A program of cooperation and partnership in resource development was begun.  Social security and unemployment insurance laws were broadened and strengthened.  New laws started the long process of balancing farm production with farm markets.  Expanded shipbuilding and stockpiling programs strengthened key sectors of the economy, while improving our mobilization base.  A comprehensive new housing law brought impressive progress in an area fundamental to our economic strength and closed loopholes in the old laws permitting dishonest manipulation.  Many of these programs are just beginning to exert their main stimulating effect upon the economy generally and upon specific communities and industries throughout the country.

The past year—­1954—­was one of the most prosperous years in our history.  Business activity now surges with new strength.  Production is rising.  Employment is high.  Toward the end of last year average weekly wages in manufacturing were higher than ever before.  Personal income after taxes is at a record level.  So is consumer spending.  Construction activity is reaching new peaks.  Export demand for our goods is strong.  State and local government expenditures on public works are rising.  Savings are high, and credit is readily available.

So, today, the transition to a peacetime economy is largely behind us.

The economic outlook is good.

The many promising factors I have mentioned do not guarantee sustained economic expansion; however, they do give us a strong position from which to carry forward our economic growth.  If we as a people act wisely, within ten years our annual national output can rise from its present level of about $360 billion to $500 billion, measured in dollars of stable buying power.

My Budget Message on January 17, the Economic Report on the 20th of this month, and several special messages will set forth in detail major programs to foster the growth of our economy and to protect the integrity of the people’s money.  Today I shall discuss these programs only in general terms.

Government efficiency and economy remain essential to steady progress toward a balanced budget.  More than ten billion dollars were cut from the spending program proposed in the budget of January 9, 1953.  Expenditures of that year were six and a half billion below those of the previous year.  In the current fiscal year, government spending will be nearly four and a half billion dollars less than in the fiscal year which ended last June 30.  New spending authority has been held below expenditures, reducing government obligations accumulated over the years.

Last year we had a large tax cut and, for the first time in seventy-five years a basic revision of Federal tax laws.  It is now clear that defense and other essential government costs must remain at a level precluding further tax reductions this year.  Although excise and corporation income taxes must, therefore, be continued at their present rates, further tax cuts will be possible when justified by lower expenditures and by revenue increases arising from the nation’s economic growth.  I am hopeful that such reductions can be made next year.