Business Forecast: |977

Economic & Construction

By Gil Oswald President Simpson Timber

Seattle, Wa.

F\su.qNl for Ywood products will accelerate during 1977 as the entire U.S. and most free world countries continue to experience basic economic improvement. Currently the American economy has slowed somewhat during the summer months but is expected to move ahead slowly through the balance of 1976. The ground for continued economic growth is solid through 1977. The following factors tend to support this view.

ECONOMIC INDICATORS

Gross National Product 1976 1977 Change

19'12 $

$1,696.0 1,880.s +10.9 1.268.0 1.332.7 + 5.1

Real growth in GNP will run close to 5% over 1976 and inflation on the same level will be held under 6%. Although unemployment is current-

Story at a Glance

Solid growth thru '77 starts at 1.65 million mortgage rates steady around 9%; 1OO,OO0 more apartment starts . repair and remodeling continues to be an impressive growth area.

ly running at the rate of 7 9% this was caused in part by the large increase (2.3 million) of new people added to the labor pool this year. Our civilian labor force is now over 95 million and 93% or more should be gainfully employed through most of 1971. The magnitude of this many people at work will of itself provide a healthy base to encourage consumer spending and subsequent consumption of goods and services.

Plant and equipment spending is now beginning to show signs of strength however and expectations are for a 15% gain in current dollars during 1977. Much of this spending will be prompted by a recognized need to upgrade equipment if we are to increase productivity and remain internationally competitive.

At this point, housing starts for 1976 and, n 1977 are projected to develop near the following levels:

Hardware Industry Very Bullish

By Otto Grigg Managing Director Pacific Southwest Hardware Assn.

AUR CURVTRENT research calls for a 20 billion dollar industry by 1979 our current Management Report reflects that the 20 billion dollar year might arrive before 1979.

Even considering inflationaty factors, the report reflects a most healthy condition in net return, sales per square foot and increased profit percentage, making 1977 a reflection of a very solid market for the retail hardware store and the home improvement center.

With a greater spendable income, American consumers will beat a so(Please turn to next page)

Housing this year will show a gain of about 26% over 1975's 1,171,000 starts. Next year should see another 12% improvement over the 1,475000 units expected by the end of 1976.

Conventional mortgage rates are going to remain inthe8.85%to9.35% rapge during 1977 and will tend to encourage home ownership for those who can qualify at this level. The (Please turn to next page)

Story at a Glance

A $20 Billion hardware industry by 1979 or sooner higher net return, sales per sq. ft. and increased prof it percentage seen in '77 industry is donning rose colored glasses for next year.

OSWALD

(Continued from page 9 ) median price of single family houses have leveled off nationally at $43,000 in recent months and shouldn't move more than 2-3% above this figure next year. Money placed with S&Ls has continued at record high levels again this year and will help to support the financing needed for 1977 mortgage commitments.

Although apartment construction has been depressed for the past two years, it now looks as though rental and vacancy rates in a number of metropolitan areas have changed enough to justify starting at least 100,000 more units next year.

Mobile homes still offer the lowest cost housing per square foot of floor area and will continue to show production increases as the economy improves.

The high cost of moving to a new or different house has caused a significant increase in home remodeling and/ or repair. Although this construction segment has historically been difficult to assess on a qualitative or quantitative basis, it is safe to assume that a deceptively large volume of wood products are consumed by professional remodelers and do-it-yourselfers each year.

Recent studies would indicate that remodel and repair, sometimes referred to as the "after market" is steadily growing. Figures are impressive enough to encourage geater emphasis on market development programs directed at the professional remodeler and doit-yourself segment of the residential construction industry.

With excess capacity gradually brought back into use this year, amore normal share of corporate funds will be budgeted for commercial and industrial buildings through 1977.

GRIGG

(Continued from page 9 ) called path to hardware home centers as more single projects become easier by greater product development.

Better trained sales people will deliver more dollar sales in handling customers in a more professional manner.

Better designed stores will attract more family business as shopping atmosphere will be more "delightful toned."

The retail hardware-home center business for 1977 already has donned rose colored slasses.