U.S. BUSINESS DECLINE

Press, Volume XCVII, Issue 28490, 21 January 1958, Page 11

U.S. BUSINESS DECLINE

Prediction Of Recovery (N.Z. Press Association—Copyright) (Rec. 9 p.m.) WASHINGTON, January 20. President Eisenhower predicted today that the United States would soon emerge from its current business decline and go on to “vigorous” economic expansion.

The President told Congress in his annual economic message that 1957 was a prosperous year, in. spite of the decline in the closing months. He said that the United States should do at least as well in the next 25 years as it had in the previous quarter century.

“As we look ahead in 1958, there are grounds for expecting that the decline in business activity need not be prolonged and that economic growth can be resumed without extended interruption,” he said.

The President submitted with the report a letter of transmittal, which, he said, condensed what he considered the major conclusions and recommendations of the report. In the letter he said:

“The last year was prosperous in spite of a decline in the closing months. Over 65 million persons were employed, 300,000 more than 1951. The nation’s output of goods and services totalled 434.000 million dollars and personal income was 343,000 million dollars.

“Both were 5 per cent, larger than in the preceding year A considerable part of these increases, however, reflected higher prices. “In the final quarter of the year, gross national product was about 1J per cent, below the peak reached in the third quarter. Personal income after taxes declined by one half of one per cent, and personal consumption expenditure somewhat less. “In December, however, unemployment amounted to 5.2 per cent, of the civilian labour force, compared with 4.3 per cent, in September. “This change in conditions called for adjustments in policies During much of the year, the task of restraining inflationary pressures was paramount, and policies were directed to this end,” the President said. “As we look ahead, there are grounds for expecting that the decline in business activity need not be prolonged and that economic growth can be resumed. The policies of Government will be directed toward helping tb assure this result.

“The demand for goods and services for final use has been well maintained.” Personal income has fallen very little, and purchases by consumers are continuing at a high level. “The confidence of business concerns in the economic future is evidenced by their long-range plans for expansion and the high rate at which they are carrying out these plans. “Financial conditions are increasingly favourable to resumption of economic growth. Credit is more readily available and its cost is lower. “The latest challenge of international communism will require a further increase in the economic claims of national security, which are already heavy,” he said. “If we follow suitable private and public policies, this challenge can be met without distorting our economy, or destroying the freedoms we cherish. Whatever our national security requires, our economy can provide and we can afford to pay. Unfavourable Feature

“A realistic appraisal of our economic prospects, though it warrants confidence, also requires that we acknowledge an unfavourable feature of recent economic developments. “In 1957, our gross national product rose 5 per cent., but fourfifths of this increase was accounted for by rising prices. “There are critical questions here for business and labour, as well as for government. Business managements must recognise that price increases unwarranted by costs or attempts to recapture investment too quickly not only lower the buying power of the dollar, but also may be self-de-feating by causing a restriction of markets, lower output, and narrowing of the return from capital investment.

“The leadership of labour must recognise that wage increases that go beyond over-all productivity gains are inconsistent with stable prices, and that the resumption of economic growth can be slowed by wage increases that involve either higher prices or a further narrowing of the margin between prices and costs. "The Government, for its part, must use its powers to help keep our economy stable and to encourage sound economic growth with reasonably stable prices. Legislation Proposed “Legislation is proposed to increase the effectiveness of the Federal Government’s credit programmes and its programmes for the insurance and guaranty of private credits; to widen and strengthen our economic ties with other nations: to bring agricultural production into line with commercial demands and reduce the fiscal burden of price-support programmes; to give individuals greater protection against economic hardships, promote integrity in labour-management relationships, and improve industrial relations; to enhance the competitive, character of our private enterprise system; and to strengthen the economic position of small businesses,” the President said.

Empire Economic Conference

<Rec. 8 p.m.) LONDON, Jan. 19. Commonwealth officials are expected to meet in London early in February to fix the agenda and the date tor the Commonwealth trade and economic conference The conference itself will probably take place, in Canada early in the autumn.