Word: lullingly
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...deepening business lull. The Government reported last week that real gross national product-total output, adjusted for inflation-rose only 3.8% in the third quarter, rather than 4% as was first estimated. Industrial production fell .5% in October, the second straight monthly decline, and housing starts also dipped. Carter in January is likely to propose a $10 billion to $15 billion tax cut to pep up demand; his chief economic adviser, Lawrence R. Klein, has said that the country may need an annual growth rate of 7% to reduce unemployment significantly...
Government statisticians were quick to note that despite the lull, the economy is still expanding, if slowly. They note that the index was undoubtedly distorted by the four-week strike against Ford Motor Co., and also that its record as a measure of future business trends is uneven. Three times since 1948 the index fell for two months in a row but no economic downturn followed. On six other occasions, however, two or more consecutive months of decline in the index did signal an overall drop in economic activity...
...recession conferred any small compensatory blessing on the industrialized world, it was a respite from the energy crisis. Shortages of oil gave way to a worldwide glut, and prices stabilized. But consuming countries failed to use the lull to start any significant oil-conservation programs, or to develop alternative sources of energy rapidly enough. Indeed, they have grown even more dependent on the Organization of Petroleum Exporting Countries; the U.S., for example, now imports about 40% of its oil, v. 29% before the time of the Arab embargo in 1973. Now, the consuming countries are about to pay the OPEC...
...while, stock analysts were happily forecasting an "upside breakout" that would lead the market to a new alltime high above the January 1973 peak of 1051.70. Though business began to slow in April, economists in and out of Government remained convinced that it was just a temporary lull. Investors' expectations remained high, and the Dow hovered around 1000 through most of the summer...
...usual, many investors are overreacting to what could still be a temporary, if prolonged, lull in business and an overwrought perception of what a Carter Administration might mean for business. Says Newton Zinder, chief economist of E.F. Hutton: "The outlook for the market still appears good, though it is lower than most expectations...