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Government Spending

Mr. Zelomek predicts several factors which,
he says, will play an important part in the
higher average for GNP in 1971 and in halting
an increase in unemployment and containing
inflation:

The Federal Reserve monetary policy will
continue easy until a downturn in
unemployment actually develops. Interest rates
will tend slightly lower.

Due to a lower cost and large supply of
mortgage money. Mr. Zelomek predicts an
increase in residential volume with a total of
1.7 million new homes started.

Due to government aid and support, there
will be greater expenditures for non-residential
construction, especially schools and hospitals.

Government spending for goods and services
will tend higher with a further decline in
national security outlays depending on
developments in Indochina and the Middle
East. Ground forces will be reduced and out of
Indochina by the end of 1971. Mr. Zelomek
predicts.