Monday, Jan. 08, 1973
BOOM is a word that forecasters hesitate to use because it suggests—besides the delights of prosperity—a period of heated excess that sometimes leads to bust. But as they contemplate the prospects for the U.S. economy in 1973, the prophets are hard put to find any descriptive other than boom for what they foresee. The outlook is for a second straight year of strong growth in jobs, income, production, sales, profits—so much so that one of the prognosticators' problems is keeping their predictions optimistic enough. Lately they have had to add a few billion dollars to their output forecasts because 1972 ended with such a whoosh. In fact they have a nagging suspicion that the economy may be accelerating a shade too rapidly, raising some danger that the upsurge could turn into the kind of inflationary blow-off that precedes not exactly a bust but a slump.
These Government moves have produced a marked improvement in the public's psychology. As employment and incomes rose, people regained a sense of confidence. They reduced their savings from a startlingly high 8.2% of their income to some 7%, and started spending again. In turn, the bigger spending created more production and profits, which led to more hiring, more income—and still more spending.
Most Wall Street analysts are convinced that the market will continue to climb smartly in 1973. Brokers looking for a marked increase in trading volume see signs that small investors are beginning to overcome fears instilled by the Wall Street slide of 1970 and return to the market. Investment from abroad is also on the rise. Economist Alan Greenspan estimates that foreigners put $1.6 billion into American securities last year and will buy $3 billion worth in 1973.
The biggest gainers are expected to be cyclical issues, the stocks that react most directly to swings in the economy. For example, the projected spending burst for capital improvements should burnish the allure of heavy equipment and machine-tool issues. Business inventory accumulation, which is just now beginning in earnest, should brighten prospects for copper, aluminum, steel, chemical and paper stocks. Among the categories expected to lag in 1973 are food stocks, which analysts believe are already fully valued, still-limping aerospace stocks and many speculative issues. For a broad range of stocks, however, 1973 is shaping up as a gilt-edged year.
Someone asked me to find an article from the 1973 peak of the stock market
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