International Economy: A Steady Performance

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From the Common Market to the Far East and from Canada to South America, the steady and gratifying economic growth of the free world's industrial nations in 1963 provided a striking contrast to the widespread economic difficulties of the Communist bloc. There were economists, of course, who complained that one nation's boom was racing too fast, that another's was losing headway, or that still another's could not continue without strong medicines. But no one could gainsay the fact that most free, industrialized nations stood clear of crucial economic problems—while the Soviet Union's wheat crop failed, Red China's economy continued to falter at bare subsistence levels and Cuba proved a good showcase of how to ruin an economy in a hurry.

Scooters & Rice Cookers. If one key trend became evident during the year, it was that a certain sense of levelheaded stability has emerged to touch the economies of most free nations, even those that have not yet fully learned all the lessons of economic discipline. That stability enabled them to weather, with no more than a momentary flutter, crises that ranged in 1963 from outright revolutions and strong leftward shifts in government to Charles de Gaulle's rude exclusion of Britain from the Common Market and the assassination of the U.S. President.

Every national economy presents its own problems and opportunities, but common to the industrialized nations in 1963 was a source of strength that has grown abroad in recent years even faster than in the U.S.: the consumer. The U.S. tends to take consumer spending for granted, but a real consumer boom is a relatively new phenomenon in many parts of the world. What were once luxuries are becoming necessities in many places, motivating the Italian family to upgrade its motor scooter to an auto and the Japanese housewife to want an automatic rice cooker. This same desire drives Congolese men to insist on neatly starched white shirts and Venezuelans to save for a vacation at the seashore. Last year consumers almost everywhere had a bit more to spend, and provided the major push to their economies by spending it for a better life. Their spending helped push world production of autos, appliances, and the steel that goes into them, to new records.

Frightened Away. But there were problems too—in some places caused by the little man's desire for a better life and in others by his inability to realize that desire. Increased consumer spending touched off a worldwide rise in imports—an excellent tonic for the overall level of international commerce but a bothersome occurrence for nations struggling with delicate trade balances. Growing wage demands in Europe, Latin America and Asia far exceeded gains in productivity, causing serious threats of a new round of inflation in France and Italy, a rise of 23% in Japan's cost of living, and of a hopeless 70% in Brazil's.