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About Nyssa gate city journal. (Nyssa, Or.) 1937-199? | View Entire Issue (Jan. 2, 1975)
The Nyssa Oat« City Journal, Nyssa, Oregon Thursday, January 2, 1975 Pag« Eleven BABSON'S FINANCIAL BUSINESS FORECAST Eastman Insurance Agency The skyrocketing prices of grain, beef, and more re cently sugar make it vital for Mother Nature to smile on us in 1975. Given normal wea ther in the coming crop year. American farmers can pro duce much-needed grain and livestock supplies in quanti ties that can help ease some inflationary pressures. A bountiful farm outturn is needed, too. for export to food- short nations—in the process improving our ba lance-of-payments situation Fertilizer and in some cases seeds are inadequate for maximum acreage plantings even with the best of weather and farm operating costs have by no means escaped inflation. We are hopeful, nevertheless. that there will be a record farm output in 1975. As to individual major crops, the picture is further clouded by the question ol how much acreage will be sown to soybean, corn, sorghum, or sugar beet, since all involve extremely high prices. Building and ( •nslzw-tton Owyhee Dist. Co New housing starts were hurl severely in 1974, exceed ing the anticipated decline. Our forecast of 1.3 million seemed unduly pessimistic at the start of 1974 in contrast to the 1.8 million projected by most economic forecasters. But preliminary figures indi cate that we were pretty close to dead center! We now expect 1975 to show some turn-around. Initially, hous ing starts may slip close to the I-million mark, since building permits are still on the way down But a brighter climate for building and construction can emerge as 1975 moves along. Easier monetary conditions and more consumer emphasis on savings have had some positive effects at savings and loan institutions and banks While mortgage mo ney is still far from flush, at least a beginning has been made in this key sector. At best, however, the mortgage money supply is not likely to support more than a mode rate betterment in 1975 bousing starts—our guess us 1.6 million units. 1974 was ayear of better profit» for much of American businesv, but few realize that the seemingly astronomical gains resulted from compar ings earnings little better than normal (and some cases of abnormal earnings, as in oil and sugar) with profits restrained by price controls in parts of 1972 and I97J. In the second half of 1973 and in 1974. price markups to compensate for brisk cost advances made many year- to-year profits comparisons look better than they were. Progress will be slowed in 1975. and indeed quarterly figures showing earnings below this year’s may even predominate. While business is contending with a sagging economy, it is especially difficult to offset the pinch of rising costs through pnee increases. Still the substan tial business profits of 1974 have strengthened the finan cial standing of many com panies which had been skirting close to disaster. Nevertheless, the economic climate will make things difficult, and despite cost cutting efforts the slower pace of business will pro bably lop off some 12% from corporate profits versus the 1974 total. As profits sag, there are bound to be some dividend casualties, but by and large established divi dend rates will be held. There will be no spate of extra disbursements. but neither will there be a rash of cuts or omissions. Domestic PoMtlcs— International Affairs Stock .nd Bond OulUxA The letdown in economic The clear domination of vitality has already caused a weakening in interest rates, Democrats effected in the with consequent beneficial 1974 presidential nomination elections and the resultant effects on bond prices. The greater decline has been in strong liberal bias have unnerved many businessmen short-term rates, with long- terms less responsive be and investors. Bear in mind, however, that the wide-open cause of still hefty demand race for the 1976 Democratic for long-term capital needs presidential nomina t i o n and concern over inflation In could bring about sffilt 1975 this pattern is likely to persist, particularly as the fragmentation of what now appears to be a veto-proof Federal Reserve moves more ( ongress. The drive will be positively to ease credit in on, of course, for more social response to mounting fears of programs, including a na recession. At this juncture, tional health plan and a therefore, income-onented in vestors still have a good consumer protection agency If the recession induces opportunity to acquire top Congress to push the panic quality bonds, as well as button, there will be heavy preferred stocks, at espe cially advantageous yields. pressure for spending well In view of the desultory beyond the Administration’s business outlook for most of intentions. But the free sjx-nders must reckon with 1975. the stock market would appear to have little chance the federal budget deficit, which could approximate $25 of making any appreciable headway over the next twelve billion in the fiscal year months. However, investors ending June 30. should keep in mind two vital On the international front, the Babson's Reports staff considerations:* I) The stock market anticipates things to looks for the detente in come, and having discounted Soviet-American relations to much bad news it may now be maintained, though the be simply waiting to signal a degree of harmony must be expected to vary. The Mid turn for the better; and (2) east remains center stage, of the prices of vast numbers of course, as arms buildups and stocks and convertible secun- rash talk paint an incendiary ties have already been backdrop. Danger of renewed hammered down to levels Arab-lsraeli fighting is grave where they represent excel- but we are hopeful that lent values. Thus, for inves- outright war can be averted tors who are in a position to in 1975. risk being a trifle early there are plenty of opportunities for timely investments at present. It would be wise to begin considering the filter ing of at least small parts of liquid reserves into equity- onented investments, mak ing certain, of course, to weigh carefully the basic needs of an individual port folio. In short, this is the time to set one’s portfolio in a position to benefit fully from the next major market advance, the start of which will doubtless emerge in 1975 from what is now a base building phase. Symptomatic of any bottoming-out process W,- wish you joy and is the market's propensity to bob around. But when this high volatility and low serenity, happy hearts readings for both individual and happy homes issues and leading market Averages combine against a all through the gloomy background, condi coming year ... tions are auspicious for eagle-eyed bargain hunters to start moving in—sensibly, carefully, patiently, for maxi mum long-term capital gams and rewarding income. The Olympic Inn Drive Inn I nd Malheur Memorial Hospital remember you. Cheers! Farmers Feed & Seed Co. Nyssa Rexall Pharmacy I he world is waiting for the dawn of a bright new day: new hopes, new goals, new dreams. May yours come true this year! Nyssa Auto Parts