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2V - MANCHESTER HERALD, Tues.. Oct. 26 1982 BUSINESS Biz' Swensson vs. Jack fhompson Stocks soar a look at the race for the 13th in rally Economist: Another bummer in '83 . page 3 . page 20 But inflation, I hastened to point out, is now running a f recession that should persist throughout most of 1983, You know that old baseball war cry; — ’’Wait till next an annual rate of under 4 percent; further, the consen maintains Rinfret. year.” Well, as far as the U.S, economy goes, it’s not sus is that it’s under control. wait till next year — but wait tilt 1984. rilE ONLY REASON he’s allowing for an upturn That’s bull, responds Rinfret. The average American In other words, the 1983 economy’s going to be a late In the year is his assumption that Federal Reserve Sunny, mild Manchester, Conn. bummer. worker with a wife and two kids currently has the least chief Paul Volcker will almost certainly be replaced by buying power he’s had since 1964. In addition, he says, This provocative, contrary view — which if true would an “ easy money” man when his term expires next on Thursday Wednesday, Oct. 27, 1982 raise serious questions about the vigor of the stock the demand for capital goods is collapsing; yet, the August. Rinfret’s reasoning: To ensure Reagan’s re- producer price index for capital equipment is going up 8 market rally — is put forth by Pierre Rinfret, the election possibilities in 1984. — See page 2 Single copy 25c percent a year. ' frequently controversial, silver-haired 58-year-old head The course of interest rates? Rinfret predicts a IrralJi So where are you killing inflation? he asks. The of his own economic consulting firm (Rinfret further drop, with the prime rate (the bank’s best len answer is you’re not — you’re moderating it, but you’re Associates), ding rate to its most creditworthy customers) falling not killing it. His reasoning: Capital spending — the driving motor from its current 12 percent to around 10 percent by behind any economic recovery — will be far worse next Rinfret’s forecasts call for an '83 inflation rate of 6.8 year-end. But that should be the bottom, even given the year than just about anybody imagines. percent next year, against a background of 7 to 8 per poor economy, he says, because of Uncle Sam’s huge sees no economic growth at all. cent wage hikes and what he believes-will be “ zero needs to finance a swelling budget deficit (which he THIS IS MORK TH AN just one man’s opinion. R ’s Pre-tax profits, according to the consensus, will rise productivity.” puts at a minimum $155 billion in fiscal 1983). based on a confidential and nearly completed survey by around 18 to 20 percent in 1983. Rinfret, on the other OUR M AN’ S VIEW S, though going against the While a drop in the prime to 10 percent is encouraging, Rinfret Associates of a substantial cross section of hand, predicts a 20 percent decline. Rinfret says it’s not enough to get the economy hum A American industry that represents, about 45 percent of His grim outlook on 1983 unemployment: An average crowd, should not be written off lightly; he’s been run Union calls ning a hot hand recently — what with his super January ming again. It generally takes an 8 percent prime — all U.S. capital assets. 10.5 to 11 percent throughout the year. 1982 calls (again contrary to the consensus) of an ’82 which translates into 11 percent in consumer credit costs — to stimulate consumer purchases, he says. The consensus view of economists is that capital spen I asked our economic bear, who’s been an official and drop in real GNP and an unemployment rate near year- ding for new plant and equipment — in terms of real unofficial adviser to Presidents Kennedy, Johnson and end of about 11 percent. IN LIGHT OF HIS revised economic scenario, Rin dollars, adjusted for inflation — wiil be off about 2.5 Nixon, whether he was ignoring the possibility of a Rinfret, who does economic consulting for 110 cor fret recently eliminated more than $1 million worth of percent next year. rebound in consumer spending next year; such an event porations, including Tenneco, Ingersoll-Rand and stocks — the entire equity holdings — from his firm ’s in However, the findings of the Rinfret survey strongly is factored into many economic blueprints for 1983. Brunswick, contends that the United States is now FitzGerald vestment portfolio. indicate a much steeper decline — 12.4 percent, to be going through an industrial depression, not a recession. Considering the market’s subsequent and continued ’The answer was an immediate NO! The consumer is a Between 1930 and 1939, there was an average 17 percent precise. derivative of capital Investment, not the economic strength following that action, obviously our economic In dollars and cents, that means nearly a $40 billion unemployiVient rate in this country. Now, there is an un spark, observes Rinfret. Consumer spending is up this guru has some egg on his face. drop in capital outlays next year — from an estimated employment figure of 17 percent — and in some cases as year, while capital spending is down; yet the economy’s $319.2 billion in '82 to $279.5 billion in '83. high as 22 to 23 percent — in such industries as steel, Rinfret admits it, but comments that no one is nimble in a recession. If you don’t have strong capital invest autos, construction, lumber, housing, appliances, non- enough to catch the market’s high or low. “ I ’m a fun “ These figures are devastating,” says Rinfret, who, ment, you don’t have a strong economy, says Rinfret. ferrous metals, mining and machine tools. damentalist,” he says, “ and since this is the most anti-labor as a result of the survey’s findings, has sharply A.S FAR AS TH E consumer goes, Rinfret predicts Given the bleak results of his firm ’s capital spending economic uncertainty I ’ve seen since the Great Depres downgraded his 1983 economic expectations. he’ll be a spending weakling next year because he’ll survey, our expert figures that the economic picture in sion, I ’ve got to believe this is the wrong time to own stocks and the right time to want total capital FitzGerald said there is nothing IN ItltlKF, HF had been forecasting a 1.6 percent continue to get killed by tax increases (such.as $20 these industries— essentially heartland America — will By Nancy Thompson improper or unusual about a probate gain in real gross national product next year; now he bilIion-$25 billion in Social Security hikes) and inflation. only get weaker. And so, without demand, we’ll have a security.” Herald Reporter judge conducting a private practice The United Auto Workers today on the side. publicly endorsed William J. Diana for judge of probate and accused in FitzGerald said he has hired Pen -In Brief- Results could come tonight cumbent William E. FitzGerald and ny to help handle some of the cases. Mayor Stephen T. Penny — a can He said he did so because he would didate in the 4th senatorial district not be taken out of town and away — of union-busting. from the probate court too frequent- FitzGerald and Penny denied the ly. charges. “ I absolutely firmly deny any UAW begins vote on strike Jim Griffin, an International charge of union busting,” said Pen representative from the UAW’s Far ny. “ It seems to me that any such mington office, said the Northern charge totally ignores my record in Area UAW Community Action the No. 3 automaker to participate in the refused to grant immediate pay raises to original tentative agreement that called public service and my endorsements By MIchellne Maynard Program Council voted unanimous voting, which will last all day. About 91,- workers a week ago, saying it could not for wages tied to future profits on Oct. by other labor unions.” UPI Auto Writer ly Friday to support Diana with both "N 000 active and laid-off workers are eligi afford them. 14. money and volunteers. He did not DETROIT (U P I) - Hourly workers at ble to participate. But enthusiasm for a walkout has since They said they wanted an “ up front” G R IFFIN SAID the UAW did hot explain why the endorsement was Chrysler Corp. cast ballots today at UAW officials, who said they hoped to waned as employees assess the effect of wage increase instead. endorse Penny’s opponent Carl A. not announced until today. plants, union halls and parking lots in an have results tonight, made no official a strike on their family budgets in the Zinsser because of his “ poor” Workers, who make around $400 a Griffin, a lifelong resident of unprecedented vote determining recommendation to their members, but face of upcoming holidays. record on labor and social issues. week before taxes, would get $65 a week Manchester, said it is extremely un Herald photos by Tarquinio whether they will strike Nov. 1 or stay on their support of a return to the UAW President Douglas Fraser last Griffin said he would personally in strike pay. The union has $12 million in usual for the union to endorse a can the job through Jan. 1 and resume con bargaining table after the first of the week said he wanted workers to think prefer to see Zinsser elected, its strike fund. didate in a local race — adding this JIM GRIFFIN (LEFT) AND LEONARD F.