Masonry Magazine February 1966 Page. 12
The Washington Wire
by-product of current high investment. It's also hoped that industry and labor will observe the wage-price guides.
But other economists have doubts. Some worry over the fact that scarce labor may be getting more out of industry as the price for staying on the job, even when there are no large contract gains. They also worry that demand will overflow before new plant has had time to start producing smoothly.
THE UPTREND IN FOOD PRICES IS NOW BEGINNING TO WORRY the President's economic advisers.
Until recently, these analysts have been prone to view the jumps in meats, especially as the normal responses to natural factors such as weather. The price increases that result have not been considered related to cyclical factors that classically cause inflation. Besides, food prices were momentarily expected to reverse the 1965 spurt and come down.
Instead, food costs here continued to rise. And officials fear that this trend may not have run its course. Whatever the reasons for the surge, the impact on the cost of living is quite real. The overall Consumer Price Index has been pushed up as much as 0.4% a month. Unions are considered likely to take note of this as a basis for bigger demands.
LABOR SHORTAGES THEMSELVES ARE WORRYING U.S. OFFICIALS these days.
They see scarcities threatening defense output, as well as price stability. The "quit rate" in manufacturing is now 22 per 1,000, up from 15 a year ago and 11 in the early 1960's. It shows voluntary departures for better jobs. Officials plan meetings with employers in key lines to see what can be done to train or find needed skills. They'll also try to check labor hoarding.
THE GOVERNMENT IS STEPPING UP POLICIES OF ITS GUIDELINES on wages.
The President wants to avoid open price-wage controls while still checking inflation. The first big target is the construction trades out West. The Labor Department has publicized the fat gains won by locals in the building trades-gains that don't get any of the fanfare of hikes in steel or autos. Some unions have won gains of 8% a year well above the guidelines' 3.2%. Putting the spotlight on these pacts is a prelude to pressures to go slow.
SALARIES FOR HOURLY WORKERS WILL BE A KEY DEMAND of the Auto Workers in negotiations next year.
Union Chief Walter Reuther has put the industry on notice this early to give Detroit "adequate time to make the emotional adjustment." In the pact the Auto Workers have pioneered many innovations. If Reuther is serious and successful-all industry will feel the backlash.
THE THREAT OF A REAL MONEY SQUEEZE IS LOOMING, the first since 1959.
Demand for credit is zooming out-stripping the rate of increase in supply. Washington, local governments, and consumers keep expanding needs steadily. But corporate requirements are really soaring, to finance building of plants. Yet corporate cash flows aren't rising so fast, now that tax-cutting is over and the move to the new, more generous depreciation formulas has been completed.
The Federal Reserve will be less accommodating in providing extra funds for bank lending. Officials do not want excess credit to bring on inflation especially in the period until something is done to increase income taxes. Interest rates are likely to rise from present record or near-record peaks.
DIVIDEND INCREASES MAY BE KEPT RELATIVELY SMALL this year, because of industry's need for cash.
Most business analysts actually expect a tidy gain in corporate profits. Normally, that would indicate larger pay-outs. But this year, the need for money is greater than usual. Many firms will prefer to conserve their cash, even if their stockholders are made unhappy.
Will stock prices suffer? No necessarily. Investors will be getting growth for those retained earnings. And common stocks will still be the preferred hedge against inflation.
PROTECTIONISM IS ON THE RISE IN EUROPE these days.
It is growing as expanding European producers seek to protect home markets from competition by third and other countries. And it is being helped by the delay in getting an agreement on the "Kennedy Round" of tariff cuts, negotiations for which have been dragging for many months. Some of the protectionist sentiment can be found in such basic European industries as chemicals steel, etc., etc.
FEES FOR CERTAIN POSTAL SERVICES ARE GOING UP, starting on March 26.
It is part of a White House drive to make the postal services pay their way. The cost of certified mail goes to 30 from 20. Money order fees rise 5.
MICROFILMS OF ALL NEW U.S. PATENTS ARE NOW OBTAINABLE, at low cost, through the Clearinghouse for Federal Scientific and Technical Information.
A company can now get the complete annual file-67,000-in convenient form. Cost is set at $830 a year from the Clearinghouse, Springfield, Va. 22151.
RICHARD NIXON IS BUSILY BUILDING SUPPORT for another White House try in 1968.
He is always available for speeches to help raise funds locally. He has already earned the backing of many influential conservative leaders. And his cause is helped by the failure of liberals to develop a candidate.
Mayor John Lindsay of New York is, of course, a new face and a bright hope. But he must still prove himself, prove that he can readily solve his city's numerous unsolvable problems.