Factors In Slowdown
Among the factors responsible for the
present economic downturn Mr. Zelomek
includes the high cost of money, the stock
market decline, a sharp increase in inflation and
advances in prices, especially in the cost of
services such as personal and medical care and
transportation.
Consumer buying of "high ticket" items
such as automobiles and appliances tagged,
while a trend toward increased savings
developed.
Government spending for national security
tapered off from $80 billion to $74 billion.
A restrictive Federal Reserve monetary
policy was reflected in a tag in the money
supply for a time, as well as the sharply higher
cost of money, Mr. Zelomek says.
For 1971 Mr. Zelomek predicts that the
GNP will average about 6 per cent higher than
in 1970. Real growth in 1971 may approximate
about 3 per cent, he says, as compared with the
indicated 6 per cent gain dollarwise. Such a
gain, he says, will not be sufficient to bring the
unemployment rate below the 4½ per cent level
but it should be sufficient to halt a rise in
unemployment above the 6 per cent level.
