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Despite such concerns, most private economists expect next year to be a good one—better than 1967. They see the U.S. economy expanding by a healthy 4% in real terms, with the 3% or 31% price inflation and with unemployment hovering about where it already stands. Bankers feel that the Federal Reserve will apply a brake to credit expansion, but gently enough to allow housing to continue its gains. Many businessmen look for consumers to save less and spend more; Detroit, for example, expects at least 9,000,000 auto sales. There are, of course, some clouds over that rather rosy view. Stockpiling to minimize the impact of potential midyear strikes in steel, aluminum and nickel could produce violent inventory swings.
What business is really most concerned about now is federal policy. In its simultaneous effort to fight a war in Viet Nam, send a man to the moon, erase poverty at home and help struggling countries overseas, the U.S. has strained its resources. The resulting budget and balance-of-payments deficits are promoting inflation. Higher taxes would attack these problems, and so would reducing expenditures at home or abroad. Business wants to see the main emphasis on the latter course because it avoids the risk of expanding government to the detriment of the more productive private sector of the economy. What the economy needs most right now is a sense-making approach to income and outgo in the federal budget.