The Economy: New & Exuberant

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As elsewhere, the customer is trading up, and "economy" has become a nasty word in Detroit. Chevrolet reports that its top-of-the-line Nova is accounting for 58% of all sales of the Chevy II, which was originally designed as an economy car. In 35% of the Novas, customers shelled out additional money for such extras as bucket seats and special carpeting. General Motors feels so good about the auto market that this fall it will introduce a new car, tentatively titled the Chevelle, which will be about halfway in size between the Chevy II and the standard Chevrolet.

G.M.'s Gordon modestly attributes Detroit's success largely to a good business climate, but others see Detroit as the prime cause as well as the beneficiary of the general economic rise. "The auto industry is the key to our economic situation," says United's "Pat" Patterson, who understandably favors another form of transportation. Autos have played a major part in sending steel production to a three-year high after many months of lagging output; 20% of the 2,600,000 tons now being produced weekly goes into autos. Detroit has created more production and more paychecks in rubber, glass, brass and a host of other industries.

Big Government's Role. The consumer also forks over most of the money, with varying degrees of unwillingness, that goes into a spending splurge of another sort—the Government's. Over the years, the Federal Government has taken an ever-increasing role in American economic life, and is now the nation's biggest customer and biggest employer. From Washington to statehouse to city hall, Government now helps to support the nation's farmers, teachers, shipbuilders and missilemakers, and many of its scientists, engineers, highway builders, psychiatrists, mine owners, urban developers, computer manufacturers and social workers.

Many businessmen abhor the trend, but they have learned to mute somewhat their criticism of Government spending and debt; after all, the Government is too good a customer to offend. Says Winston-Salem's P. Huber Hanes Jr., president of a large textile company: "We must reconcile ourselves to the importance of Government spending." The Kennedy Administration believes that the Government's enormous power should be openly used to affect the economy's course—and that it has managed to do just that. It has its own handle for what is happening to the economy: the Kennedy expansion. In the belief that the recessions of 1957 and 1960 were triggered by President Eisenhower's policies of tight money and tight budgets, Kennedy & Co. have pumped up federal outlays by $16 billion over the last two years and made a conscious economic tool of the planned deficit. Federal purchases alone accounted for 20% of the increase in the gross national product during 1962. Spending by federal, state and local governments is running at an annual rate of $169 billion —which is equal to 29% of the gross national product and represents $900 for every man, woman and child in the land.