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Three University economists last night gave a tentative approval to President Eisenhower's optimistic view of the nation's economy for the coming year. A fourth economist declined to comment on the grounds that "nobody knows anything about what's going to happen in the next year."
The president and his Council of Economic Advisers, while exulting that the economy has "broken through to new and higher ground," cautioned that prosperity would continue only if proper restraints are employed.
Seymour Harris, professor of Economics, was the only faculty member interviewed who saw a slight business decline as a definite possibility. "It's going to be hard to maintain the present rate of consumer credit upon which so much of our prosperity is based," he said. "The falling off in automobile and housing sales is a first indication of this."
Harris urged that "strong safeguards be taken to reduce the growth of consumer credit. Congress should authorize the Federal Reserve System to tighten credit, and the System should take steps to reduce bank expansion credit."
Economy at Peak, Says Slichter
University Professor Sumner Slichter himself a frequent adviser to the economic council, agreed that Congress should empower the Federal Reserve to act, but doubted whether the System would need to use such limiting power in the near future.
"We wouldn't want consumer credit to rise again so fast as it did this past year," Slichter said, "but there's very little chance it will, anyway. We took up a lot of slack last year in the purchase of cars and other goods, and we were lucky that this coincided with a greatly increased production. We are practically at production peak now--it may increase this year, but not by much."
"No one expects the economy to expand as fast as it did in 1955," commented Professor Wassily Leontieff, "but there is no reason why it should not stay at an even keel. The balanced budget without a reduction in taxes is a good sign."
Leontieff agreed with Harris and Slichter that any reduction in taxes would be an incitement to inflation, but, like his colleagues, felt that an increase in federal taxation would serve no immediate good.
Professor of Economics Alvin Hansen refused comment other than nothing that "you can't tell what's going to happen next week or next year. Everyone is guessing; they hear a reasonable guess and say the same thing."
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