THE PAST AS PROLOGUE TO RTHE FUTURE
Let's turn the clock back one year from today. Assume that we are sitting at this conference one year ago. What did our economy look like from that perspective? The major concern was whether this nation was going to lead the world into a deep depression. Were we going to return to the dust bowl days, the long ,bread lines, the tremendous unemployment that had not threatened us for nearly half a century?
There was no doubt that we were already deep into a recession. The economic data only confirmed what we knew was occurring from our daily life in business and at work. Unemployment had reached a postwar high of 9.2 percent. Inflation was charging upward at an annual rate of 7 to 8 percent. Inventories were being slashed. Plant and equipment investment was ancient history. Interest rates were raging along at extremely high levels--a prime of 8 to 9 percent, long-term Treasury issues yielding nearly 8 percent, mortgage rates of 9 percent. New housing starts had fallen so far that it was difficult to find them on the charts that economists are so fond of using. It is little wonder that most of us were glancing a little apprehensively over our shoulders, wondering if the specter of another depression might not be overtaking us.
But what a difference a year can make! Unemployment has dropped from 9.2 to 7.6 percent. Prices have, started to decline from their high levels to a more modest 5 to 6 percent annual rate. And certain leading indicators suggest that these low prices will continue for another several months. One and a half million more Americans are employed today than a year ago. Interest rates are down to more acceptable levels. And even housing starts and new car sales have stirred from their deathbeds. No longer do we speak of an impending depression. And most of us are even beginning to believe that the recession is over; that economic recovery is indeed real and certain. Our confidence has begun to flow back, a little more slowly for the typical businessman than for the consumer, but a return of confidence is indeed in the winds. And so we turn from the past for a glimpse of the future. What is in store for us in 1976?
ECONOMICS AND POLITICS IN '76
While there is some truth to the saying that economics and politics mix like oil and water, it is also true that economics is the stuff out of which politics is made. Whichever way you choose to look at the problem, we cannot avoid considering the mix of economics and politics in an election year. If we believe what our newspapers tell us, then we would be convinced that the Democrats are either going to spend us right into another recession by opening up the government coffers in an attempt to rapidly reduce the unemployment rates.