The Economy: Portents of Trouble

Even when business is good, business men scan the economic horizon for portents of approaching trouble. And these days, as the dreary deadlock persists between Lyndon Johnson and Congress over taxing and spending, businessmen view the portents as troublesome. Seldom in recent years have they felt more uncomfortably aware that the whole U.S. economy can be crucially affected by a political impasse.

Whether they blame the Congress or the President, corporate executives are increasingly vexed by uncertainties and inaction in Washington. "It's difficult to calculate the inflationary pressures on labor rates and costs of ingredients," complains President William Howlett of Consolidated Foods. "I lay 99% of the responsibility at the doorstep of the Administration," says President Robinson F. Barker of PPG Industries. "Sure, you can keep surtaxing and surtaxing until we're surtaxed to death," says President A. Clark Daugherty of Rockwell Manufacturing Co., "but it won't help unless federal spending is cut." The difficulty about wielding an ax on the budget, noted Chairman Roger Blough of U.S. Steel Corp. last week, is that "nobody has come forward with a list of priorities that would command a consensus." Blough's somewhat idealistic recommendation: political support for "elected officials who vote to cut government spending even if this affects our own pet projects and communities."

The Common Cold. Without question, the stalemate has already cost the President some of his cherished support among business leaders. Last month, when the presidents or chairmen of 100 major companies gathered in Hot Springs, Va., for the semiannual meeting of the prestigious Business Council, the corridors hummed with complaints. Most of the council faulted the President for "lack of leader ship" and "playing politics" with congressional demands for spending cuts as a prerequisite to the 10% income tax surcharge he proposed in August.

Despite their misgivings, most businessmen predict rising sales next year. "We are backing up our forecast by increasing production," says Chairman William Blackie of Caterpillar Tractor Co. "Most businessmen I meet feel we're going to succeed—in spite of Government." Optimism, however, is often tempered with worry over strikes, rising labor costs, and, inevitably, squeezed profit margins.