Boost For U.S. Economy

Press, Volume CX, Issue 32352, 18 July 1970, Page 13

Boost For U.S. Economy

(N.Z. Press Assn. —Copyright) WASHINGTON, July 17. The United States Gross National Product turned upwards in the second quarter of 1970 after two successive quarterly declines, the Department of Commerce announced yesterday.

This was the most concrete news so far that the American economy is not headed for a sustained recession, and may now start a resumption of its growth without submitting to inflationary pressures. The real 'Gross National Product, which measures the national output of goods and services after allowance for price inflation, rose at an annual rate of 0.3 per cent in the second quarter, after a 2.9 per cent decline in the first three months of the year. At the same time, the rise in the over-all price index, known as the G.N.P. deflator, slowed to an annual rate of 4.2 per cent, after advancing 6.4 per cent in the first quarter, indicating that the renewal of growth was developing in a more stable price environment. In money terms, the G.N.P. advanced ■ 4.5 per cent, or SUSIO,6OO million, during the quarter, to an annual rate of $U5970,100 million. Commenting on the preliminary figures, the Assistant Secretary of Commerce (Dr Harold Passer) said: “The fundamental significance is that the economy has stabilised rather than continued to

decline. This lays the foundation for an early resumption of growth.” Consumer spending and private savings rose significantly in the second quarter. The rise in savings to the highest proportion of net private income in three years, at 7.6 per cent, prompted Dr Passer to predict that consumption would accelerate in the latter half of the year, as people would have a greater capacity to purchase goods. The news appeared to be

a welcome political boost for the Nixon Administration, which, for 18 months, resisted pressures to move rapidly in conquering inflation or to switch abruptly to expansionary moves to stifle increasing unemployment President Nixon has adhered to his policy of gradualism, and, with only four months to go before the Congressional elections, can point to economic evidence that his measures and predictions are having the desired effect, observers say.