Evening star., 1961-08-02
U. 5. Officials
See Gains
In Economy
By LEE M. COIN
Star Staff Writer

The Kennedy administration
is taking a new look at the
economy, and expects to pro-
duce happy news when the re-
view is completed.
Preliminary evidence points
to a faster and stronger eco
nomic upswing than had been
expected earlier this year, Of
ficials said today.
Their optimism results main
ly from brisk business in the
April-June quarter and from
the expectation that the new
defense buildup will stimulate
the economy.
Two key acknowledgements
ployment and gross national
product-illuStrate the bright
ening outlook.
JObleSs Rate Dips
Unemployment has lowered
close to the z per cent mark
since last December. The ad-
miniStration until recently had
no real hope of reducing the
iobless rate below 6 per cent by
the end of this year, and fig
ured it would be at least mid
1862 before unemployment de-
clined to about 5 per cent.
Now, officials said, job pros
poets have improved and the
unemployment rate probably
will cross to the sunny side of
the 5 per cent line during the
first half of 1862, even though
cures announced today showed
an unemployment rate of SO
per cent in July.
The administration, never
theleSS, feels its interim goal of
a 4 per cent unemployment rate
is coming into sight.
Gross national product, per-
haps the best overall economic
yardStick, is the Nations total
production Of goods and serv-
ices.
GIMP slid from a record an
nual rate of $506.4 billion in
the April-June quarter of 1860
to a recession low of $500.8 bill
lion during the first three
months of this year.
The Presidents Council of
Economic Advisers last January
correctly predicted an upturn,
in the April-June quarter of
1861, forecasting an annual
rate of $500 billion. The Coun-
Gil in June raised it's second
quarter forecast to $513 bill
lion, and predicted a $3.50 bill
lion rate in the fourth quarter.
When the April-June figures
were calculated, it turned out
that GIMP had risen to an an
nual rate of $515 billion. Re-
vised estimates now in process
almost certainly will raise the
fourth-quarter target several
billion dollars above the $3.50
billion forecast.
Rise Preceded Berlin
Even before President Ken
nedy proposed the $3.5 billion
defense buildup to meet the
Berlin crisis, the economy was
recovering strongly from the
recession. Now the increased de-
fense expenditures are expected
to give the economic an added
stimulus.
Officials said psychological
effects of the defense buildup
should prevent any pronounced
showdown in the pace of re-
covery. The mere fact that the
Government plans to increase
spending will sustain business
activity.
When the Government actu-
ally starts spending the in
creased appropriations. officials
said, the economy's upturn
should pick up speed.
Initiation Rise Disputed
The Federal Reserve Board
and some other expert observ-
ers fear that the increased
budget deficit resulting from
additional defense spending
may cause a new round of in
flation.
But administration officials
see no reason for an initiation
airy surge, because there still is
plenty of slack" in the econ
omy.
Nevertheless, they are watch
ing price indexes for any signs
that businessmen are taking
advantage of the Nations
crisis psychology to boost
prices. Officials said the ad-
miniStration is prepared to
take prompt remedial action if
evidence of initiation appears.