Presidential Statement No. 1 on Economic Issues: Maintaining Prosperity.

1. OUR PROSPECTS for maintaining prosperity start from the solid base of a 44-month expansion that shows no signs of faltering:

--Nearly 5 million new nonfarm jobs have been created since early 1961.

--Our total production is now expanding at a 5 percent annual rate.

--Profits after taxes are up more than 65 percent since early 1961.

--Wages and salaries after taxes are up nearly $60 billion.

2. Excesses and speculation have been avoided:

--Prices and costs have been more stable than in any other industrial country in the world.

--Inventories have been rising very modestly, far less rapidly than sales.

--Credit expansion has been moderate, and the money supply has risen less than the Nation's output.

--Expansion of plant capacity has been closely geared to developing markets.

3. This unprecedented period of peacetime prosperity has broken the historical rhythm of recessions after every 2 or 3 years of expansion. It stands in sharp contrast to the recent history of recessions in 1953-54, 1957-58, and 1960.

4. It would be wrong to say that recessions are a relic of the past. But we are convinced that recessions are not inevitable, and sustained prosperity is our realistic objective. Many of the free economies of Western Europe have gone more than a decade without a business decline.

5. The best way to avoid recessions is to maintain strong and steady forward momentum. A continued partnership of Government and private enterprise can supply that momentum:

--by continued restraint in costs and prices, combined with steady progress in modernization, improved management, and cost-cutting investments;

--by further tax reduction, with excises first in line, carefully timed and tailored to maintain continued growth and to head off recession;

--by monetary policies to provide adequate credit for steady expansion without inflation;

--and, finally, by a spirit of constructive cooperation, not angry antagonism, between Government and private enterprise.

6. A good offense--a vigorous program for sustaining prosperity--is our best defense against recession. But if recession were to threaten, a well-timed tax cut would be one of our most effective measures. And within the bounds of efficient Government expenditures, a speedup of public works and other Federal outlays could also take up economic slack.