Evening star., 1960-02-01
CongressGets
RosyForecast
On Prosperity
BY LEE M. COIN
Star star Writer

Congress 1860 will be q pros.
porous year with declines pre-.
dicted in only two major area.
-construction and agriculture
Chances are good, the experts
told the Joint Economic Com.
mittee, for prosperity to con.
tinue into 1861 and perhaps
even beyond.
Interest rates will continue
at high levels. they said, but
business activity will not be
retarded by scarcity Of money
and credit. Any move to force
interest rates down, one wit
ness warned, would cause "ex-
cesses" and a later economic
decline.
The committee Is holding a
series Of hearings on President
EiSenhower's Economic Report.
Secretary Of the Treasury An
derson Cancelled his scheduled
testimony this afternoon be-
cause of illness.
Democrats Criticized
The committees Democratic
majority, headed by Senator
Douglas Of Illinois. is highly
critical Of the administrators
economic policies. Republicans
on the committee defended the
administration in a dissenting
report issued last week. Debate
on economic issues is expected
to play a big role in this years
election campaign.
In today's testimony, Martin
r. Gainsbrugh, chief econo-
mist Of the National Industrial
Conference Board, predicted
major increases this year In
business investment for new
plants and equipment. The
level Of such capital invest
ment is an important element
in whether the economy gains
or loses ground.
Mr.. Gainsbrugh, citing sur
veys of business plans, said
the outlook for capital goods
spending is perhaps the most
favorable Of all the major eco
nomic sectors"
Upward Thrust" Seen
He said business investment
should provide an upward
thrust" to the economy
throughout 1860. Capital in
vestment will continue strong
and rising in the second half
Of the year, when some other
sectors of the economy may
decline, providing an under
pinning for prosperity, he said.
Capital investment may con-
tinue to expand for another
two and one-half years or
more, helping TO sustain eco
nomic growth, Mr.. Gainsbrugh
predicted.
Scarcity of credit, he said,
will not dampen capital in
vestment because business
profits will be high enough to
finance investment from in
ternal sources.
Another favorable factor for
1860, Mr.. Gainsbrugh said, is
that businessmen win increase
their inventories by about SCI
billion. Inventory accumula- y
ton augments consumption in
expanding demand for produc-
ton Of goods and services.
George Cline Smith Of the
F. w. Dodge Corp, testified
that total construction con-
tracts probably will decline
about l per cent this year from
the 1859 level. registering the
first drop since World War II.
A decline in housing will be q
major factor in this reduction,
he said, attributing the housing
drop largely to high interest
rates on mortgages.
Labor Viewpoint Given
Consumers viii increase
spending sharply this year in
all categories, especially serv-
ices, Mr.. Smith predicted. He
forecast new records in 1860 for
practically all economic indica-
tors except agriculture and
housing.
Peter Henle of the AFL-CIO
predicted gains in employment
and income at least during the
first half Of 1860. But. Mr..
Henle testified, unemployment
will not decline sufficiently be-
cause the labor force will grow