Bee RE
GORABEHAL
Cabinet Meeting, May 12, 1960
-
ADMINIST |. MARKING
E.0. 11 52, Section 1
NLE, Date &-/2-76
By _aH¥e
page 2
a short statement of principle items, or at least the important poinf
could be presented first in summary with the full Platform set fort I
in an attachment.
Economic Situation - Dr. Saulnier reported happily on the recent
advances in retail sales, automobile sales, increased employment,
the FHA reduction of down payment requirements, the outlook for
plant expansion, and increased exports, He suggested caution with]
regard to inventories where the rate of buildup may slow down,
although they are not now high in relation to sales. On the pessimi tic
side, a trouble spot existed in that corporate profits are running bqlow expectations, primarily because of the squeeze caused by risi
costs but steady prices, with a possible dampening effect on plant
expansion and Treasury receipts.
Dr. Saulnier summarized the situation as indicating that 1960 will
a good year, though not marked by boom conditions,
Dr. Saulnier thought it desirable probably for the Government to b §
taking steps to provide some stimulus to replace the expected inve utory
rate change. Already the housing down payments have been reduce d,
ing
monetary policy -- the principal.governmental instrument -- was
eased, and highway allocations would be a strong stimulus in the eleoes
half of the year once the impact of the reduction required by legisl q tion
last year could be overcome.
Looking beyond 1960, Dr. Saulnier thought that the national econom
was in a more favorable position for sustained growth than at any
time since World War Il.
no greater rate now than it was a year ago, but the President point
i
In discussion, Sec. Mueller noted that the inventory increase is at
Secretarie
7)
out that the process of filling up the pipeline had to end eventually
unless there were a great growth in consumer demand.
Seaton and Benson questioned the export figures as related to P. L. 480
agricultural sales, and Dr. Saulnier indicated that such sales were not
included in the export statistics he used, Mr. Gates wondered abo
the impact on the economy as a whole of the sickly outlook for the
aviation industry. Dr. Saulnier agreed that some adjustment in th Lt
industry might be needed after the current backlog of orders is fill d,
y
but he was confident the economy could weather this adjustment ju
as it had others in the past. Mr. Herter noted that the expected rq cord
travel abroad would adversely affect the balance of payments situa fion;
Dr. Saulnier felt nevertheless that the balance of payments deficit
would be substantially reduced even though continuing to be a prob]
The President noted reports he had had from foreign visitors that fhere
Dr. Saulnier was
reassured by such indications since they are a significant indicatio h of
public confidence in the economic future.
would be much tourist travel to the United States.
ON ABEN HAL