacl' of rising consuml..'r I.'Xp..:nditllfl':"
will probably slow dC)\\ll
in the carly part of this ycar. The
anticipated ,lowing of imtllllJllcnt
buying and thc growing burden of
repaymenb illl'un that the pace of
ri~illg COIl:.Ull1er ('xpcnditllfe!>, dur­
IlIg thl' '>ecnnd part of the ycar, \\ill
inercu!>ingl} ul']>end on COIl!>Ulller
bu) ing powcr and confidencc-employment.
wagl's, and the degree of
advanc(' of li\ ing costs. A ~hlckening
ri~c of enn,utllcr spending durrng
thl': ~econd half of the ycar and
the expcct ... d ucdim: of housing
Mans through 1973 can be o ff:.ct.
only p;lrLiully, b) the anticijJ:tku 14
per cent rise of bu.!.ines:. inw:.tmcnl
in plants, machines. and equipment.
r8EW Jou,nClI