Word: demands
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Dates: during 1970-1979
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Some seeming nonessentials, however, seem to remain much in demand. Says Lewis Katcher, a research director at the Sutro & Co. brokerage firm in San Francisco: "Yacht sales will remain strong but sailboats will be down," a sign that while millionaire boatowners remain secure weekend sailors are financially vulnerable. Then again, as always in recessionary times, women are continuing to buy cosmetics regardless of cost. At the fancy Georgette Klinger skin care salons in New York, Chicago, Beverly Hills and Bal Harbour, Fla., sales of treatments and assorted preparations have continued to rise at 20% per year. But this year, reports...
...almost 40 years the formula worked. Increased Government spending stimulated demand; companies hired more workers to meet the demand; then employees spent, bringing forth more demand and more production, and the virtuous cycle continued. But, says Economist Arthur Okun, long a Keynesian Counsellor to Democratic Presidents: "We were victims of our own success and a good press...
There were shortcomings and pitfalls, little recognized when Keynesianism was flourishing a decade and more ago. One shortcoming was the Keynesian assumption that supply would simply take care of itself once demand was stimulated. So long as inflation stayed low, that is in fact what happened. Even modest increases in consumer demand would bring quick jumps in output. So productive were U .S. plants and factories that they not only filled the needs of the nation's domestic market but also deluged the world with material abundance...
True, Keynes argued that excessive demand and price rises could be countered by reversing the cycle?that is, by reducing government spending. But that required a degree of wisdom seldom seen in the spend-and-spend, elect-and-elect politicians of a democracy. Apostles of Keynes contended that to maintain the proper level of demand, the Government regularly had to "fine-tune" the economy with just the right amount of stimulus, either tax cuts or spending increases, or maybe both at once. As Feldstein puts it, the nonstop jiggling and juggling amounted to "an embellishment of Keynes beyond anything that...
...When demand turns slack and unemployment shoots up, Keynesianism can still play an important role. But now the economic pendulum has swung from underutilization of capacity to overstraining of productive resources, and policies aimed at further firing consumer demand without simultaneously increasing investment and supply have become about as useful as Gerald Ford WIN buttons. Says Feldstein: "It is a much more complex world than Keynes or anyone else admits, and it is constantly changing. We know enough to move the economy out of a trough but not to control the business cycle...