Tax Cut and S&Ls Are Key to'78

Philip Kuharski Vice President and Economist Fidelity Mutual Savings Bank Spokane, Wa.

THE number of new housing I started has peaked for this cycle but will decline only slightly in 1978. While interest rates are expected to be somewhat higher, mortgage lunds should be readily available to finance the expected volume of 1.8 rnillion units. In the West. volume should remain near the 500 thousand annual level.

Story at a Glance

Suppliers should key production & inventory on the timing and extent of a federal income tax cut and the rate of change in thrift industry deposits.

These forecasts are based on two essential assumptions. Suppliers should key production and inventory policies on the timing and extent of a federal income tax reduction program and the rate of change in thrift industry deposits.

To be specific, a combined business and individual tax cut of at least 15 billion dollars is needed early in 1978. In addition, thrift industry deposits must continue to increase by 12% or more, on an annual basis, through most of the year. Without these conditions the marketplace for residential construction activity will gear down in the latter half of the year. I'm counting on continued opportunity!

In 1975, the median price of a new home was $39.300. while median family income was $13,700 - for a ratio of 2.87. Even though the cost

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