The Future: The Sizzling 70's

The U.S. economy seems headed for its most expansive era yet in the 1970s. That was the message of a study presented last week by Martin Gainsbrugh, chief economist of the National Industrial Conference Board, a private center for business research. Two years in preparation by a dozen of the board's staff economists, the study projects remarkable advances in family income, now averaging $9,300. By the end of the next decade, the typical American household will earn almost $14,000 — in terms of today's prices — and enjoy a 40% increase in the real standard of living. At the same time, the number of families with incomes above $10,000 will rise from 15 million to 34 million. Those with less than $5,000 will decrease from 13 million to less than 11 million out of a total 61,400,000.

The N.I.C.B. figures that U.S. production, which has increased an average 3% annually for the whole 20th century but rose to 4.5% during the '60s, will continue to grow by 4.5% a year during the '70s. One reason will be an unusually large rise in the labor force, the result of high birth rates in the late 1940s and 1950s. The labor force has been increasing by an average 1.2% a year, but in the 1970s it will jump 1.7% annually. In addition, continued investment in research and new plants should maintain productivity gains at the historic rate of 2.8% a year. Altogether, the gross national product, in terms of current dollars, should come close to $1.25 trillion by 1975 and $1.5 trillion by 1980.

Gainsbrugh warns, however, that these prospects for prosperity will prove hollow if inflation continues at its current rate of more than 4%. If it does, he says, it "could foreshadow a boom followed by a severe deflation later in the 1970s." Convinced that sensible Government policy will avoid such a crisis, he estimates that inflation will average 2% during the decade. Tending to reinforce his assumption, such economic barometers as industrial production and personal income have begun to level out under the growing pressure of high taxes, tight money and a budget surplus.