Excellent, Buoyant & Ebullient

Asked about the present and foreseeable future of the U.S. economy, Chicago Banker Tilford C. Gaines was exultant. "The only words I can use," he said, "are 'excellent,' 'buoyant' and 'ebullient.' " Asked to write a pair of memos to Lyndon Johnson on the state of the economy, Gardner Ackley, chairman of the President's Council of Economic Advisers, had trouble finding any dark spots, replied mostly in superlatives:

> For the first quarter of 1965, the gross national product was up by $14.5 billion over the last quarter of 1964. This was one of the biggest quarterly gains in U.S. history, and was in line with Ackley's earlier estimate of a record G.N.P. of $660 billion for 1965.

> For the same quarter, consumer spending rose by $11.7 billion, to an annual rate of $418.2 billion. The biggest increase came in the area of new-car buying which set a quarterly sales record of 2,189,787 cars.

> March unemployment dropped to 4.7%, the lowest figure for the month in eight years. At the same time, employment rose by 1,652,000 jobs over March 1964--to a record 70,169,000.

Concluded Ackley: "It's a good prosperity with good balance. There has been no sign of excess in inventory stockpiling or in corporate investment. The economy does not seem to have any bottlenecks. Confidence is high in the consumer and businessman."

Few businessmen or economists di agreed with Ackley's prognosis. Ford Motor Co. Chairman Henry Ford II predicted that the auto industry would sell "at least" 9,000,000 new cars this year, making 1965 the third consecutive record-setting year in Detroit's history. Corporation giants were falling all over themselves in making plans for capital investment in 1965. "I've never seen people so optimistic," said Robert H. Stewart III, president of Dallas' First National Bank. Declared John Brooks, board chairman of Santa Monica's Lear Siegler, Inc., manufacturers of aerospace products, air conditioners and TV equipment: "There is little doubt that our present economy is strong. Tax reductions did stimulate industry and help business last year. We will continue to be aided this year by a further tax reduction." Mused Los Angeles Sportswear Manufacturer Richard Woodard: "It's sure a different kind of country and economy than when I was a kid back in the '20s and '30s. With all these things going for us today, if we drop the ball we have nobody to blame but ourselves."

In the view of Manhattan's Martin R. Gainsbrugh, chief economist and vice president of the National Industrial Conference Board, the ball was not about to be dropped. Predictions of a $660 billion gross national product, he said, "may, in the light of the first quarter and rising investment plans, prove to be too low. Conceivably, it may be as high as $670 or $675 billion."

Of course, every silver lining has a cloud or two. Might not the great Form 1040 income-tax fiasco (see following story) cut into consumer spending? And what if there were to be a strike in the steel industry, where labor-management negotiations last week seemed to be nearing a dead end? No matter. Most Americans would still find "buoyant" and "ebullient" excellent words to describe the state of the economy.

The stock market has always been a good indicator, and during the week the Dow-Jones industrial average ran to an alltime high of 912.86. But nowadays there are other markets that tell almost as much. One is the art market.

Last week a black-tie audience packed an auction at Manhattan's Parke-Bernet Galleries (see ART) and, pausing only long enough to refuel on champagne and caviar, expressed its own sort of confidence by making record bids on almost every item offered up.

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