Slichter Forecasts Improvement In American Economy During 1955

The national economy is likely to undergo a period of expansion n 1955, rather than continued contraction, Lamont University Professor Sumner H. Slichter predicted yesterday.

A primary reason for the expected increase in business activity is the influence of present Federal fiscal policy, Slichter explained in an address to the New England Bank Management Conference. Although the Administration's program has been a powerful factor for economic contraction in the past year, he continued, it "will become a mild influence for expansion" next year.

The expansion "will be broadly based" and "will rest on a small increase in the Federal cash deficit, a small rise in state and local spending, an increase in spending on housing and on all forms of consumption, and a termination of the efforts of business concerns to reduce inventories," he said.

The recovery must proceed, however, beyond the 1953 business peak to be satisfactory, he warned, Since the country has greater economic needs than in 1953 and greater production capacities, failure to rise above 1953 levels would be a "disgraceful condition."

Wage increases seem necessary in certain areas of the economy, Slichter said.

"Wage increases, when made under the right circumstances, represent an increase in spending or prevent a decrease in spending," he continued. The case for wage increases in a great many industries during a period of recovery is unusually strong."