BABSON'S REPORTS
and local demand for goods and not come in 1973. Nonetheless, Increase in the first year, ave­ financial condition after build­
services, betterment in the na­ there should be a better show­ rage wage rates in American ing up their resources over the
tion's foreign tratte balance, and ing in our foreign trade balance industry will show a signifi­ past two years with the aid of
the unavoidable updating of the and a less horrendous deficit cant rise in 1973, tempered the investment tax credit. The
nation's defense
capabilities in our annual international ba­ somewhat by whatever controls Babson staff looks for corpo­
(Continued From Page 1)
will also lift the GNP.
lance of payments.
are in effect. All of this will rate profits after taxes to go
on public confidence. Overall, the economy upward these past
mean an upward push in both up about 12% in the new year
WORLD PEACE AND TRADE
we are hopeful that price and two years may well level off,
By the time this Annual Fore­
GOOD YEAR FOR FARMERS gross and disposable personal compared with 16% in 1972.
« age hikes can be kept to around but the hitherto laggard ca­ cast is published, there could
The step-up in grain exports incomes.*
Even this smaller gain, how­
6% in the coming year, leaving pital-goods sector will come
already be a cease-fire agree­ this past year has stiffened
SPENDING
WILL RISE
ever--coupled with the freeze
the normal productivity gam of on strong. Other lines which
ment for the Vietnam war. In agricultural commodity prices
on corporate dividend disburse­
3% to 3.5% per annum as a are expected to contribute to
any case, such a truce should materially, and 1972 is wind­
The combination of full em­ ments--will enhance business
partially counterbalancing in­ the advance in industrial pro­ not be far off. How long such
ing up as one of the best years ployment. soaring wage rates, liquidity.
fluence. The Administration it­ duction include paper and pulp,
a cooling-off arrangement will in history for the nation’s far­ and new highs in personal in­
One area of danger in the
and
self will be m the forefront containers, instruments
last, however, is indeterminate. mers. Realised net income come will, of course, put con­ money-rate picture may be tra­
machine tools, *P- We are hopeful that this for­
of the inflation battle. While controls,
could reach $18.8 billion, a sumers in a spending mood. For ced to the government's door­
it would be overly ambitious parel, and both military and ward step can be followed by total which would outstrip the that reason the staff of Babson's step. The U. S. Treasury is
consumer
electronics.
to look for a balanced federal
negotiations leading to a per­ previous peak of $17 billion Reports looks for a substan­ slated for fairly active refi­
budget in either fiscal 1973 or
manent peace treaty. Even if a reached back in 1967. Farm in­ tial rise In consumer spending nancing in 1973. and the unu­
fiscal 1974 (portions of both GROSS NATIONAL PRODUCT cease-fire is achieved but fails come next year should hold near for 1973. The continuing ad­ sual and unexpected tax re­
It
is
the
opinion
of
the
Bab
­
fall in the calendar year 1973),
to hold, any resumption of figh­ this all-time-record level. Do­ vance in consumer expenditures ceipts that have come in during
the Nixon Administration will son staff that through the com­ ting will presumably take place mestic demand for agricultural w ill be spurred to some degree 1972 through overwithholding
aim for a moderate budget de­ bination of anticipated higher without American forces. Hope­ products will remain strong, by a decline in the rate of will not be seen in the new
ficit by impounding funds allo­ prices and increased output, the fully, settlement in Vietnam while exports are expected to savings. The trend toward put­ year. Whether the Treasury's
nation's 1973 Gross National
cated for certain purposes.
may be only part of a favor­ rule on the upside. Farmers are ting away a smaller percentage debt-management efforts will
Product
in current dollars able peace package which will
already "champing at the bit” of disposable income has been pose a problem depends on in­
should
an
advance
appro
­
INDUSTRIAL PRODUCTION
incorporate
agreements to to start tilling and planting in evidence since the third quar­ flation prospects. If, as now
ximating
9
‘
T'over
1972,
again
Allowing for a reasonable
maintain the integrity of all 1973's spring crops. The farm­ ter of 1971, after hitting a seems to be increasingly ac­
labor climate with some dis­ of about the same magnitude other Southeast Asian nations. equipment market is booming, peak in the preceding quar­
cepted. the general public feels
ruptions of brief duration, the as that seen in the year just
It
is the conviction of and demand for fertiliser and ter when consumers channeled that inflation is being restrai­
staff of Babson's Reports feels ended. In constant dollars (de­ Babson's Reports that there seed will be brisk. Farm real 8.6 of their disposable income ned, the federal refinancing
that industrial production can flated basis), with 1958 as the will be no World War III in estate prices have also streng­ into savings. For the full year projects are likely to occur
post a gain of 5% in 1973 over base period, we expect a year- 1973. There may well be more thened.
1971 the savings rate was 8.2%, without undue pressure on in­
the 1972 average. This would to-year increase of about 4% internal strife in the emerg­
but we estimate the 1972 fi­ terest rates.
BRIGHT
CONSUMER
be in terms of physical volume compared with 5.5% for 1972. ing nations of Africa and other
gure will prove to have been
Hence, bond prices will pro­
PSYCHOLOGY
of output and not subject to in­ This smaller rate of progress underdeveloped countries of the
bably show sporadic signs of
All told, the nation's con­ reduced to 6.6%.
points
up
the
fact
that
general
flationary factors. This rate of
world where the climate for sumers can look forward to
With little chance for much softness in the short to in­
increase would amount to some­ business in 1973 will tack on leadership is still a partial
reduction in foodprices and with termediate sectors of the ma­
a
good
year
in
1973.
There
will
what less than that registered further gains but not with the vacuum and thus invites strug­
be some dissatisfaction over consumption per capita still turity scale. But on the long­
same degree of vigor.
during 1972.
gle for domination. Similar con­ prices as well as occasional climbing, a fair portion of the term end prices should be ge­
Two aspects of economic ac­
On the other hand, the in­
ditions also exist in portions tremors among workers unset­ increase in personal incomes nerally well maintained. In ge­
crease in industrial activity- tivity we think »ill be prominent of South and Central America.
tled by labor-management con­ will go for food and beverages. neral, 1973 should offer ample
in
enabling
1973
to
chalk
up
a
should be spread over a broa­
It is to be hoped, however, frontations, but the overall at­ Consumers »ill also spend opportunity to make selected
der base in terms of industries climb in business, and hence that the expected redirection of
mosphere will be heartening. more for eating away from purchases of bonds and pre­
participating. There should also in GNP, are in the private U. S. foreign policy and assis­
home. W ith new housing starts ferred stocks of good quality
be some shift in leadership. sector of the economy. These tance will include a shift back Employment should move above
in 1972 bolding up longer than for investors who need to nail
the
record
rate
already
achie
­
For example, the production of are personal consumption ex­ to Latin America in time to
was earlier expected, furniture down a fair amount of fixed in­
ved
during
1972.
Already
the
automobiles and trucks which penditures and private domes­ stave off serious trouble there.
and home furnishings are likely come from their investments.
did yeomen’s work in pulling tic investments. However, state In the Middle East no full- "Help Wanted” newspaper sec­
tions are reflecting an increase to remain strong areas of buyer Wherever possible, however,
scale war is likely in 1973, in numbers of job openings. On interest. Purchases of new some inflation hedge should be
but the area will unfortunately the other hand, unemployment autos were extremely heavy sought, even to the point of sac­
continue to teeter on the brink will shrink only a trifle from during the bulk of the past year, rificing a little income on a
of outright conflict.
the current 6% of the civilian and there is no indication that portion of investment capital.
The commercial transactions labor force, possibly reaching this tendency will soon be re­ This part of investment funds
achieved between this country the Administration’s target of versed. It should be noted, how­ can be placed in some attrac­
and Russia and RedCnina barely 5.5%. This is scarcely satis­ ever, that we look for con­ tively priced convertible de­
scratch the surface of the trade factory to labor leaders, but siderably less of an upward bentures and convertible pre­
potential which exists on an in­ it must be recognized that it fillip in home furnishings and ferred stocks.
ternational scale. We forecast is difficult to reduce jobless auto sales in 1973 than was
Bl'/. ER
TAX Bill 1
an increase in foreign com­ totals--even when employment seen in 1972. In both instan­
The outcry for tax reform,
AS THE NEW YEAR’S
merce for the United States in is on the rise--if there is a ces, ti is getting late in the
the new year, involving more massive influx into the labor upward phase of the selling the staggering projected federal
industry groups. Stupendous force of young people and cycle. We do expect, however, budget deficit, and th»- need for
BELLS ARE RINGING
though the potential may be, we mothers seeking part-time or quite positive gams in consumer help at state and local levels
can tap only a tiny fraction of full-time work. And this will spending for leisure-time acti­ indicate that somewhere along
IN THE OLD FAMILIAR
the line in 1973 there must be
the basic markets. Iron-cur­ be the case during 1973.
vities and products, and for ap­
a heavy tax wallop. The staff
tain
countries
simply
do
not
parel
and
accessories.
WAY. MAY THEY BE
As we said earlier, wage
of Babson’s Reports does feel,
have enough dollar holdings or rates will climb further m the
CAPITAL EXPENDITURES
however, that by closing tax
trade credits. Sales made on year ahead.
RINGING IN A YEAR
The pattern for
Business capital expendi­ loopholes of the more glaring
a credit basis require tedious raises and fringe benefits for
negotiations to establish terms the ensuing three years may tures will help to stimulate the sort and putting some restraints
FOR YOU THAT’S
for such transactions. Even­ well be determinedbycontracta economy during 1973, but not on public spending, the federal
tually,
however, the worldwide lnlcpd in the kpy trucking auto, with the same potency as in government can avoid an out­
HAPPY EVERY DAY:
revamp of the international and construction industries in previous business booms. It is right increase in both corpo­
monetary system will result in the new year. With multiyear probable, in fact, that a good rate and personal income taxes
some improvement in this si­ agreements usually calling for chunk of capital spending will in the coming year, over and
tuation. But the solution will the lion’s share of the overall be not for increased productive above the social security tax
capacity but for items of high hike that is already scheduled
social priority. Most firms will to take effect January 1, 1973.
be laying out more money to
We'd like comply with anti-pollution re­
gulations, and companies in the
to express our
oil and gas industry will ex­
RALPH G. LAWRENCE
pend huge sums in the search
thanks and
for new reserves. Major gas
appreciation! distributors are so hard-pres­
sed for fresh supplies of na­
tural gas that they are ad­
vancing millions of dollars to
help pay for exploration and
development costs in exchange
for the right to purchase a ma­
jor part or the entire output of
a given area. All in all, bu­
siness capital expenditures in
1973 could show a gain just
about matching the 10% mar-
ked up during the past year.
NYSSA INSURANCE AGENCY
NYSSA
TAVERN
INTEREST RATES--
BOND MARKET
Since the consumer will be
spending more and business will
be building up inventories and
pouring out more funds for
capital-equipment
programs,
there will inevitably be some
upward pressure on interest
rates. But we stress once more
that we do not anticipate ano­
ther traumatic credit crunch
such as occurred during the
closing years of the 1960s. The
brunt of any interest-rate rise
is likely to come at the short
end of the money-rate scale,
with only a moderate flrmingof
long-term rates. Keep in mind
that the total of new housing
starts will probably ease a
bit in 1973. Moreover, cor­
porations are generally in good
IVhet! A jumping New Year
is about to begin, but before
we push ahead we want to express to
you, our deep gratitude for your patronage.
As joyous bells ring in
the New Year, they peal out
our best wishes to our friends—
for Happiness ard Good Cheer.
DR. DAVID SARAZIN
Thursday, December 28, 1972
The Nyssa Gate City Journal, Nyssa, Oregon
Page Twelve
SPIC & SPAN
CLEANING CENTER
STCfK MARKET OUTLOOK
The stock
market during
1973 will have three power­
ful factors in its corner (i)
The element of peace. (2) the
generally healthy economic
climate, and (3) the decisive
hurdling of the 1,000 mark by
the Dow Jones Industrial Ave­
rage which is whetting the in­
vestment appetite. These are
considerations that tend to stif­
fen investment confidence sub­
stantially. Un the assumptions
that corporate profits can post
another gain during the coming
year and that Inflation can be
prevented from running away,
the Dow Jones industrial Ave­
rage can be expected to work
into still higher territory over
the next twelve months. The
possibility of a move past the
1,100 mark, to even a chal­
lenge of the 1,200 level, should
not tie ruled out. However, there
may not t>e a smooth jet flight
for the stock market, if only
because of the overhanging dan­
ger of labor troubles which will
threaten for virtually the entire
year ahead.
Nevertheless, barring an un­
predictable major adverse de­
velopment, many of the stocks
which have been in the dol­
drums will have an opportunity
to catch up with the parade.
Among the groups that can give
a good account of themselves in
1973 are those related to the
energy crisis, the reawakening
laggard» such as steels, che­
micals, and insurance issues,
and those which stand to bene­
fit most from the increase in
business capital spending and
stepped-up foreign trade. The
intense atmosphere along the
labor front in the new year
could also attract investors to
the stocks of concerns dealing
in equipment that would cut
back excessive labor costs.
Promising though the stock
market outlook may be at this
transition period--1972 into
1973--the staff of Babson's Re-
ports is of the opinion that
investors should employ a heal­
thy measure of conservatism in
their investment moves. Re­
solve, for instance, nottochase
stocks which have already gone
whizzing upward, try to ope­
rate on a sensible investment
game plan. Give due considera­
tion to the fundamental quality
of investment selections and to
securing at least a reasonable
degree of diversification tor
your portfolio. In additon, keep
on hand some investment re­
serves at all times.
END
round-up of health,
wealth, happiness is our
wish to you. We are grateful
for the opportunity of serving you
Bass
I nion 76 Service