American businesses have not increased their capital spending plans for 1977 and spent less on plant an equipment last year than originally estimated, the Department of Commerce reported yesterday.
The capital spending survey should give the administration further ammunition in its campaign to get Congress to enact an increased tax credit for business investment as well as tax rebates for consumers and tax credits designed to boost hiring.
If the two-year-old economic recovery is to continue for a length of time and if unemployment is to be steadily reduced over the next several years, business spending on plant and equipment must pick up, administration and most other economists maintain.
The Commerce Department said that based on a recent survey, business investment spending will increase 11.7 per cent in 1977, following a 6.8 per cent rise last year. After price increases are factored in, real spending on capital goods increased 2 per cent in 1976.
"If capital goods prices increase this year at about the same rate as last year," the department said in a statement, " an increase in real spending of 7 per cent for 1977 is suggested."
The department said the 11.7 per cent increase means that businesses will spend $134.6 billion on plant and equipment this year, $400 million less than in the survey the department conducted late last year. That survey also suggested an 11.3 per cent increase in spending in this year.
The larger 11.7 per cent increase projected in the new survey "reflects the lower estimate of 1976 spending rather than an expansion of 1977 programs," the department said.
Commerce Department economist Maynard Comiez said the increase investment spending coupled with the economic stimulus package - tax cuts and spending increases - approved in principle by Congress last week should be sufficient to get the economy growing at a 6 per cent rate by the end of the year.
Administration economists project that real gross national product - the total of goods and services produced by American citizens - will be 6 per cent higher during the last three months of this year than it was during the last quarter of 1976.
Economists are worried that business investment spending will not continue to increase fast enough over the next several years to both replace plant and equipment that is wearing out as well as modernize and expand facilities.
Comiez said that because of the low level of real investment spending last year and because companies are projecting smaller sales gians this year than last, much of the 7 per cent real investment spending increase for this year is probably for replacement facilities, modernization and environmental upgrading.
He said the nation must add to plant and equipment to avoid production bottlenecks in the future. Increases in investment spending are also needed to provide increased employment, economists say.
Such administration officials as Charles L. Schultze, chairman of the Council of Economic Advisers, and W. Michael Blumethal, Secretary of the Treasury have argued that Congress, by failing to vote the investment tax credit proposed by the Carter administration, is sending the wrong signal to the business community.