Where the Growth Is

THE ECONOMY

Every week the surging U.S. economy packs a few more happy surprises and leaves some old records behind. Last week the Government reported important gains in retail sales, inventory buying and capital spending. While businessmen last February budgeted a 0% increase in capital spending for 1964, the Commerce Department reports that they now plan a 12% gain, to almost $44 billion. The benefits will be uneven; the U.S. economy is so varied that some regions of the country are clearly doing better than others. A comparison by regions:

The South, which paced the nation with a 6% rise in personal income last year, will continue to lure industry with sunshine, low-wage labor and generous tax concessions. Last week multimilliondollar expansion programs were announced by Lockheed in Georgia, International Paper in Alabama, Reynolds Metals in Florida, Allied Chemical in South Carolina. Growth in chemicals and oil helped lift personal income in Louisiana well above the national average of 5% last year.

The Southwest gets more than its share of Government contract money, thanks in no small part to its important friends in Washington. NASA's new Manned-Spacecraft Center brings $3,000,000 in monthly salaries to Houston, and at least 85 aerospace companies have landed in the area since 1961.

The regional boom is broadly based. Last year the Southwest's industrial output rose 5%, construction 11%--both to alltime records. Texas has become the nation's leading producer of basic chemicals, and its $5 billion petrochemical industry is a bigger business than oil refining.

The West senses some growing pains. Southern California last year started more new houses and apartments--200,000--than any entire state, but local contractors now complain of overbuilding. Cutbacks in defense-spending during April resulted in 5,000 layoffs in California, which depends upon the Pentagon for fully one-third of its manufacturing output. But personal income in neighboring Nevada last year ran 13% ahead of the 1962 rate--a more rapid gain than any other state's--mostly because of its returns from legalized gambling.

The Midwest is growing more slowly than other regions because such fast-growth industries as aerospace and defense have drifted to areas that boast a gentler climate and more persuasive Congressmen. Compared with the same period last year, personal income during the first quarter rose scarcely 5% in Missouri, Illinois, Iowa. But auto-booming Michigan gained almost 8% , and the unemployment rate there is down to 3.6% .

The Northeast is also moving less rapidly than the South and West, partly because those regions have more room for expansion. Last year, personal income ran from 4% to 5% higher in New Jersey, New York and Pennsylvania. These highly developed regions stand to fare better in the future. The Labor Department recently predicted that the fastest-growing businesses during the last half of the 1960s will be construction, electronics, publishing, trucking, retail and wholesale trade--precisely those sectors in which the Northeast is strongest.

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