Bad Guess

U.S. businessmen, who thought that Washington had already confused them as much as possible, discovered last week that confusion can be compounded. As he was sworn in as the newest member of the President's Council of Economic Advisers, ex-Economics Professor Robert C. Turner, 44, told newsmen that the peak in defense spending--which everyone thought was almost a year away--has virtually been reached. Added Turner: "It will be a difficult and delicate job to maintain present prosperity."

Next day, when the stock market took one of its sharpest flops in recent weeks, many traders blamed Turner's gloomy prophecy. Turner, who had misread revised figures on the 1953 budget, was quickly contradicted, not only by Presidential Assistant John Steelman and Boss Mobilizer Henry H. Fowler, but finally by his red-faced self. Steelman and Fowler stated--and Turner agreed--that the current $12 1/2-billion-per-quarter rate of military expenditures will reach a peak of some $14 billion in mid-1953, then level out for two years.

Last week, as far as anyone could see, the Turner recession looked far away. Once more the U.S. boom was at full throttle. Appliance makers, who not long ago had been shoving mightily at their slow-moving goods, now had trouble catching up with demand. And only six weeks after the steel strike had cut auto production to the lowest level since World War II, automakers rolled out the biggest week's production this year: 103,054 units v. 100,584 for the same week last year.

As the OPS finally issued its long-awaited order allowing steel users to pass along all increases in their costs from the steel wage-price settlement, there was new upward pressure on many prices. Nevertheless, the big U.S. productive machine was now in such high gear that there were signs of softening in some prices (see below).

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