The National Outlook
Secretary Hodges Is Optimistic
By Ralph Kobe*
Secretary Luther Hodges,
►yvlxose Department of Gouvnerce,
’together with the Department of
Labor, collects almost all • the
general data on business that ig
gathered by government, has is
sued a statement indicating that
he believes the economy is still
on the upgrade, and will con
tinue so for many, many months.
Two items particularly impress
the secretary:
First is an increase of cor
porate profits in the second
quarter. The rise amounted to
SBOO million, and it lifted the
pre-tax total to $50.9 billion.
This is still S2OO million below
the aggregate in the final three
months of 1961, but it was gen
erally expected, both within and
without the government, that the
total would show another de-1
cline. No details of the increase
are yet available, and hence it is
impossible to determine how
widespread the improvement l
was. From the reports of indi
vidual firms, however, it is
known that while some are get
ting along a little better from
''a profit viewpoint, many others
are finding it impossible to make
as much as they did a year
earSerr
Second is another rise in per
sonal income. The department
release said it rose by $1 bil
lion, but the detailed figures
show it was S9OO million. The,
difference, of course, is not too
important. A breakdown of the
total has been issued, and it re
veals some interesting and quite
significant facts.
For example, transfer .pay
ments, which consist primarily
of social insurance benefits and
veterans’ payments, in August
amounted to $34.5 billion. This
is an' increase of $1.5 billion in
the past twelve months. At
present 7-8 percent of all per
sonal .income in the nation 'is in
the form of these transfer pay
ments.
Dividends which amoupt to
well under jonc-half the transfer
payments, flowed a decline for
the second* consecutive month.
The total is] $15.6 billion.
Over twofthirds of porsorffil in
RESERVE |
Sum —■Aw'■ '■
Ig
I tf#'/<J///f>r'-t&t jflj
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‘ .
come consists of wage and sal
ary disbursements. Between July
: and August there was a decline
in that paid out by manufactur
; ing in the form of wages and
salaries. This is probably the
; result of a slightly shorter work
week, the increase in unemploy
ment, and the change of models
by the automobile industry.
Os especial interest in the
category of wages and salaries is
that paid by government—fed
eral, state and local. The total
i in August was $56-6 billion.
This was an increase of $4.5 bil
lion over August 1961.
Now, the real question is
whether these reports on profits
and personal income justify op
timism for the remainder of this
year.
I In fairness to Secretary Hodg
es it should be ported out that
; he said merely that they indi
cated our economic system has
: j “bounced back a little from what
it looked like two or three
; i months ago’’ and he added that
. the performance is not wholly
[ satisfactory.
i When these two releases are
. interpreted in that manner it is
■ most difficult to find any thing
j with which to disagree., But the
, I Secretary gave the impression of
, | being highly pleased and con
. I vinced that we have better busi
; I ness ahead for at least well into
,j 1963.
i, In our judgment this is read
. ing far too much into these two
developments. The slight in
. crease in corporate profits does
not indicate that the squeeze in
. this area is coming to an end.
■ Granted, it is better to have a
I rise than the anticipated decline,
i but the improvement was not
; large enough to be important.
, The personal-income increase
; is basically insignificant. That
. ] item normally rises, month after
i month, except when we are in
. a recession.
Whether we shall have a
, downturn of business before the
■ end of the year is still an open
■j question.
j TRY A HEFALD CLASSIFIED
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