The chairman of one of the nation's largest steel companies said yesterday that the economy will get stronger, not weaker over the next 12 to 18 months, as a capital spending boom starts to take over from three years of strong consummer spending.
"From our vantage point, the business expansion momentum is almost certain to carry us at an increasing page through 1978 and into 1979," Frederick G. Jaicks, chairman of the Chicago-based Inland Steel Co. told securities analysts here.
"That seems to conflict with the prevailing view that the economy will be weakening later this year." Jaicks conceded. But, he said, basedon his orders and his customers, "We do not have the end of the current economic expansion in view."
Carter administration economists, while professign a new-found concern for inflation, have long held that unless some further stimulus is applied to the economy this year, the three-and-a-half year expansion will peter out and unemployment could begin rising next year.
That was President Carter's rationale for the $25 billion tax cut he proposed last January. Although he has since scaled it back by $5 billion and pushed back the effective date three months to January 1 because of congressional pressure and inflation worries, Carter's chief economic advisers still believe that the recovery could run its course without some help from the federal government.
The long economic expansion - that has reduced the unemployment rate from 9 percent in 1975 to a stillhigh 6 percent last month - has been fueled mainly by consumer spending and housing construction. Businesses have been slow to build new plants and facilies.
For job-creating economic growth to continue, business investment must pick up. So far, considering the strong demand for consumer products, cars and housing, businesses have been very slow to invest in new facilities causing the concern in the administration and elsewhere.
But Jaicks said that is changing. "The long-overdue expansion in capital spending is finanlly underway and should become more and more apparent," he said.
Inland, the nation's sixth-biggest steel company and traditionally the industry's most profitable, is in the middle of a massive expansion of its facilities on Lake Michigan near Gray, Ind. When the new facilities come on line next year, Inland's ability to ship steel will grow under 10 percent, from about 6.3 million tons this year to 6.9 million tons.