Show BUSINESS and the STOCK MARKET by BABSON'S REPORTS Copyright 1973 1972 BUSINESS PROSPECTS FOR FOURTH QUARTER The nations nation's economy has shifted into into in in- to high gear and there Is little evidence that the upward momentum will slacken slack slack- en In the near future The Gross National National Na Na- Product in current dollars posted posted post post- ed a smart 27 percent gain from the first to the second quarter reaching an annual rate of billion When third quarter figures figures' for GNP are available available avail avail- able they will doubtless show a continuation continuation con con- of the broadly distributed up up- trend For the final three months of oC 1972 we look for further strength with rea real gain likely in most sectors of the economy economy LESS INFLATION The upswing this year has been accompanied accompanied ac ac- ac companied by a slowdown In the Inflation Inflation inflation in In- rate making the economic show showing showing ing even even more impressive The second second- quarter GNP price deflator was up only only only on on- ly 04 percent and in August consumer price increases slowed to 02 percent Thus the dollars dollar's purchasing power is declining more slowly than in recent years There Is however considerable co- co jecture about the course of inflation in 1973 Many feel the economy is growing growing grow grow- ing too fast for inflation to continue at this low level much longer especially with the big labor pacts up for renewal next year But Dut despite uncertainties uncertainties' uncertain uncertain- ties ties' inflation should remain under control control control con con- this year GNP AND INDUSTRIAL OUTPUT The Research Department of Babson's Dabson's Reports is still projecting a gain in current current cur cur- rent GNP of about 10 percent for all of 1972 with most of the more advance th than n 6 percent percent-ln real terms and somewhat somewhat some some- what less than 4 percent due to tion The final figure could be slightly higher reflecting than greater ed growth in consumer spending and inventory inventory in in- accumulation The rate of gain in the last quarter should be comparable comparable com com- parable with that of the quarter just ended Industrial production will continue con con- Untie its climb during this final three months The capacity utilization rate will also improve but may stay below earlier peaks CORPORATE PROFITS Aided by Increased volume and a ales les lesser lesser les- les ser rate of oC inflation corporate profits are arc registering good gains This trend should not only continue but may even be stepped up in jn the last quarter Consequently Con Con- Consequently Babson's Dabson's Research Department Depart ment expects a brisk 16 percent gain gainin in corporate profits for the full year The better profit picture is greatly enhancing enhancing en en- the cash flow of most corpora corpora- And because of payment dividend-payment restrictions most companies have an ample supply of oC cash INCOME AND CONSUMER SPENDING While unemployment has changed little lit tle tie since June total employment has continued to climb Job gains increased ed social security benefits and a somewhat somewhat some some- what longer work week will boost per personal personal income this quarter Consumer spending will thus be helped to make a strong showing in the last three months of the year ticket Big items especially especial especial- ly Iy related to housing should show ad ad- additional additional additional strength while spending for may gain faster than in inthe inthe inthe the quarter just ended CAPITAL SPENDING AND HOUSING Businesses are still projecting a 97 percent Increase In plant and equipment equipment equip equip- ment expenditures for all of 1972 according according ac ac- ac cording to the Commerce Department only a bit below the May projection of percent Manufactures are planning planning plan plan- ning ring a 11 56 percent expansion year to year unchanged from the May survey while nonmanufacturing lines are planning planning planning plan plan- ning to spend slightly less than in the earlier silvery percent vs a 13 13 15 percent rise Although housing starts in the second quarter were 16 percent ahead of oC the year earlier level they were unchanged from the quarter first-quarter rate thus ending a string of eight consecutive quarterly housing records August starts however however how how- ever ever surged to the highest point since last Februarys February's record while building permits also soared Housing starts may slacken in coming months but they should nevertheless remain at an extremely ex ex- level by historical stand stand- ards j The man was taking no chances in buying a parakeet He went to every cage in the pet shop repeating Can you ou talk Can you talk At the last cage a ai parakeet replied disdainfully Yeah J I can t talk lk Can you fly The viperfish lives so deep beneath the ocean ocean its it's alm almost st never seen by man man Occasionally one is found inside the belly of another deepwater fish that has been caught The viperfish grows to tobe tobe tobe be about 10 inches long has a narrow body nd ha teeth e th as sharp as needles |