The Bozeman courier., 1927-01-07
Business Conditions in the
United States

In summary of the years busi-
ness, emphasis must be placed first |
of all on the exceptional degree of !
prosperity enjoyed by nearly every |
major economic group in the country,
states the current issue of the Guar
anty Survey, published by the Guar I
anty Trust company of New York.
The most striking feature of this
prosperity is that it is something
more than prosperity" in the con-
ventional economic sense of active
business, large employment, rising
prices and wages and increasing bank
loans, the Survey continues. Under
such conditions large business profits
almost invariably prevail; but wages
and salaries, while generally moving
upward, often fail to keep pace with
the advance in the cost of living, so
that the purchasing over of some
groups lags behind that of others.
It is chiefly in this respect that the
present domestic situation is remark
able. Not only have wages risen to
new high levels, but the cost of hv-
ing has increased comparatively lit
tie in the last five years, and during
the greater part of this year it has
actually been moving downward.
Encouraging Outlook for, 1927
The wide distribution, even more
than the volume of the publics pur-
chasing power justifies the expecta-
tion that business will continue ac-
tive and underlying conditions gener-
ally sound during the coming year.
1t is not to be expected that the rate
of growth maintained during the last
two years can be maintained indefi-
nitely. Even if it be granted that
growth is a normal feature of the
country's business, and that the man.
power now existing could, under bet
ter management, produce vastly
more than it has even in the recent
past, it remains true that such rapid
expansion demands adjustments
which must from time to time occa-
sion temporary setbacks. It must be
remembered, however, that a moder-
ate decline from such levels as have
existed this year would by no means
mark the end OF the present era of
prosperity.
, Moderate Recession Possible
A number Of developments in the
last few months have led to a rather
general belief. that some recession, or
. at least some slowing down. in the
! rate of expansion, is likely to occur
in the near future. Curtailnent has,
in fact, already appeared in some
, directions. The declines in building
!, activity and automobile manufacture
the sO-called "key industries: the
downward movement of commodity
: prices; the effects of low cotton
prices and Of unfavorable conditions
in some agricultural sections; the ex
tremely high level of stock prices and
of speculative activity in the security
markets; the diminishing export trade
balance; political uncertainties: the
outward movement of foreign cap.
ital which has taken refuge in thi:
country during the period of infla
tion, increasing competition at home
and abroad-these are among tn;
factors that have been mentioned a,
indicating the approach of business
reaction.
Large Purchasing Power
On the other hand, there is tn,
basic fact Of large and widely share,
purchasing power, reflected in fuI
employment, high wage levels. activ
retail trade and small commercial in
ventories; q strong credit situation
a highly liquid condition on the par
Of most business enterprises; slowl,
reviving purchasing power abroad
with the hope of more rapid progress
to follow the restoration of SCUM
financial conditions; remarkably ef
ficient transportation service; an
special factors, such as the expendi
ture in this country Of funds boz
rowed by foreign industries. AS fo
the influence of declining commodit
prices, the experience of the pas
year has amply demonstrated ths