Fair & Warmer

Only a few weeks ago, many a harried merchant with sales lagging and customers hard to find got the troubled feeling that 1952 was beginning to look a lot like recession-ridden 1949. In Wall Street, many a professional trader warned that the big bull market was as good as dead.

Who's Dead? Last week the stock market surged up in the liveliest session in weeks. On at least one of the numerous stock averages (the New York Herald Tribune's), its gains for the week put the market at a new 21-year high. Moreover, startled merchants were finding that business, far from looking like '49, in some cases was even better than 1951. For example, U.S. department-store sales for May were 3% higher than last year.

The building industry was humming. May's outlays for public & private construction totaled $2.7 billion, a new record, and pushed the total for 1952's first five months 3% above 1952's period. Government spending contributed the biggest increase (25%), mainly for expansion of military, AEC and defense-plant facilities. This week the Federal Reserve Board gave building another boost by easing Regulation X, which curbed housing credit, to lower the down payments required on homes.

The pickup was also felt in the auto industry. With credit relaxed, sales rose; dealers had only 256,793 cars on hand v. 369,101 at this time last year. Demand was so brisk that it was again taking as long as eight weeks to get delivery on a Ford or Chevrolet, and four to six months on a Cadillac. Independents, whose sales had been soggiest, shared in the rise; Hudson's sales were up 40% for April and May, and Kaiser-Frazer's also gained. The buying impetus spilled over into appliances; General Electric reported its May sales of major appliances up 24% above April, while Philco said its refrigerator sales were the best for any week since April 1951.

No Corpse. Along with sales, prices also had begun edging up once more. Dun & Bradstreet's index of wholesale food prices showed the sharpest increase (1.6%) in 17 months. The Government's cost-of-living index was still 11% above its June 1950 level, when the Korean war began. In the face of these signs that inflation was far from dead, neither Republicans nor Democrats in Congress seemed willing to take a chance, in an election year, on killing controls.* This week the Defense Production Act, with its train of OPS, NPA and other business controls, seemed certain to be extended to at least next March i.

* Except on potatoes, where OPS ceilings had helped create a woeful shortage and black market. Last week, after the Senate demanded it, OPS abandoned its potato ceilings.

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