The Economy: New & Exuberant

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Some top economists feel that unemployment may get worse before it gets better, look for a 15% unemployment rate in ten years—if the Government takes no steps to counteract unemployment. But in the new economy, neither John Kennedy nor any other U.S. Presi' dent could or would tolerate such a depression rate, even if the cure involved a return of the WPA and the CCC. If the U.S. economy can grow strong enough with Government help to create jobs for all but the truly unemployable, economists expect that the slow-growth days of the last six years will give way to a remarkable new era of growth. With jobs to support them, most youngsters would marry, multiply and spend heavily to feather their nests. No wonder both busi nessmen and economists look with such approval on the sight of couples shopping for wedding rings and of young women flocking into bridal salons. "How much the economy goes ahead," says Andrew Ferretti, staff economist of Boston's Keystone Fund, "depends on the success of the 18-year-old girl in snagging somebody to marry."

Tax Cut Push. While not against romance, the Kennedy Administration has a somewhat more complicated plan for turning the economic upturn into a sustained advance that would create new jobs. It believes that the tax cut it wants would further stimulate consumer spending, help business profits to rise, encourage expansion—and, not incidentally, bring the Government more in increased reve nues than it would lose by the cut. Only a few months ago, most U.S. businessmen seemed indifferent about the budget-distending idea of taxing less while spending more. But the Administration has persuaded most businessmen that past rises out of recessions have not had enough steam, and that a tax cut would go far to do the trick this time. A Washington-inspired group of top businessmen has already been formed to push for a tax cut. Said Henry Ford II, co-chairman of the group, in a Detroit speech last week: "A broad tax cut will'stimulate consumer spending, and thereby help to increase employment and put idle plant capacity to work. But a more lasting effect of a tax cut will be to increase the growth rate of the economy, once it is operating at full potential."

The Administration envisages a cut of about $10.5 billion a year. At best, the reduction could not be enacted before October and probably would not go into effect until next year. But, explains Bank of America's Vice Chairman Rudolph A. Peterson, 58, "just the anticipation of a tax cut will be important to the economy." Peterson, who is due to become chief executive of the nation's biggest bank by Nov. i, should know: he watches over 3,000,000 savings accounts, and plays an important role in the economy of California, the nation's most populous state. On the other hand, businessmen fear that the failure of a tax-cut bill in Congress might shatter the businessman's and the consumer's great expectations and make it hard for the economic upturn to continue its advance.