Word: downturn
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...there is a good though hardly reassuring reason for this sudden upswing: the economy's downturn. Said Assistant Secretary of Defense Robert Pirie Jr. at TIME's seminar: "There is no question about the fact that the growing unemployment helps recruiting." Another senior Pentagon official put it less delicately: "If the economy goes to hell, we could be in fat city...
Economists readily admit that they do not know how high unemployment will go in this recession. Confessed one top White House policymaker: "We've simply thrown away the textbook on this one. We've never started a downturn with such a high unemployment rate...
...relative employment optimism among economists is based on the current moderate levels of business inventories and the expectation that the recession will end by early next year. Unlike 1973, when businesses started the recession with large stocks of unsold goods, they now have modest inventories. This economic downturn has been predicted for so long that companies have kept a tighter grip on production and not amassed excessive backlogs. A drop in customers thus will not result in immediate widespread firings. Says a Capitol Hill economist: "In certain industries inventories are getting out of line with demand...
...Transportation Secretary Neil Goldschmidt, who has been studying the industry for the past six months as part of the Federal Government's loan guarantee to Chrysler. Goldschmidt's investigation convinced him that the auto manufacturers were in very deep trouble, even discounting the woes of a recession downturn. Two weeks ago, Goldschmidt gave the President a 20-minute graph and chart show to demonstrate the seriousness of Detroit's plight. Concerned, Carter immediately agreed to a meeting with the carmakers and United Auto Workers President Douglas Fraser. While no specific action came out of the White House...
Gloomy businessmen are now bracing for an economic downturn as deep as any in the postwar period. They consequently see no need to borrow funds at the still relatively high rates so as to expand capacity or hire new workers. General Electric Chairman Reginald Jones predicts that the prime rate will sink to 12% or 13% before investment picks up. Explains Gilbert Heebner, chief economist at the Philadelphia National Bank: "It was like 20% was some magic threshold. Borrowers simply stopped borrowing. Even small independent businessmen like farmers chose to liquidate their crops rather than borrow money...