The Journal Times from Racine, Wisconsin • 20

Two-tier economy: spenders and the squeezed By john Cunniff level of price increases. The phenomenon is observed to some degree all over the United States, where, say some consumer researchers, one-third of the population is living extremely well while two-thirds have been immersed In hardship. Albert Sindlinger, who heads Sindlinger a Media, consumer research and economic forecasting service, was one of the first to discover the split several years ago. It is as marked as ever, he says. Another economist, Carol Kenney of Shearson, Loeb Rhoades is quoted by Business Week as finding the richest 40 percent of households account for 60 percent of retail sales, and two-thirds of all spending on highly discretionary, easily postponed items such as color television sets and automobiles.

The two-tier economy isn't difficult to understand. Homeowners, for example, may have built up sizable equities, which they can tap through second mortgages and home improvement loans. More often than not, they have above-average incomes. Moreover, they can lower their tax bite by deducting interest costs and real estate taxes. Non-owners have less ability to offset rising taxes and prices.

More of their income must go for necessities, they have few of the tax deductions of homeowners, and they are unable to save enough to acquire tax-deductible assets. In short, they have little inflation protection. The split intrigues many of those who seek to explain the economy's behavior, and they generally offer it in explanation for the persistence of buying in spite of high taxes, interest and prices. Now it is likely to enter the political arena, there to be seized by opponents of the Reagan administration's policies. Should, for example, the top tier lose some advantages? Should the lower tier be given more tax breaks? Can the split be ignored by politicians of either party? If economic times return to normal if inflation recedes and interest rates come down and the debt burden is reduced the split might tend to close.

Until thai day, however, it very well might widen. That too isn't difficult to understand. Upper tier members, for instance, have greater assets and greater borrowing power. They can borrow during inflation and repay in cheaper dollars. They obtain tax deductions for interest charged on the-loans.

Through the use of existing assets, that is, the upper tier can obtain more assets and more tax benefits. They have he ability to deal and even take advantage of economic conditions. The lower tier has little protection. Its income goes for necessities rather than investments. To some degree, of course, the situation always exists, but in recent years some consumer economists say the split has become so marked as to constitute two economies, each with its own peculiar behavior.

It may help explain in part why the Federal Reserve has had such a difficult time restraining spending, and it is bound to be used as an argument against some of President Reagan's spending and tax policies. AP Business Analyst NEW YORK The owners of some posh dwellings on Manhattan's East Side feel confident that if they just wait another few months before selling they'll probably get $600,000 instead of $480,000. The type of buyer for such dwellings, real estate agents tell you, aren't scared away by an increase of $100,000 or so in asking prices. A few miles away in the working class inner suburbs, owners of two-family dwellings sometimes complain they cannot increase their tenant's rent by the rate of increase in the consumer price index. The type of person who rents such units, it is explained, simply cannot afford a double digit increase because their wage increases have fallen behind the general usines: the Journal March 3, 1981 AC Racine, Wis.

if Cut budget even more, Volcker tells Congress He also reiterated the Federal Reserve's intention to restrict the growth of the nation's money supply its contribution to combating high inflation. The committee chairman, Rep. Dan Rosten-kowski, asked Volcker for his assessment of Reagan's tax cut plan, which calls for a year across-the-board cut in personal income tax rates along with business tax reductions. Volcker said that the Reagan proposal may be one way of stimulating economic growth, but added that there are other ways of structuring a tax bill to achieve tne same result. The precise composition of the bill is something "you may want to struggle with," Volcker told the panel.

Pressed for his opinion on whether Congress should commit itself to a -three-year tax cut before cutting federal spending over that same time, Volcker refused to be pinned down, saying "there are pluses and minuses" to a multi-year tax reduction. West Racine elects Richard E. Hinsman of Hinsman Realty Inc. has been elected president of the West Racine Business and Professional Association. He succeeds David Schulz of Westawn Foods.

Also elected were Norris Richardson of Camera World, vice president; Carol Pfister of Pfister's Pflow-ers, secretary, and Ted Shenkenberg of First Wisconsin Bank of Racine, treasurer. Elected to the association's board of directors were Jeff Nelson, Theresa Fritsche, William Sustachek, Joel Bishop, Owen Davies, Joleen Carlson and Jeanette Johnson. T-bill rates rebound WASHINGTON (AP) Interest rates for short-term Treasury bills rebounded at Monday's auction, regaining nearly half the ground they lost last week. The average rate on 26-week bills jumped to 14.133 percent from 13.611 percent a week earlier. The average rate on 13-week bills rose to 14.463 percent from 14.103 percent a week earlier.

Starting Thursday, banks and thrift institutions may pay up to 14.383 percent on six-month money market certificates, which are tied to the 26-week Treasury bill rate. The current ceiling on the minimum-deposit certificates is 13.861 percent. CM adds to cutback JANESV1LLE (AP) The 1,600 workers on the General Motors truck assembly line here are being laid off for a week beginning March 9 well as are 4,300 workers involved in passenger car assembly and related operations, plant spokesman Phillip Gottschalk announced Monday. The auto cutback was announced last week. WASHINGTON (AP) The chairman of the Federal Reserve Board today urged Congress to consider cutting the federal budget even more deeply than President Reagan wants.

Paul Volcker, the chairman, said more severe cuts would not harm the economy and told the House Ways and Means Committee, "I wouldn't be disappointed if you went beyond the Reagan cuts." Volcker said that, "from the standpoint of general economic policy, all the risks seem to me on the side of not cutting back the rise in spending enough." "There's no question in my mind that the dangers of undershooting (budget cuts) are greatest and the dangers of overshooting are nonexistent," testified. Volcker, who heads the nation's independent central banking systeni. Reagan is completing work on a revised budget for fiscal 1982 containing proposed reductions of about $45 billion. Volcker told the tax-writing panel today that even those cuts as they are, are only a kind of progress payment toward what needs to be done to bring the budget into balance in reasonably prosperous economic conditions." But he told the committee that he "would not put a lot of weight" on the administration's prediction that the president's program would lead to a rapid and sharp reduction in inflation and a healthy spurt in economic growth. He argued, rather, that the more the budget is cut, the more room Congress has to enact a tax cut and the greater the effect on reducing the federal deficit, which he said contributes to high interest rates because of government competition for private loans.

Volcker urged that tax reductions be designed to maximize savings and investment. 1 i -I V4 it4' Photographers win at state AP aserphoto The biggest Store opens at Westgate Lamberton's, a family-owned women's apparel retailer here, opened a store today in about 7,000 square feet of space at Westgate Mall, the retail development on Washington Avenue west of Ohio Street anchored by a Shopko discount store. In opening the Westgate store, Lamberton's closed the one it operated in Western Village at 6216 Washington Ave. Lamberton's north side store at 3417 Douglas Avenue continues. Chamber elects nine to board A concrete structure is towed to sea for the Statfjord offshore oil platform.

After a steel deck is added to the top of the base, the offshore platform will be about 895 feet tall. It will have 816,000 displacement tons, making it the biggest in the world. Thomas L. Nicholson of Nicholson's of Racine, 346 Newman Road, took the sweepstakes -award at the Wisconsin Professional Photographers Association's state convention in the Red Carpet Hotel, Milwaukee. Nicholson received the overall trophy for the highest total score on his four prints.

He received a court of honor award for a print, "Daddy's Girl," the last of two considered for top portrait. He also received four blue par excellence ribbons and three traveling loan ribbons on prints. Three associates of Image Gallery, 2707 Erie won a total of eight blue ribbons, four traveling loan awards, three court of honor awards and the portrait sweeptakes trophy. Phillip J. Fountain, the studio's owner, received the court of honor award for a Lady," which also won a traveling loan award.

Fountain also won two blue ribbons. Gary Craig Silber of Image won the portrait sweepstakes trophy for highest total points on four portrait entries. He also won two court of honor awards, four blue ribbons and three traveling loan awards. Skip Simonsen of Image won a blue ribbon. Other awards: Jane Wodicka, 2819 Geneva won three awards in the specialist competition.

She was cited as print retoucher of the year, oil colorist of the year and photographic artist of the year. Mr. and Mrs. Michael Scheibe, operators of Camera Masters, 5903 Washington three, blue ribbons, one red ribbon and one traveling loan. Kenneth Luedtke of Photography by Ken, 1200 N.

Main two blue ribbons, two red ribbons and one traveling loan. Mrs. Shirley Ross, 1411 Lombard won the negative retoucher of the year award, red ribbons for oil coloring and print enhancement and blue ribbons on two negatives. She also won a scholarship for the Winona School of Professional Photography. Nine people have been elected to the 22-mem-ber board of directors 'of the Racine Area Chamber of Commerce in mail balloting that closed Feb.

27. Elected as members at large were Harry Gar-nette, manager of the Sears, Roebuck Co. store, 5415 Washington Ronald L. Reichert, senior vice president of Marine First National Bank of Racine, 500 Wisconsin Eugene Rinehart, president of Pottinger Steel 1500 16th Lee Schultz, district supervisor here for Schultz Sav-0 Stores and Eugene E. Wieczorek, an executive vice president of Emerson Electric In-Sink-Erator division, 4700 21st St.

Elected to the board representing service businesses, manufacturers, the professions and retailers, respectively, were Frank Savaglio of Frank Savaglio Son Realtors, 926 High Howard Schilke, manager of the Racine Industrial Plant, 1405 16th Dr. Jerome J. Veranth, whose offices are at 5605 Washington and Eldon Smithback, president of Office Equipment 335 Main St. Darrell Wright, the chamber's president, said the board will meet March 12 to elect officers. The organization's current chairman is S.

John May of Hammill an accounting firm at 201 6th St. Penney profits rise J.C. Penney New York, said its earnings rose 20 percent in the fiscal fourth quarter on a 9 percent sales gain. For the year, Penney's earnings declined 5 percent on a 5 percent sales gain. For the quarter, Penney reported earnings of $160 million or $2.29 a share, up from $133 million or of $1.92 a share in the year-earlier period.

Sales rose to $3.89 billion from $3.56 billion. For the year, the nation's third largest retailer posted earnings of $233 million or $3.33 a share, down from $244 million or $3.52 a share the year before. Sales rose to $11.35 billion from $10.85 billion. In its fiscal second quarter, Penney posted a pretax loss of $6 million from retail operations. In its fourth quarter, however, income from continuing operations rose 30 percent, to $180 million from $139 million.

Operating profit increased 2.3 percent for the entire year, to $268 million from $261 million. Could confirms talks Gould Rolling Meadows, confirmed that it is negotiating to sell its industrial group to Reading Plymouth Meeting, and said it expects to sign a letter of intent If Reading gets the financing it needs. Gould, the electronic and electrical products company that last week acquired Gettys Manufacturing Co. 2700 Golf said any letter of intent would be subject to approval by its board of directors. Gould said it is working with Reading on obtaining financing for the transaction, and that it does not expect a loss on the sale.

Reading, a real estate holding company with interests in anthracite coal, said last week it was in "serious negotiations" to buy Gould's industrial group. Expected purchase price was reported as about $380 trillion. Gould's industrial products group has about 7,000 employees at 29 plants in Indiana, Illinois, Ohio and Wisconsin. The Wisconsin plants are the Hose and Couplings division at Manitowoc and the Engine Parts division at Eau Claire. York opposes PSC changes MADISON, Wis.

(AP) Proposed climbing wholesale fuel prices. The legislation to change the structure of national gas and telephone prices the state Public Service Commission are particularly affected by deregu- will not accomplish its goal of lower lation at the federal level," York consumer prices, PSC Chairman said. Stanley York said Monday. York criticized the proposed legis- "Utilities are in a critical finan- lation that would limit a utility's cial state at the present time. To rate of return on common stock equ- tinker with legitimate costs of doing" ity, limit the salaries of top utility business is to court financial insta- executives to $65,000, limit the kinds, bility, which ultimately results in of costs utilities can pass on to cus- higher costs to the consumer," York tomers, and increase the number of said at a news conference.

psc commissioners from three to Consumers can reduce their utility five, bills by conserving energy, York York said that increasing the said, adding that he was aware of number of commissioners would be consumer dissatisfaction with rising a cosmetic change and could add energy costs. $150,000 in administrative costs. "The Public Service Commission "The Wisconsin Public Service cannot control utility costs simply Commission has long been a national by saying 'no' to rate increases. The model for progressive and effective problem is much deeper and more regulation," York said at a news complex than that," he said. conference.

"To tinker carelessly "It has to do with record-high in- wfth this institution can be counter- terest rales and rising labor rates, productive and much more compli- soaring construction costs and cated than most people realize." Grain futures Local interest Chicago (AP) Futures trading Monday Courtesy Robert W. Baird Co. Inc. on the Chicago Board of Trade. Quotations as of 10 30 a Open High Low Close Chg Ntt WHEAT 5,000 High Low Last Cnng Dollars per bu.

Allen Lud 41t 42 42 4.354 Am Motors 4 4 '51 4 38 4 401 -17 Ametek 29 29 NC 4 42 4 4J v. If, Bucyrus .21 20 NC 0 4 58 4 SI -20 Cont Can 34 14 vi 34e Uec .3 4 91 4 I9'm 4.1014 -11 Evans It 19 19 NC 0a 08 4 97 4 98 -19 First Wis Corp 31 31. 31 iaies Fn. 18.613. on Sig Corp 45' 44 44 'it Total open interest Fri.

47,299. ott 1.795 Irom Couldlnc 27 24 26 NC 'nur, INCO 19' 19 19 mart 17 16 16 CORN bu 25 NC Dollars par bu Levi Strauss 46 45 45 Mar 3 57'j 3 57'i FiO 3 51 ni Massey 4 3 4 NC May 3,67 J67W 3 59. 3 60 09 Mattel Inc 10 9 9 Jul 3 71 3 2 3 65 3 65 09 nel Inc.lpld) 25 NC 3 71 3 71 3 643 64 09 XM 30 NC Otc i 70 3 70 3 63 3 63 Modint 19 NC Mar. 3 BO 3 80 3.71 3 73 Northwest Ind 40 19 40 idles -Put. 49,96 0 Kennord Inc 14 16 16 total open Interest Fri.

221,509 off I 431 Irnm Re(2 3ptdl 51 Nt Thur. on I.4J3 irom schliU Brewing 10 10" 10 Note. Close Is average ol last two trades Snap-on Tools i.2l JO 20 iraoes SI Hf ()c fVi vv 9 NC OATS 5,000 bu; Tenneco 47 47 47 Dollars par bu. Tetron Inc 29' 29 29 -J fA" 2 25 2 2 2 24 2 27 00 Twin Disc 16 16 16 1 21 it 2 19 -04 Vulcan Mat 40 40 40 Jul .,,.2 14 2 141 2.13 2 13 -06 Wis El Pow 20 20 20 NC f0 1 2 1 2.13 2.11 06 Wis PSvc 15 15 15 NC Lc 2 24 2 241 2.21 2 21 05 Wis Pwr LI 15 It It ia'es Fri 1,04 i jnJotal open Fri 7.132. oil 201 irom Dollar, gOlCj LONDON (AP) The dollar gamed against SOYBEANS 5,000 bu mott maior currencies today Ookl prices Stead-Dollars par bu Dollar rates compared to late Monday: Mar 7 26 26 Vol 7 07 10 2 Gasman marKs, up Irom 2 IS0, May so 7 50 7 31 29 I 9965 Swiss Irenes, up from I 9910 5 1145 French Jul 7 74 7 74 7 56 7 56- 29 Irenes, up Irom i 050.

2 3950 Dutch guilders, up Aug 7l 7 81 7 61 1 bt'l 30 Irom 2 3850 1,044 25 Italian lire, up from I.Olt 5ST Sep 7 87 7 88 7 5 7 75 10 Tn British pound cost 52. 1105. compared with Nov 1 06 8 06 7 89 7 92 27 12. 1128 In Tokyo, Iht dollar closad al 210. IS yen, 1 25 8 25 8 09 8 11 27 down Irom 210.75.

Mar 8 45 8 45 111 114 25 Meanwhile. London's five bullion houses fined Salps Fri 44 568 recommended morning gold price of S4A4 25 an tutal open interest Fri. 126,627, up 445 Irom oune'' Zurich, tht metal was Inur quoted at a medven 1466.50, down Irom M0.50. Jj Silver traded In London at 111.64, up from 111.60. Silver and gold SILVER Chicago Mid America 1,000 ounces March ill.

40, April 112.05, May 112.22, June 512 19, August 112 73, SeptemDer 112 90, Oc-loDer 1 13 07, December 13.4 i Estimated sales, 1,118 contracts. GOLD Chicago Mid America 33.2 troy ounces March 1460 00, April 5463. 00, June S475 O0, July 1487 00, September 1492 50, October S500 00, DecemDer 5510.00, March S528 00, June 1548 00. September 1560 00. Estimated sales: 2,024 contracts.

Eggs CHICAGO (AP) Midwest ago price report; wholesale buying prices Monday were unchanged; Class l-large 54; Class 2-large 54; mediums 50; smalls 44; nest-run breaking stocK 49; checks 44. Cash grain CHICAGO (API Wheal Nn 1 hard r.rt Over the counter Bid Ask Franklin El 15 15 Marine Corp 24 25 Marshall II Corp 20'4 21 Pabst Brewing 15 4i Stearns 1 4 Versa Tech 12 13 Mutual funds did Ask Affiliated Fund (79 9 47 Century Share Trust 109) 65 Fidelity Fund U.I7 H.L. Investors Mutual 9 59 10.43 Investors Stock 21.27 23.12 Investors Variable Pay 9 65 10.49 Massachusetts Inv. Tr 12 51 13 49 Massachusetts Growth 12. 79 U78 Newton 70 19 N.L.

Nicholas Fund 18.18 N.L. Selected Am. Shares 776 Wisconsin 3.40 N.L, Foreign exchange (Quoted In American cents) Mar 2 Feb vr. Ago England 2. 1795 2.H40 2 2870 Argentina 0004 0004 ,0005 Canada BH ,8323 889 Australia 1,1508 1,1545 1.0W0 Austria gM Ba'9'um 0281 .0284 0149 Breill 0140 .0140 02IO OenmarK 1485 ,1814 France WS .1994 2413 Oermeny 4649 .4490 5654 Greece 02OO ,0200 0250 Holland 4191 .4244 India 1204 .1200 ,122 Ireland 1,7190 2 0975 Israel 1170 .1170 ,0250 Italy 0009 0009 .0012 Japan 0047 .0047 0040 Memco 0420 ,0424 0417 Norway, 1817 ,1811 20.18 Portugal 0175 0174 0208 Saudi Arabia 2985 2985 2965 Spain .0114 ,0115 .0144 ion 2142 .2155 2.M0 Switierland .5019 5089 5961 Teamsters OK profit sharing at Braniff DALLAS (AP) -Debt-ridden Braniff International Corp.

has received, a financial boost from 5,000 Teamster-represented employees who agreed to donate some of their pay to help propel the airline into the black. The profit-sharing proposal still must be voted on by unions representing Braniff pilots, flight attendants and mechanics. If approved, Branlff's 11,500 employees would furnish 10 percent of their salaries toward making the airline profitable. The amount employees would be repaid would depend on Bran-iff's ability to make a profit with the employee funds. ler Monday; No.

2 solt red winter 4.06n, Corn No 3 yellow 1 47n (hopper) 3 17n (bol. Oats No. 2 heavy 2.10n. Soybeans No. I yellow 7.

Iln. No, 2 yellow corn Friday was Quoted at 3.49n (hopper) 1.3n (box). Correction Livestock Racine native Maurice R. Valente began his career in 1953 with Motorola Inc. as an industrial engineer.

He moved to Crane Co. in 1961 and International Telephone Telegraph Corp. in Incorrect starting dates for his employment with those companies were listed in a story on Monday's business page about Valente's joining Wol-sey an investment banking concern in New York City, as a general partner. MILWAUKEE (AP) Monday's cattle mar ket: good to choice steers 57 00-58 00; good to choice hellers 55 00-57 00, good Holstein steers SO 00-56 00, standard to low 47 00-50 00; good dairy heiters 45 00, utility cows 42 canners and cutters 39 00-42 00; commercial bulls 52 00.54 00; common 48 Monday's call market, choice calves 75 00-85 00, good calves as 0O-75O0; feeder bulls 80 0085 00, leader hellers 80.00150 00, Monday's hog market; light butchers 36 soil 50, heavy butchers 14 14 50; light tows 15 00.16 00, heavy sows 15 0016 00, boars 1100 and down. Monday's lamb market: good to choice 40 00-48 00, ewes and bucks 8 00-14 00 luesday's estimfted receipts: 400 cattle; 400 calves; 200 hogs ana no sheep..