Evening star., 1961-02-02
Il OUR GOALS
AND PROBLEMS

Il OUR GOALS
AND PROBLEMS
America has the human and
material resources to meet the
demands Of national security
and the obligations Of world
leadership while at the same
time advancing well-being al
home. But our Nation has been
falling further and further
short Of its economic capabili-
ties. In the past seven years,
our rate Of growth has slowed
down disturbingly. In the past
three and one-half years, the
gap between what we can pro-
duce and what we do produce
has threatened to become
chronic. And in the past year,
our economic problem has been
asgravated by recession and
by loss Of gold. I shall shortly
send to the Congress q sepa-
rate message dealing with our
international balance Of pay
ments and gold position.
The Nation cannot-and will
not-be satisfied with economic
decline and slack. The United
States cannot afford, in this
tine Of national need and
world crisis. to diSsipate its
opportunities for economic
growth. We cannot expect to
make good in a day or even
q year the accumulated def
ciencies Of several years. But
realistic aims for 1851 are to
reverse the downtrend in our
economy. to narrow the gap
Of unused potential, to abate
the waste and misery Of unem-
ployment, and at the same time
to maintain reasonable Stabil-
ity Of the price level. For 1869
and 1858 our programs must
aim at expanding American
productive capacity at q rate
that shows the world the vigor
and vitality of q free economy.
These are not merely fond
hopes, they are realistic goals.
We pledge and ask maximum
effort for their attainment.
I am proposing today meas.
ureS both to alleviate the dis
tress arising from unsatisfactory
Performance Of the economy
and TO stimulate economic re-
cOvery and growth. II economic
Developments In the first quar-
ter Of this year indicate that
additional measures are needed,
/ win promptly propose such
measures.
TEE PRESENT SITUATION
AND OUTLOOK
The potential of the American
economy is constantly expand
ing. The labor force is rising
by is per cent per year. Output
per man rises annually by 2 per.
cent as q result Of new and
better plant and equipment,
modern technology, and i'm
proved human Skills. These in
creases In manpower and pro-
ductivity provide the base for q
potential annual growth Of 3.5
per cent IN the Nations total
output. This IS pot high pnough.
Our potential growth rate can
and should be increased. To do
so, We propose to expand the
Nations investments In physical
and human resources, and In
science and technology.
But in recent years the eco
nolny has not realized even its
present possible growth. From
the peak Of the business cycle
in the second quarter Of 1858 to
the top Of the anemic recovery
seven years later, gross national
1roduct grew only at an annual
Ate Of 2.5 per cent. The failure
to use our full capacity Is the
urgent economic problem. Of the
day.
In 1860, the American econ
omy produced $503 billion Of
output when it was capable Of
producing at least $685. billion.
In the fourth quarter Of 1860,
actual output could have been
8 per cent higher than 1t was.
More than . million and o half
unemployed-over one-third Of
all unemployed - could have
had jobs. Twenty billion dollars
more personal income could
have been earned in 1850. Cor
porate profits could have been
S. billion higher. All this could
have been accomplished with
readily available manpower,
materials and machines-with-
out Straining productive capac-
ity and without igniting in
flation.
The performance Of the
economy in 1860 was not only
wen below It's full capacity; It
also fell short Of the modest
levels expected by the previous
administration.
Adjusting all figures to the
same statistical basis, the budg-
ct projections last January
were based on o 1860 national
output Of $513 billion. In Octo-
Der, output for the year was
still expected to exceed $500
billion. implying q rate Of at
least 1921 billion in the fourth
quarter. The actual figure
turned out to be $503 billion
both for the year as . whole
and for the last quarter.
Even when the recession ends
and economic activity begins to
expand again, the problem Of
unused potential will remain.
Even II we were to achieve the
ISIS billion output projected
flor 1861 in connection with last
months budget message. the
gap between potential and ac-
flial nllfnlik Nrniild cnYakiniia IA