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About The Oregon statesman. (Salem, Or.) 1916-1980 | View Entire Issue (July 4, 1955)
( S Sc ly-Statasman, Saltm, Oregon, Mpnday, July 4, 1955 Economic Experts Almost Unanimously Optimistic Over Last Half of e55 Outlook (Eds Not: New Judgments are fcelag made by Washington ecaaa mie experts as the utltt heads lata a sew fiscal year and they're almast aaalmeasly eptimistic. Here' a eaaseasas of official apia iaa as to what eaa be expected ef the aatiaa's hasiaess ia the see ad half af ) business, opinion appear to differ Smaller companies quaO at the prospect of similar wage boosts and guarantee layoff pay demands. They voice concern lest the auto pacts start a new sequence of big, annual "rounds" of wage increases followed by price increases, thus starting a pattern in which prices chase wages up the spiral of in flation. : " To which some of the government economists reply: Of the 20-cent hourly package won by the United Auto Workers, only seven or eight cents represent new spending mon ey handed out to workers.. The rest goes into welfare, layoff pay guar antee and other funds, destined fcr investment in government bonds and other securities which do not inflate public purchasing power. Up Ga Price Tags But the businessman counters: Steel and other basic industries ! will be called ' on, to match the ! auto package in cold cash. Wage sive number of other goods and: has contributed to spectacular gains in output per worker. In today's fierce sales competi tion, officials believe, many com panies will feel obliged to absorb much of the higher wage and ma snarpiy iruiu uie niuuinguia ap praisal. Industry fears the infla tionary impact .of the new auto contracts. They will add an esti mated three-quarters of a billion services, s ' Still, Washington declines to be; badly ; frightened. , Manufacturers j wifl hope to offset part of the new j costs by rising productivity. The industry-wide trend to automation' more nearly automatic factories! costs in the raw materials indus tries tend to be passed on automa tically to the buyer; then up go the price tags 'on autos, home ap pliances, construction, and a mas dollars to the wage cost of Ford terials cost,' passing it along in prices. and GM alone. By STERLING F. GREEN WASHINGTON I As Wash ington reads the economic omers, 1353 will easily be the "biggest ever" year for business and con sumers, unmarred by either se vere joblessness or menacing in ' flation.- - At mid-year, officials and eco nomists of the Eisenhower admin istration report no sign of a second-half slump which, six months ago, , some of them thought miht occur. r Instead they find production and income at all time highs, and evi dently still gaining altitude. They li2ve , virtually stopped worrying about a possible autumn sag in automobiles or housing production, figuring that by now down-drafts in some industries can be offset by up-drafts in others. y , , One White House adviser esti mates . unofficially that the total national output hit a rate equal to roughly 377 billion dollars annually if the quarter just ended. That is 7 billion dollars above the. Janu ary-March quarter, which matched the peak of the best previous year, l?53. PoliUdaas Eye Tread - Political office holders are elated. The boom looks ample enough to last into the presidential election year. 1956, If it does. Republicans can take to the voters a story of high employment, high wages, probable tax cuts and at least the promise of a balanced budget Industrial developments last , montlS erased one potential blight oi the general optimism, but add ed another. The new wage agree ments in automobiles allayed fears of a crippling wave of strikes, but made some businessmen jittery over the possibility of wage-inflation. Government officials tend to dis count the latter hazard. In fact, optimism is so widespread that Arthur F. Burns, chairman of the President's Council "of Economic Advisors, uttered a warning in his address a fortnight ago at Pennsyl vania State University. Areld Overeaafideace ."It is," he said, "important to prevent the confidence that en . erates prosperity from passing in to the overconfidence that gener ates speculative booms." Burns said Americans may feel reasonably sure the country can avoid "deep and protracted depres sion," but recalled that no coun try has ever . eliminated the busi ness cycle. He said dangers lie in overbuilding of homes, bidding ud e-f stock prices with borrowed mon ey and deterioration in the quality r credit He added: ''If several such developments should occur simultaneously, the ability of the government to limit an economic downturn might be severely tested." - ; Off-the-record guesses of econo mists in the executive branch, con gressional staffs, and -the White House, presents this prospect for the second half of an already pros perous year. Steep Climb 1. Production will top the early- year official forecasts. Total cut put of goods and services exceeded the 1953 peak of nearly 365 hjllion dollars in the first quarter nnd ; climbed steeply in the second The rise may be less rapid in the second six-month oeriod, or it may level off. But officials see small prospect of an autumn recession, despite an inevitable slow drvn in the automobile industry's break neck race. 2. The personal income of Ameri cans, which never stopped rising even during the IStmonth reces sion that began two years a. will exceed the 288 billion dol lars of 1953 and the 286 billion record of last year. BMid to Rise Personal income stood at a 2954 billion dollar annual rate in April and. the experts said, is bound to be lifted by the newly negotiated wage increases, the resumption of overtime work, in many factories and the substantial rehiring of workers in the late spring. 3. Living costs should be quite stable. Some experts forecast a rise of less than one per cent, others a fractional decline. Indus inai raw materials wm go up somewhat it is believed with negli gible effect on retail prices. 4. Employment could top the 1953 'average of 62.213,000. There were C2.703.000 jobholders in May. but because of. the growth of the labor force, unemployment was 3.S per cent as against only 2.5 per cent in the record year. 5. Joblessness will rise in the next several weeks as students and housewives hunt summer jobs, but will decline as they find work or stopf looking. The year-long unem ployment average win be lower than last year, but probably not as good as 1953. In May there were fewer than 2 million un employed, the best record since 1953. Strikes Avaided 6. No major strikes now are con sidered threatening. Officials believe the Ford and General Motors agreements with the CIO set a pattern of generous settlements peaceably arrived at " 7. A balanced budget cherished goal of administration policy, is at last in sight Officials hope to pare down the estimated $2,300,000,000 deficit for the 1956 fiscal year, now beginning, and to wipe out the red ink entirely in the S7 ' budget which President Eisenhower pre sents in January. ; - S. The budget picture makes it almost certain that Congress will approve tax cuts next session. 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