The only questions troubling financiers are how long the boom will lastand how high the stock market will go in the meantime.
"The economic recovery rolling now," says Business May 3.
"Real gross national product (GNP adjusted for price change) rose at a hefty annual rate of 7½% in the first quarter.
"Real GNP rose 6.9% in the past year. That's a pretty good bounce back for the first year of a business cycle recovery."
Besides the growth in output and the accompanying sharp rise in profits, two other factors especially. impress American executives at this point: the drop in the rate of inflation at home, and the exceptionally favorable position of U.S. business relative to its imperialist rivals abroad.
In the first quarter of 1976, the Consumer Price Index rose annual rate of 2.9 percent, the lowest rate of inflation since 1972, when Nixon's wage controls were in effect.
On the more significant year-to-year basis, consumer prices rose 6.1 percent between March 1975 and March 1976. This compares with the peak rise of 12.2 percent in the year ending December 1974. The double digit inflation rates of that period helped to throw the economy into its two-year decline.
World competition "The American economy is expected to lead the world's economic recovery," reports Britain's financial weekly the Economist, April 17.
Economist singles out a new factor in U.S.-European economic relations. For the first time in decades, U.S. corporations are cutting their rate of investment in Europe. The U.S. firms expect to profit more from the fast-moving upturn back home.
Moreover, explains the Economist, "America's WaKe costs plus benefits are no longer much higher than those of workers in northern Europe. Sometimes they are lower: in mid-1975 hourly labour costs for employing an American shipworker were $7.06, against $8.07 for a Swede and $7.46 for a German."
The Economist complains about the differences between "job security" in the United States and Europe: "During a slump American companies lay off workers to cut output and reduce wage bills. Most American employees are on contracts that permit a single week's notice. The unions cooperate in picking the men who will be given dismissal slips. ..." In Europe unions have won greater job protection.
As an example, the Economist says that in the world slump last year, Eaton Corporation was able to "cut its American workforce from 31,000 tm 25,000, but was allowed to reduce its overseas workforce only marginally from 19,000 to 18,000."
These figures call attention to the central explanation of the profitable revival of the U.S. economy: the ability of the American ruling class to reconstitute a massive reserve army of unemployed workers, in order to pit workers against each other in the struggle for jobs and drastically undercut wage increases as a result.
Unemployment Even in March, as industrial production turned upward across the land. there were still seven million workers officially unemployed, 7.5 percent of the work force. If the number of "discouraged workers" is added-people who have given up looking for jobs because they can't find any-the total comes tc nearly eight million unemfringe ployed.
On top of this, however, there are also nearly two million workers, according to AFL-CIO estimates, who are forced to work part-time instead of fulltime. The AFL-CIO unemployment figure in March as 9.7 million, a rate of 10.3 percent.
Despite the recovery in production, there are more workers unemployed now than at any time since the Great Depression of vast workers-disproportionately made up of Blacks, Puerto Ricans, and women-is employers use to bludgeon those workers who do have jobs into accepting lower pay.
This "secret" of America's economic success is well known on Wall Street. In a pitch to sell stocks, the investment weekly Value Line boasted March 26, "Unions in the United States have. a modicum of economic understanding. Value Line finds incidents as the recent two-year settlement of a multicraft labor contract in Detroit for a moderate annual increase in wages and benefits of 6.5%; the explanation of a union official: 'Our membership's 50% unemployed.'"
Adds Value Line: "The beginning of economic wisdom!"
beginning of economic High unemployment registers high profits: essence of U.S. capitalist recovery from driving down wages!
massive gave the true wage increases, cities-including Line's example, Detroit.
the 1930s—millions New York crisis of unemployed Chicanos weapon an irreversible process.
reported on New encouraging such that controls the city budget.
"New York as municipal, sales.
are ness wisdom-that capitalist profits come This points to still another aspect of the recovery. It is based not only on recent unemployment and lower but also on the eco nomic decline of a whole series of big site of Value But it is still New York City, the nation's financial headquarters, that most vividly illustrates the contradic almost a third of its female workers.
"*You are close to wiping out the minority work force in the City of New York,' said Eleanor Holmes Norton, the chairman of the Commission on Human Rights."
According to the Times, "Scores of complaints alleging discrimination have been filed by laid-off workers, both as class members and individuals, squeezing the city between the pressures of the traditional primacy of union seniority protections and Feder al equal employment requirements."
The real squeeze is on workers. By pitting workers against each other at all levels-white against Black and Puerto Rican, men against women older against younger, cities against suburbs—U.S capitalism assembles the ingredients of the new economic upturn.
Limitations But there are serious limitations • It is by no means certain that inflation rates can be kept very long at their present levels (which are only low by comparison with 1974-75).
Throughout the economy, as monopolists see prospects for upping their they will also raise prices. This has already begun in basic metals. The prices of steel, copper, and aluminum creeping upwards, even before major spending for plants and equip ment gets off the ground.
• Corporate spending on plant and equipment slowed down in the first quarter of 1976 compared with the last quarter of 1975. It is in the nature of capitalist business cycles for invest ment in new factories to lag behind increased production of consumer goods and this is no exception.
But U.S. monopoly also faces the long-term fall in profit rates that has wracked capitalist industry around the globe. Investors would like a guarantee of profits before they undertake the immensely expensive operations that plant construction requires. It is a guarantee that cannot be made. . "In dustrial construction this year," Busi Week said April 5 "despite a frenzy of new building in oil refining and petrochemicals, will probably not reach two-thirds of the 1969 level."
• Finally, it is far from assured that workers will allow continued cuts in their standard of living without pushing their unions into fighting back economically and politically.
The fight for effective unlimited cost-of-living escalators, the top mand in the rubber strike and the Teamsters' strike struggle of Blacks and women for equal rights and equal pay... the resistance by students, teachers, and municipal workers to the budget slashes-all these threaten to upset the capitalists' dreams of higher profits through heightened exploitation of the working masses.