Pacing the Boom

One of the prime measures of the U.S. economy's staying power in the current boom is capital spending. Last week as a spate of new plant and equipment spending was announced by major U.S. companies, Government economists estimated that capital outlays in the first quarter rose substantially from the $34 billion a year annual rate of 1959's last quarter, will average $37 billion for the year as a whole and hit $40 billion in the last quarter, a new record.

What the experts like best is that the alltime high appears likely to be achieved at an even pace without the overstraining and overexpansion of manufacturing capacity that helped create the 1957-58 recession. In such key industries as steel, autos, electrical machinery and transportation, the capital spending emphasis is on modernization and automation of existing facilities rather than new plants.

In the electrical industry a 3% increase in spending is expected this year. Manufacturing expenditures will show a good increase. Biggest burst will come from the steelmakers whose strike-deferred projects are expected to boost capital spending 50% to 60% over last year. Republic Steel, for example, plans record spending of more than $155 million on new strip and plate mills and expansion of a plastic coating line for pipe. Said Treasurer W. B. Boyer: "Our program is being undertaken not so much to raise capacity as it is to increase efficiency."

Other capital spending plans announced last week :

P: Goodyear Tire & Rubber Co. authorized capital expenditures of $90 million for 1960 v. $78 million authorized in 1959, of which $55 million was spent. P: Union Carbide Corp. expects construction outlays in 1960 to "increase appreciably" from the $136 million spent in 1959 on expansion of its chemicals, plastics and industrial gas business.

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