The Management of prosperity [antikvár]

I. Our longest expansion In the course of the campaign of 1960, Senator John F. Kennedy promised that if he were elected president, America would get moving again. This promise or prophecy has been amply fulfilled in the economic sphere—which is my sole concern on this occasion. In the three years preceding the campaign, our economy made little progress in expanding production or employment. From the summer of 1957 to the spring of 1958 we experienced a recession which, although moderate by pre-war standards, was the sharpest of the post-war period. The recovery that followed was fairly strong at the outset, but it soon faltered and did not return the nation to full prosperity. In the spring of 1960 the economy again lapsed into recession and, while the decline was extremely mild, unemployment mounted and reached seven percent in the spring of 1961. As was generally expected, the new administration embarked promptly on an expansionist economic policy. In February 1961, just one month after it took up the reins of government, economic recovery started, it is very doubtful, however, whether this development can be credited to the new administration. Judging from the national income accounts, the decline of 1960-61 came as close to being a pure inventory recession as any on record. In the first quarter of 1960 business firms in the aggregate added to their inventories at an annual rate of ten billion dollars. A year later they cut back inventories at an annual rate of three and a half billion dollars. This turnaround of 13 billion dollars in inventory investment reflected readjustments in steel and various other industries, but it was not accompanied by any over-all decline of demand. On the contrary, the demand of final buyers, both domestic and foreign, kept growing during the recession, quarter after quarter. In these circumstances, the decline of inventories relative to sales could not long continue. Once the level of inventories again approached the desired relationship to sales, a recovery in orders and production followed naturally. The substantial easing of credit by the Federal Reserve authorities during 1960 doubtless played some part in maintaining aggregate demand and thereby hastening the end thirteen