Show Business Prospects Favorable BABSON c IS Although uncertainties abound and there is no lack of unsolved unsolved unsolved un un- solved problems the U. U S. S economy is still pointing to the upside ADMITTEDLY ADl Y some segments segments segments seg seg- ments of business are not showing as much vigor as previously yet relatively few really serious setbacks have occurred Thus far the Administration tion and Federal Reserve fiscal and monetary control actions designed to bring about disinflation of the overheated overheated overheated over over- heated economy have had only a token impact Capsule Forecast AS THINGS now shape up the staff of Babson's Reports expects final compilations to show Gross National Product for the first quarter of 1969 approaching the billion mark a gain of 2 percent over the 1968 quarter Despite the heavy restrictive influence of large spring tax payments and government credit curbs we feel there is enough forward fOr business momentum momentum momentum mo mo- to carry the GIto GI GNP to the billion level in inthe inthe inthe the second quarter l I WITH PERHAPS half of this additional 2 percent increase increase increase in in- crease coming from higher price tags the real expansion on will be only fractional Yet the trend will still be up and new highs will be reached in inthe inthe inthe the June April-June period The rate of gain posted by bythe bythe bythe the Federal Reserve Index of Industrial Production thus far in 1969 has been lagging the pace PRELIMINARY ARY figures suggest suggest suggest sug sug- gest at quarter first-quarter average for the index of about 1695 We Ve are arc looking for a second- second quarter average near with the high mark probably occurring occurring occurring oc oc- oc- oc in May l But beyond midyear production increases may be harder to come by Rise In Construction Activity Our studies indicate that dollar volume of construction construction tion will increase substantially I compared with the 1969 first quarter While the rise in bank lending rates and higher building building building build build- ing costs are dampening earlier forecasts of a 10 percent rise in housing starts this year the recent brisk housing starts should bolster residential con con- HEAVY construction highways highways highways high high- ways bridges dams and the like will show good gains from quarter first-quarter levels And and industrial building promises to lend support support support sup sup- port to the industry's total ac ac- ac- ac ti vity Hence the economy should benefit from a decidedly higher high high- er level of spending for construction construction construction con con- in the current ter ACCORDINGLY the Research Research Research Re Re- search Staff of Babson's Reports Reports Reports Re Re- ports favors such building materials materials materials ma ma- stocks as Lone Star Cement Medusa Portland Cement and National Gypsum Pluses and Minuses Babson's Reports are forecasting that the following following following fol fol- fol- fol lowing other industries will show t the bet best g gains i during the second q quarter quarter- arter Airlines i ir t aluminum chemicals I electric utilities 1 lile Ee e cop p ance and railroads and Si t I p n generally I THIS TIllS AUGURS w well r stocks such as frt FMC n Reynolds Metals and Corp P public National Life i ance currently favor favored Babson's Trending bending though at a slower Pl u up p pace likely be Auto acS electronics machinery machine X rn fabricating and rubber Autos and steel will win r v gift ably be the major la Auto prospects are ra drab and total outs output the second quarter now pL m pr to be down from te somewhat disappoints disappointing rt- rt suits of the January January- January January-iw J period STEEL still going gr guns after a far better betterS expected first quarter S t do better than autos S Swe Y Yd we feel steel is riding ro for I setback While Shi sh P pm m should hold up well aU 1 doldrums and resumption P rf d foreign steel inflow J I slow orders an and d lead to i i flattening out of pr Q QI before n midyear I Summary I Ii i The bulk of the factors s t gest Best that business will d cm 7 up further over-all over gains gad B 6 this second quarter in b b M i volume and profits INFLATIONARY pr press pry must still be reckoned ii ai ii however and as we c co closer to midyear we lor look lock l fo b increases in profits to t lr tr 3 off The h high cost of cam ing inventories and the impact im i- pact of fiscal and mones 1 controls may restrain I fo fot a I I ward buying |