[TWO YEARS AGO THE RESEARCH INSTITUTE PREPARED A TIME MAP OF THE SIXTIES]

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP80B01676R003500040029-1
• Release Decision: RIFPUB
• Original Classification: K
• Document Page Count: 12
• Document Creation Date: December 19, 2016
• Document Release Date: March 22, 2002
• Sequence Number: 29
• Publication Date: August 16, 1961
• Content Type: LETTER

EXeeutive t.;s:rY
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-Xt111 161W~
589/,~L
August 16, 1961
at the Research Institute prepared
Two years ago 1, Sixties in which we outlined our
"A Time Map of the
economic predictions for the decade to come.
the coming decade was
In 1959, You may remember Sixties"--"The Soaring
'The Fabulous optimism
widely hailed as this climate of unbridled Sixties". it was in the recessionary
that we first predicted e decade s
characteristics.
ears later, the decade's first thee sits s
Now, two y inning
gone. The doubtful begwh
and the ich con-
has come anni otude of international problems
former optimists
United the e United States have left many
uncertain uld be useful
that it wo Time Map
As a resu have decided
te our earlier now our
in the new climma ate e to re- And it is
which it dealt. assessed
he predictions of 1959 passed.
pleasure to present t of the Sixties have
nearly two years e "New Time Map of the
I hope you will find the one which preceded it.
Sixties" as interesting as this
S ilrfi er elyA
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S
The New Time Map of the Sixties
Many businessmen now view the future with doubt,
hesitation, uncertainty, instead of the unchallenged
optimism that prevailed just before the start of the
decade. To guide Members, the Institute reassesses
its 1959 economic predictions for the Sixties, and
again charts the course for profitable management.
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In 1959, when the Research institute prepared its
original TIME MAP OF THE SIXTIES, the economic cli-
mate, despite the steel strike, was good. Business
was climbing out of the '58 recession with amazing
speed.. Forecasters saw more of the same ahead.
In Washington, Republicans were jubilant, expect-
ing that the second Eisenhower term was only the
forerunner of a long Republican era. Khrushchev
had shown his broad peasant's smile across the land.
The "'Spirit of Camp David" held sway. Limited dis-
armament was felt to have a real chance.
Many reasons led the Institute to plot the topog-
raphy of the Sixties at that time. Foremost was our
conviction that many businessmen, in viewing the
mountains ahead, would overlook valleys and pla-
teaus in between. As we said, "You'll have to be
prepared to roll with the punches, ride out intervals
of little or no growth, and then be ready to cash in
on the intervals of rapid expansion."
Then, in 1960, things began to change. The Sum-
mit blew up. The recession caught many forecasters
with their predictions down. Widespread overcapa-
city and ever-toughening competition intensified the
relentless profit squeeze, which became the central
fact of business life for many companies.
A, new Administration committed to the "New
Frontier" has had to face mounting cold war crises
. . . the Congo, Cuba, Laos, now Berlin. All these
crises point up an unmistakable fact: the U.S. faces
a generation of conflict. Space and missile programs
on the drafting boards add up to the staggering total
of $50 billion. Requirements for foreign aid have not
only failed to decline, but are growing rapidly.
.All this has produced a new mood in business -
not exactly pessimism, but doubt, uncertainty, hesi-
tation. This mood, if it persists, is bound to be re-
flected in a lack of vigorous action that can hurt
individual companies - and the economy.
In the light of all that's happened in the past two
years, we have subjected our original TIME MAP
to detailed re-examination. In reporting to you, we
have summarized the original TIME MAP forecasts
(on pages 6-7), not to indicate the accuracy of our
59 analysis, but to provide perspective. Like the
original version, the new TIME MAP must be viewed
in relation to the current domestic and international
scenes. Cold war is certain - hot war a possibility.
Political fortunes change rapidly. The shape of to-
morrow's economy will be affected by non-economic
forces that cannot be measured precisely today.
What's Changed?
Our projections have NOT been scaled down; the
topography of the Sixties looks even a little more
impressive than it did two years ago. Total growth
over the ten-year period will be a bit more than we
anticipated, and may come a bit sooner. The real
change is in federal spending. The assumptions of
stable defense outlays, declining foreign aid, slow
expansion in space exploration programs - all these
are overboard, tossed out by Moscow's determina-
tion to challenge the U.S. head-on in a cold war.
Other assumptions have been tossed over because
of the urgent need to accelerate the rate of U.S.
growth and cut the heavy "structural" unemployment
rolls - and because the new Administration is
pledged to other extensive social welfare programs.
In fact, before the decade is out, total government
spending - federal, state and local - may well force
some hard decisions between defense and welfare
programs. The pressure for such decisions could
come to a head in the 1968 Presidential race.
Reminder : What the Time Map Does
The original TIME MAP looked at the Sixties in
terms of seven major business factors: population,
consumer hard goods, consumer soft goods and serv-
ices, housing, business capital spending, federal
spending, and state and local government spending.
This Report adjusts earlier findings if necessary.
Even in the summer of 1961, this is a long look
ahead. This Report is not intended to pinpoint exact
dimensions. It is designed to suggest where and
when strengths and weaknesses are likely to appear,
for the economy and your own industry. Its purpose
is to locate guideposts for profitable management
. . . in a decade full of growth and change, promises
and problems, dangers and opportunities.
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REPORT TO MANAGEMENT
The Early Years: 1960-1963
The remainder of the early Sixties will continue
to be a consumption economy, with less than normal
growth in investment, but with a gradually rising
rate of government spending. There will be no real
boom, and rather than inflation, a firming of prices.
Business will be getting back to high operating
levels, but capacity itself will not be growing, and
keen competition will continue. The private sector
will continue as mainly a replacement market, with
the big marketing payoffs concentrated in new prod-
ucts, or the imaginative redesign of existing lines.
The TIME MAP divides the decade into thirds, as
you may recall. Before proceeding with the specific
segments of the 1960-1963 period below, you may
wish to refresh your memory and review the total
picture of the decade by turning first to the summary
chart on the next two pages.
Population
The projected trend remains substantially as we
indicated in the original TIME MAP. While the total
population continues to grow at about 3 million a
year, the increase is at the young and old ends of
the age spectrum, with very little growth in the
middle. The marriage rate has passed its long-time
low point, but rises only slowly during this period.
Jobs continue to be hard to find for new entrants
into the labor force, and some delay in marriages is
likely to continue for the next two years. The key
factor - the rate of new household formation -
remains low.
For the company personnel man, life is a little
easier in some ways, more difficult in others. In
the early Sixties, job applicants are more numerous
relative to the number of vacancies, and the pressure
on wages so characteristic of the Fifties has abated.
Despite talk of a steel strike in mid-1962, upward
pressures on the wage level are not as intense as
they were. The big hiring problems are at the middle
and upper brackets of management, in the market
for skilled personnel, and in obtaining and keeping
experienced supervisors.
Consumer Hard Goods
The original TIME MAP labeled this the toughest,
most competitive area of business in the early Sixties
- and so it is. The period is essentially one of re-
placement markets, with little or no growth. Yet
these are being served by huge capacity. The re-
sult is price pressure for most businesses. The slow
increase in the number of families has focused
marketing efforts on second-unit merchandising, and
profit margins have continued to shrink.
No sharp improvement is likely in these markets
in the next few years. The trend in household forma-
tion works against the possibility; and so does the
debt position of consumers. Hard goods sales de-
pend heavily on instalment credit, and the latest
$10 billion increase in outstanding instalment debt
cannot be digested for a while. The only good news
is that excess capacity in consumer durables is
being reduced somewhat, and profit margins should
at least hold their ground from here on.
Consumer Soft Goods and Services
The promises described for this period in the
original TIME MAP are already being fulfilled: rela-
tively high saturation levels in hard goods have
pushed consumer funds into soft goods and services.
Spending for services has risen sharply as a per-
centage of total consumer outlays, and will continue
this relative gain throughout the remaining early
years. Soft goods performance has been slightly less
favorable, but it is in an upturn now and substan-
tial gains are in prospect. Until the big durables
markets reawaken later on, soft goods and services
will continue to win the competition for the con-
sumer dollar.
Housing
Here, too, the TIME MAP was very close to the
facts for the early Sixties. The rate of housing starts
declined irregularly all through 1960. One important
unforeseen change is on the way: the Administra-
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RESEARCH INSTITUTE
tion's housing law is likely to put some new vigor
into home building by early 1962. The federal gov-
ernment thus is moving into the housing area more
heavily than would have been expected two years
ago. Between urban redevelopment, extended mort-
gages, additional support from the Federal National
Mortgage Association, and deliberate efforts to hold
the mortgage interest rate down, a housing re-
covery can be on its way within a year. This is a
prime social target of the new Administration. Hous-
ing demand itself is sluggish, however, and will stay
sluggish, even though the bait is more attractive.
For suppliers of the home building industry, this
means a turn for the better, some lessening of intense
price competition, and so more profits. In the next
few years, the fastest growing segment of the market
will continue to be, as the original TIME MAP indi-
cateed, apartment units rather than single family
homes. But even the single family category will
begin growing again before the end of the period.
And the repair and modernization market will be in
for a modest advance of its own, partly in response
to more liberal arrangements on modernization loans.
In brief, not a housing boom, but perhaps a mild up-
tilt in the prospects we saw earlier.
Business Capital Spending
Thus far the indications provided by the TIME
MAP are in line. The rate of business outlays is now
recovering from its mild decline of 1960, but no real
boom is yet in sight. Capacity in most major indus-
tries is still abundant, and given today's tax rates,
profitable new investment opportunities are hard to
find. Spending is still dominated by cost cutting,
taking advantage of new technology, replacing in-
efficient facilities - rather than expansion. Real tax
incentives would expand the capital goods market
quickly and substantially; but in the absence of
these the big rise is still a couple of years off.
Federal Spending
Here is the most uncertain area. Major programs
in defense, housing, education, depressed areas and
worker retraining are all either enacted or in the
legislative hopper. They add up to a sharp advance
in total federal spending, beyond the levels envi-
sioned at the time of our earlier Report. When these
programs will really, take hold is hard to appraise,
but this will definitely be before the end of the
early years. With both expanded social and defense
programs coming, an increase amounting to some $4
billion a year in federal purchases of goods and serv-
ices, between now and mid-1963, seems fore-
shadowed.
Right now, and continuing through these early
years of the Sixties, there will be enough slack in
the economy to handle this large advance in federal
spending. It would be a serious mistake to treat
the developments in Washington as a clear indica-
tion of inflation within the next two years; that real
danger comes later. Nevertheless, the rise in the
outflow of federal funds will put a floor under the
price level, and bring an end to much of the price
weakness that has characterized many segments of
business in the last year or two. In particular, look
for firmer markets in construction materials and
electrical components.
The balanced federal budget, a realistic hope two
years ago, is now a lot farther away. A general tax
reduction, held out as a strong possibility by the
new Administration, now seems dead. In fact, tax
increases are more likely if the cold war continues
unabated. No important easing of credit should be
expected and interest rates are likely to be in a
slow ascent throughout the period.
State and Local Government Spending
The trend is definitely up, as indicated in the
original TIME MAP. Thus far, the rise has been fi-
nanced by the larger tax base, some increases in
rates, and some extensions of taxes. In the next few
years these financing methods will be further sup-
plemented by a rising volume of grants-in-aid from
the federal government. More outlays for higher
education (for construction, books, other teaching
facilities) are on the way. Here is one of the more
promising markets of the next few years. Higher
spending for roads is due as well, although the rate
of increase will not be as dramatic.
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Time Map of the Sixties - The Early Years
The importance of each major factor listed in
1960 to 1963
KEY the first column is described briefly in the sec-
ond. The darkest color shade indicates strong-
est economic support, white the weakest.
Original Forecast -'59
Review - '61
Its effects on the market
Practically no growth in the
make this the most impor-
prime earning and spending
POPULATION
tant single dynamic in the
age group (25-to-44). Sharp
ACCURATE
long-run economic growth of
increases among the younger
the country.
and older population.
Accounts for only 10% of
The market is now intensive
C0114SUMER
national output. But shifts
rather than extensive. It de-
in durable goods spending
pends less on new customers
ACCURATE
HARD GOODS
are a major determinant of
than on replacements, new
recession or expansion.
and improved products.
CONSUMER,
Outlays for food, clothing,
' [4t14
-
TA e91e1
medicine, travel, etc. make
~
reoi
pelf P~~
ACCURATE,
SOFT GOODS
up about 55% of nati
onal
but with more
S
output. Though stable, sheer
rt Wcs "' , eh$ Qa
4n"
stress on serv-
ERVICES
aize makes it significant.
,
fashion, popW*t~n ,i tfuC. -
ices.
Only 4% or 5% of national
The emphasis is increasingly
output, it is a key business
on apartment units and "ur-
ACCURATE,
li 5 p `.
force because scores of in-
ban redevelopment", more
but with some
dustries are dependent on
than on single-family subur-
uptilt from the
housing activity.
ban homes.
Housing Act.
t 1
Money invested in equipment
Outlays rise to new highs,
"'
and facilities varies greatly
though year-to-year gains are
CAPI'VAL
from year to year, with great
small. Stress is more on mod-
ACCURATE
,
'
,
impact on the direction of
ernization and cost-cutting
-S r
k N 0, = N
G
the entire economy.
than on new capacity.
1 ii d a l.
F
A major item in the total
economy since World War II.
Total federal activity is not
climbing as fast as the
pri-
Spending high-
Sudden changes in the rate
vate economy. Fairly stable
er. Balanced
P E N I N
of outlay play a key role in
defense budgets offset grow-
budgets no long-
the picture.
ing welfare outlays.
er a real hope.
STA?"Z A
A minor item just a few
The trend is up, based on
years ago, total state and
mounting needs for educa-
L CAL. e W'I
local spending will undoubt-
tion, roads, etc. Non-federal
ACCURATE
F? k s i
edly exceed federal spending
bodies are a widening market
in the Sixties.
for many businesses.
HrO`/ t s=E
The over-all economic climate
A consumption economy, with
moderate over-all growth. No
No change in
PICTURE
of the period, based on our
'
boom, and no dangerous
this basic pic-
r
ADDS UP
staff
s assessment of the ef-
fects
f
h
f
t
boom psychology, but good
e
t u r e of good
eac
o
major
ac
or.
business most of the tim
.
business.
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Time Map of the Sixties The Later Years
1964 to 1966
Original Forecast -'59
A growing number of young
adults; teen-age groups ex-
panding even more dramati-
cally, with increasing impact
on business.
Review -'61
ACCURATE
The market is expanding and
shifting back to first sales.
Signs of a hard goods boom
visible, but business effects
yet to be felt.
Strong economic position is
retained, due mainly to con-
tinued growth in income and
population. High discretion-
ary spending adds boost.
New construction matches
the boom rates of the mid-
Twenties, reflecting the turn-
around in family growth.
Apartments still dominate.
Industrial capacity that was
excess is now largely ab-
sorbed; need for new plant
is growing. Danger sign: a
premature spending boomlet.
Non-defense allotments are
rising, along with the gen-
eral economy, but defense
continues to get a smaller
share. Some tax easing.
Spending for schools and
other services now rising
rapidly, and total outlays
climb steadily. Local taxes
keep going up.
Transition period - from a
high-consumption to a high-
investment economy. Danger
of a major recession from
conjunction of weak spots.
ACCURATE,
but add new
growth in sin-
gle - family
homes.
All spending ris-
in g , especially
space, education
and foreign aid.
Still a transition
period-but po-
tentially even
more hectic.
1967 to 1969
Original Forecast -'59
Review -'61
The 200 million mark broken,
population still burgeoning.
The "deficit generation" of
the Thirties is moving into
the 40-and-over age group.
Boom strength develops from
households and expanding re-
placement demand for obso-
Sales, though rising, repre-
sent a shrinking percentage
of total consumer spending.
The market is now less dy-
namic than in earlier years.
A boom unlike anything seen
in over a generation. Mini-
mum need : 1.5 million units
a year; 2 million units annu-
One of the most dynamic fac-
tors in the boom of the late
Sixties. Expanding markets
and bright prospects bring
heavy investment.
ACCURATE,
but financing
the expansion
will be a prob-
lem.
Lags farther behind the rest
of the economy, which is
surging ahead. Limited de-
fense needs in a missile age
trim the government market.
Unending demands for more
and more community serv-
ices, higher wages, better fa-
cilities. Total being pushed
above federal spending.
The promise of the "Fabu-
lous Sixties" here becomes
reality - a boom of unpre-
cedented strength. Spending,
investment high and rising.
Federal s
ing neap con {;
ACCURATE,
but will be a po-
litical problem
by the late Six-
ties.
Essentially the
same forecast
real boom. But
serious inflation
may appear.
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Copyright 1961, 1959, Research Institute of America, Inc.
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REPORT TO MANAGEMENT
The Middle Years: 1964-1966
The original TIME MAP called the middle years a
"transition economy" - a gradual shifting of gears
from a consumption economy to an investment
economy. This portrait still holds. Toward the close
of the period, however, some of the characteristics
originally ascribed to the later years of the decade
may begin to make their appearance more force-
fully than seemed likely two years ago.
For one thing, the still-modest growth in private
spending will be superimposed on a much higher
level of public spending. Also, a new price trend
will be taking shape by the mid-Sixties - a broad,
pervasive rise. This will not be very rapid, since it
will still reflect increasing costs more than infla-
tionary demand. But if the upcreep gets out of
hand, a serious recession is possible before the end
of this transition period.
Population
Growth will still be concentrated in the teenage
and young adult groups. But there will be some in-
crease in the rate of entrants into the labor force.
With each passing year, the trend will gain mo-
mentum as more of the postwar "baby boom" reaches
the labor market. The newcomers, by and large,
will be young and inexperienced. Management will
be faced with the problem of training these new
workers while still short of skilled employees and
supervisors.
Demand for labor will largely keep pace with the
supply. But "structural" unemployment, particu-
larly among older and unskilled groups, will remain
a chronic problem for government and business. The
shorter workweek may well become a serious item
in labor-management negotiations. Household forma-
tion will be at a low rate, but will increase signifi-
cantly in the latter portion of the period.
These factors add up to an excellent market
throughout the period for products and services
aimed at children up through the teen ages. Toward
the close, there will be a sharp rise in demand for
all the products and services new families use.
Consumer Hard Goods
As a new generation seeks to raise initial family
capital, consumer, durables markets will begin to
gain from the early stages of a new instalment credit
boom. This means a rising sales rate for many first-
time major items. At the same time, replacement
markets for a wide range of consumer goods will
grow, since much of the heavy production immedi-
ately after World War II will have reached the end
of its useful life. By 1965, for example, these factors
should result in new sales records for basic major
appliances.
Consumer hard goods markets should be stimu-
lated during this period, too, by the many new or
greatly improved products on the drawing boards
or jus,_ beginning to be seen. The trend to built-in
appliances, even furniture, will develop further.
Color television, stereophonic sound, home dry
cleaning, should boom. The new car market may
well be distinctly split between the Number 1 and
Number 2 family cars. New materials and compo-
nents will radically alter many of the consumer items
familiar today. Stay-put management will find com-
petitive pressures on existing lines increasing rapidly.
Consumer Soft Goods and Services
These years will be a "golden age" for all soft
goods. More income, and more people will mean
still bigger markets.
The competition between "instant", pre-cooked
and frozen foods will be intensified as the time re-
quired :o prepare frozen foods is cut by the new
infra-red ranges now being used only by commercial
establishments, airlines, etc. Consumers will be
tempted by an even greater variety of foods and
many of today's gourmet dishes will become staples.
In fact, variety will be the keynote of the period -
in apparel as well as foods, in cosmetics, recreation
and entertainment.
All the major service industries-medical, recrea-
tion, travel, education- will continue, of course, to
grow substantially.
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RESEARCH INSTITUTE
Yet management in soft goods industries will do
well to keep a sharp eye on the future for, within a
few years, the rate of increase in total sales will
slow to a walk - and the bulk of the added con-
sumer income will again go into hard goods.
Housing
Heavy activity in government housing will con-
tinue throughout this period. In addition, a new
boom in private housing will begin to appear.
Family formation will have passed its trough, and
started up. Apartment building will peak out, as the
traditional single-family dwelling begins to regain
some of its lost ground. The growing and shifting
population will be sparking a revolution in the
location of retail units, in central-city transporta-
tion facilities, and in real "urban renewal". More
and more communities will be facing up to the
planning needed for the burst of growth still ahead.
As the population continues to spread over the
countryside, local governments will find it increas-
ingly difficult and expensive to provide utilities and
services. Marketers will find it necessary to do more
than add a few small branches. Suburban outlets
catering to the total needs of these groups will over-
shadow, in many cases, the big urban retail centers.
Federal Spending
The total will clearly be rising, but the composi-
tion of the expenditures is somewhat more difficult
to foresee. By the mid-Sixties, conventional arma-
ment requirements should be back onto a largely
replacement basis. These outlays may still be high,
however, as new weapons, vehicles, clothing, are
developed.
Missiles will continue to take the greatest single
share of the defense dollar. But "civilian" space
programs and foreign economic aid are the best bets
for growth from now through the close of the
decade. Another good bet is aid to higher educa-
tion (college and graduate schools), where registra-
tions will be in an unprecedented uptrend. Also
expect an increasing volume of exports of capital
goods to support a rising growth rate in under-
developed areas. A substantial part of this will be
financed by the government, but a growing share
will be in the form of private investment, nursed
along and supported by government guaranties,
incentives, etc.
An important overhaul of the tax laws may well
take place during the early part of this period. But
no across-the-board slash that would reduce the
total tax burden or decrease government revenues
is in the cards.
Business Capital Spending
Here too, plans will be shaping up for a great
expansion ahead. Alert managements will be antici-
pating an emerging pressure on output not seen
since World War II. Gradually, the emphasis will
spread beyond outlays for modernization to expan-
sion. This means that "brick-and-mortar" projects
will. begin to recover a more normal share of total
plant and equipment expenditures.
The problem for management is one of timing-
to guard against "too much, too soon". Any wide-
spread anticipation of actual requirements for new
productive capacity would increase the danger of a
serious recession in the mid-Sixties. Raising capacity
gradually will result in a much sounder footing
later on, and enhance the long-run profit picture,
especially for equipment makers.
State and Local Government Spending
The only phrase to describe these expenditures
during the middle years is "more and more"-with
plans being made for still more ahead. Since local
budgets and taxing powers will already be strained
to the breaking point, these outlays will be increas-
ingly financed through federal grants.
Marketers should be alert especially to the grow-
ing need for educational and medical facilities and
services. By mid-decade, the potential business
available will frequently support products designed
specifically for the market, even special sales forces
to contact local officials. And those who get in
early will be in line for even more business as these
outlays continue to grow in the later years of the
Sixties.
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REPORT TO
The Late Years: 1967 -1969
The late Sixties now shape up as even more "fabu-
lous" than seemed likely two years ago. This expan-
sion, however, will be tinged by the danger of infla-
tion, resulting from high levels of both private and
public demands. If productive capacity and pro-
ductivity do not grow fast enough to meet these
demands, something is likely to give-and that
something may well be the price level. Since the
original TIME MAP was drawn up, this is the single
most dramatic shift in the broad perspective for the
late Sixties.
Population
By the late Sixties the population wave will be
a torrent, flowing into the early adult years. This
will produce the highest rate of marriages and house-
hold formation in a generation, with an accompany-
ing overwhelming demand for homes and household
goods. The labor force, too, will be growing at an
unprecedented rate, as it receives the full effects of
the surging expansion in the United States birth rate
in the late war and postwar years. About seven
million men and women will be added to the work-
force between 1965 and 1970, four million of them
in the 20-34 age group.
This tremendous increase in the young adult
group will represent both a great opportunity and
a critical challenge to business mangement. The op-
portunity, of course, will stem from the accelerating
demand for products and services. The critical
challenge will be to absorb this great influx into the
workforce at a time when the new technologies are
further reducing the number of workers required
per unit of output.
Even with great strides in automation, large num-
bers of new workers will be needed to lift the level
of production and provide the products and services
desired. But it will not be enough to absorb the
influx, and it is in this period that the drive for a
shorter workweek will reach a climax. Many indus-
tries, especially those with more elastic workweeks,
will move to the 35-hour week, and firms in all lines
will feel the pressure for shorter work periods.
Labor costs, however, will rise, starting at the
top. The shrinking pool in the more mature groups
will cause competitive boosts in the highest wages,
and inevitably this will produce a general shift
upward all along the line. As a result, despite new
sales records, the "profit squeeze" will remain a top
priority management problem.
Consumer Hard Goods
These markets will form one leg of a soaring
three-legged tower of private demand. The postwar
sales records for consumer durables (largely set in
the early Fifties) will be surpassed. The long-
heralded "8-million car year" will arrive, along with
new records for many other durable items whose
growth seemed to have passed the peak. For most
consumer hard goods, there will be an expanding
new-sales market-on top of an already high replace-
ment demand. For totally different reasons, the
nation will experience an explosive growth like the
postwar years of 1947-1955.
Lush sales, even of "last year's" models, will tend
to reduce the pressure for new products. But alert
managements, remembering earlier experiences, will
maintain research and development at a high level
in anticipation of a return to intense competition.
Consumer Soft Goods and Services
Continued growth can be expected in soft goods
during this period, although it will not come close
to the boom in hard goods. The increase in house-
hold formation will inevitably be translated into an
increase in birth rate, and a real surge in infants'
and children's wear (and other children's goods)
will be emerging. Nevertheless, the durable goods
markets will skim the cream of consumer income in
these years, and soft goods will claim a declining
share of the consumer dollar. Soft goods will also
be fighting further growth in service outlays, in the
form of medical bills, leisure and recreation spend-
ing, and other services associated with the newly
developing family living patterns.
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RESEARCH INSTITUTE
The growth in leisure and recreation spending, in
fact, will be a major exception to the over-all trend
in non-durables. Shorter workweeks, large groups
of youngsters and senior citizens, and the generally
high living standard, will combine to create a
stronger demand for products and services in this
category. Marketers who are ready to meet this
demand will find rich rewards.
Housing
This is the second leg of the private spending ex-
parision. Home starts in the late Sixties may well
reach an average of over 1.5 million annually, with
peaks possibly approaching 2 million. Apartments
will still claim a large part of the total new housing
market, but suburban single family units will be
built at an increasing rate. Financing will be made
as easy as possible in a generally tight money market,
by a government dedicated to equipping a new
generation with its basic fixed investment. Mortgage
financing and servicing will grow in importance
among financial activities. Incidentally, the housing
boom of the late Sixties should see the flowering
of the truly prefabricated home - a development
expected, but long awaited.
Business Capital Spending
Here will be the third leg of the private spending
boom. By the late Sixties, the combined growth of
private and government demand will bring full
utilization of the enlarged capacity then available.
With demand straining against capacity, an expan-
sion exceeding that of the late 1940's and early
19150's will appear in most industries. Prices of
industrial capital goods (as indeed all prices) will
be advancing. This will induce an anticipatory
demand for plant and equipment. In addition, the
technological payoff of current research and develop-
ment outlays will come in this period, bringing an
increase of investment in production facilities for
new products.
In the original TIME MAP, few serious problems
were seen in the financing of this much higher rate
of capital spending. However, the revised prospect
that government spending will be much higher than
seemed probable before, and the likelihood of a
resumption of inflationary price trends, now suggests
that financing may be very difficult indeed, and
very expensive as well. Management preparation for
the capital spending of the late Sixties might wisely
be made well in advance of the actual need.
Federal Spending
Barring an unlikely change in the Administration
in 1964, federal spending may well have swollen to
the point of near conflict with needs of the private
economy. Missile and space programs will represent
a major component of the federal budget; social
welfare programs begun earlier, with relatively
modest expenditures, will now call for enormous
outlays; and complicating the problems will be the
fact that price tags on many of the goods and serv-
ices purchased will be rising.
Despite these factors, the impressive growth of the
economy (and thus of the tax base) may obviate
the need for sharply higher tax rates. But prospects
for tax reduction will not have improved.
Companies that bet on the rapid development of
space age equipment and hardware will collect their
winnings during this period.
State and Local Government Spending
By the late Sixties, the spending of local govern-
ments will become an acute political issue. Popula-
tion growth and rising demands will necessitate
expansion in many public facilities and services
normally provided by local governments. On the
other hand the funds will be harder to come by
than at any time since the Great Depression. By
today's standards, this spending rate will be phenom-
enal, and some political reaction from dependence
on federal aid is inevitable.
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MEMORANDUM FOR:
The attached Time Map concerns
prospects for the American economy
during this decade based on an analysis
of such factors as: population, housing,
federal spending.
It doesn't touch much on international
affairs
6V
WE
22 Au ust
(DATE)
10-101
FORM IQI WHICH MAY BE USED.
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