One reason for business and even consumer confidence remaining high in spite of almost constant complaining is the outlook for 1996. It isn't nearly as bad as the complaints make it seem.
Complaints get attention. Retailers worry about sales, workers gripe about low wage increases, consumers are concerned about debts, economists are wary of rising inventories, and business owners say profit growth is slowing.But after nearly five years of expansion, a time period which in the past would be a prelude to inflation and then to recession, neither event is a very strong probability in 1996. The ingredients aren't there.
Instead, the outlook is for growth in jobs, wages, profits, industrial output, stocks, bonds and a variety of other ways in which economic success is measured. Improvements mightn't be great or steady, but they are likely.
In his 25th annual address to the New York Society of Security Analysts, John Wright pointed to some of the fundamentals that have firmed up the foundation of the economy and make it less vulnerable to a sharp downturn.
For one thing, said Wright, an octogenarian populist with a wholesome faith in his countrymen, Americans will again demonstrate their integrity, wisdom, virtue, know-how, productivity and leadership ability.
To Wright, whose Wright Investors' Service will manage $5 billion of investments in 1996, these are vital, practical traits. In short, don't underestimate the United States; it retains its vitality.
A major factor in Wright's optimism is an important but not widely noted tilt toward investment and production rather than consumption. It can be observed in consumers who, while they spend heavily, also demand discounts.
Even more significant as an indicator of a production versus consumption bias has been the strength in business investment, which is a commitment to the future as well as an attempt to lower production costs.
Investment in producers' durable equipment has risen in the expansion to a postwar high of 13 percent a year.
"This high rate of business investment, he said, "is the defining characteristic of the current economic expansion and accounts for the improved trend of productivity growth in the 1990s."
Not since the 1960s, he continued, has such growth matched the 2.3 percent annual rate since the expansion began in 1991. And not since the early 1960s until recently has productivity improvement accounted for 75 percent of the increase in GDP.
What is happening, he said, will make the Industrial Revolution seem puny by comparison. Already, he suggested, it has confounded the Federal Reserve, which he says has repeatedly sold the U.S. economy short.
Clearly, he explained, "this stronger trend in productivity explains why the Federal Reserve has time and again been surprised by the consistently low inflation of the current expansion." Productivity thwarts inflation, he said.
Wright's vision is based in hard research, a talent for which his firm is noted, and thus is grounded more in facts and trends than in hopes and wishes.
There might be a correction in securities markets - even one of 10 percent to 15 percent - but the investment environment is likely to improve late in 1996 and into 1997.