1962 & Beyond

President Kennedy was bullish about the U.S. economy in 1962. "I think," he said at his press conference last week, "that this economy has more vitality in it than some of its premature mourners."

There had indeed been some mourners. They based their worries mostly on the fact that the nation had suffered some January hiccups. Although orders for durable goods were up by 2% over December and manufacturers had increased their orders for new machinery and equipment by 8%, personal income declined by .3%, industrial production by 1%, and the average weekly hours clocked by production workers sagged from 40.4 to 40. Commerce Secretary Luther Hodges likened January to "a slight chill." Walter Heller, chairman of the President's Council of Economic Advisors, conceded that January had been "particularly bumpy." Spurts & Pauses. But both Hodges and Heller insisted that 1962 would still be a good year. Actually, said Heller, the economy is "in the midst of a very brisk recovery despite certain spurts and pauses. Some of our bumpiest recoveries have been our best." During the week, the figures for February began to come in--and they were certainly encouraging. Auto sales totaled 455,300, a 26% jump over February 1961. Normally, unemployment increases during the dead-of-winter month of February, but this time it dropped from 5.8% to 5.6% of the work force, while total employment hit an all-time February high of 65,789,000.

Economist Heller confidently predicted that the gross national product would soar to a rate of $550 billion by the first quarter of 1962--a jump of $8 billion over the last quarter of 1961--and go on to reach the average for the year of $570 billion predicted by President Kennedy in his economic message to the Congress in January.

Most economists agreed that 1962 would turn out well despite its stuttering start; but many were worried about the longer-term prospects. The nonprofit National Planning Association estimated that the gross national product would grow at an annual rate of about 4.2% during the '60s, reach about $800 billion by 1970.

But even this, said the association, would fall $150 billion short of the standards set by the Commission on National Goals during the Eisenhower Administration.

Speaking in Poughkeepsie, N.Y., Albert T. Sommers, director of economic research for the National Industrial Conference Board, said that 1962 looks "like a year of moderate growth in an admittedly competitive environment." He suggested a probable leveling-out of the economy as a whole: "Both boom and recession, it seems to me, are now less likely to occur, and when they occur, they are likely to be less pronounced."

Questions & Problems. If recessions were minimized, that would be all to the good. But less pronounced booms? Was that the prospect for America? Economists were well aware that stepped-up federal spending last year did not cause a dramatic revival of the economy. What would help?

The U.S. faced ever greater competition from a prosperous Europe united in a Common Market. At home, there was the threat of dollar-sapping inflation unless the new labor contracts, led by steel, could be written on a sensible basis. Must the next upsurge for the economy wait until the "war babies" get married around 1965? These were the questions and problems posed to economists and to the Administration.

This file is automatically generated by a robot program, so reader's discretion is required.