Evening star., 1962-12-30
Economy Ldgs,
Hodges States,
Asking TaxCui
By the Associated Press

~ NaAN sNooSSa@NNN aNeo
Secretary of Commerce
Hodges pictured the Nations
economy yesterday as a husky
giant that is dragging its heels.
He insisted a tax cut is essen
tial to shove it ahead.
Taking a year-end look at
business conditions, Mr.. Hodges
concluded the pace Of progress
will be slower in 1863 than in
1862 land at a level we'll below
full employment Of the Ma
tion's economic resources"
Economic activity has
achieved record levels, he said,
and the economy is basically
sound. But, he added in an out
look and review statement, the
rate of forward movement in
recent months was slowing
down.
Favorable response to the
Federal income tax reduction
program which the President
will recommend to the Con-
gress in January is imperative
to expand consumer buying
power still further and to in
crease the incentive for busi-
ness to invest in new and more
modern plant and equipment,
and in inventories" Mr.. Hodges
said.
No Exact Proposals
The Secretary gave no ink
ling as to exactly what the ad-
ministration will propose for
tax reduction and revision. But
he said a cut is vital not only
to provide additional incen-
tive" in the coming year but to
generate sales, jobs and profits
for the long term.
THE sooner we release the
tax brake on our economy" Mr..
Hodges said, "the surer we may
be that 1868 will be the be-
ginning Of a long period of
rapid economic growth and
rising prosperity for the Amer
lean people"
Mr.. Hodges statement fit
into an administration effort
to build grassrootS pressure for
the Kennedy program. Many
in Congress are wary about
lowering revenues when they
see no deep crack in the
economy.
While estimating the 1862
gross national product - total
output of goods and services
will show a per cent increase
over 1861 to 1854 billion and |
attributing the rise to produc-
ton rather than price, Mr..
Hodges had this to say:
For some time now, the
overall pace Of our economic
growth has not been satisfac-
tory. The level of unemploy-
ment is much too high, and the |
trend Of business investment in
plant and equipment has been
Disappointing"
Stimulation Held Needed
Since Government demands
cannot produce full employ
ment, Mr.. Hodges argued.
something else needs doing to
stimulate the private economy.
That something, he reasoned,
is an income tax cut.
Peering back into 1862, Mr..
Hodges found heavy purchases
of new autos bolstering con-
sumer outlays. Expenditures on
soft goods were not showing |
much improve ent." but
spending on services was still
going up. Government spending
primarily for defense at the
Federal level and for roads at
the State and local level-also
continued to rise.
In the last three months, Mr..
Hodges said, business invest
ment evened off and signs
point to a slight dip in the
first quarter Of 1963.." Housing
outlays dropped from the third
to fourth quarters.
I'm the final quarter, the
excess in steel stocks had dis
appeared, and retail stocks OF
autos were low and in need OF
rebuilding" Mr.. Hodges said.
I'm general, however, business
inventory policy continued to
be conservative"
Mr.. Hodges said consumers
enjoyed higher living standards
than they had ever known and
business profits increased with
new hgihs in output and en-
ployment. purchasing power
and sales in 1862.