| Show 7 US U.S. ECONOMY SHAKEN KEN nUT nur NOT CRIPPLED The recent termination of the longest strike ever of the nations nation's organized coal miners found the economy in remarkably good shape with most of the damage restricted principally to regional dislocations of commerce and industry In fact the accompanying spell of or harsh winter weather had as strong an unfavorable impact upon economic activity as did the prolonged labor dispute in the coal mines particularly particularly par par- during the months of January and February nJ BENEFITS OP OI LONG TERM IU 1 CHANGES In the more distant past a coal strike of such duration would surely have precipitated extremely wide-ranging wide economic hardships However because oil natural gas manufactured gas and propane are in the aggregate far more important than coal as a source of fuel for today's energy and space healing heating needs the US U.S. economy was able to rack up a fair advance during the first quarter of 1978 The Research Department of Babson's Babson's Bab Bab- sons son's Reports estimates that the real Gross National that Product is the GNP adjusted to offset the effects of managed inflation an increase of about 25 percent over that thai for the same period a year ago This compares with the 4 percent advance projected by the Babson staff when it was formulating its 1978 Outlook several weeks before the United Mine Workers began its strike There were of course other saving factors such as the increase in strip- strip mined coal from sources west of the struck labor region and the hefty stockpiles stockpiles stockpiles stock stock- piles of strike-hedge strike coal inventories But perhaps even more fun fundamental has been the redistribution of commercial commercial commercial com com- mercial and industrial centers to the so- so called Sunbelt regions of the country over the past three decades Nor should it be he forgotten that the same time span has seen a swift growth in the importance importance importance im im- im- im of or many types of service activities to the economy as a whole 1978 BUSINESS CURVE RESHAPED Except for certain areas devastated by storms and those localities almost entirely dependent on the strike-idled strike mines damage to lo the economic fabric in general was far less se severe re than had been considered consider d' d possible Yet that period of underachievement in the first quarter of 1978 has changed to some extent the shape of the profile of economic activity for the current year In the 1978 Outlook the Babson staff had anticipated a sustained high level of business for the first half of the year and some possibility was expressed for fora a continuance of this through the balance of the year It R was our thought then however that the maximum might occur at al the very beginning of 1978 with the vigor of the advance perhaps gradually and steadily diminishing thereafter But the more subdued in this years year's first quarter means that hat some stronger up catch efforts will be seen in inthe inthe inthe the second quarter In fact we would not rule out the possibility that thai such a sustained tempo of business may spawn enough momentum of its own to spill over into the third quarter of the year ear EO ECONOMY I STILL ON IN This generally favorable scenario however does docs not imply that a new big surge of economic vitality is on the way Businessmen and consumers are hurting from inflation and there is a chance that OPEC may hike oil prices again to lo compensate for the erosion in value of the US U.S. neither dollar-neither of which is conducive to an outburst of confidence Nevertheless in its latest soundings of business conditions Babson's Reports concludes that most of its major predictions on economic conditions con for made 1978 before this year debuted-could debuted turn out to be pretty much on target These include an advance ad vance of 4 percent in the real GNP versus 1977 1971 but with inflation somewhat more pervasive than expected expected expected ex ex- ex- ex more favorable employment conditions and personal incomes and moderately higher money rates |
