On the Up & Up

Bankers from 48 states gathered in Atlantic City, N.J. last week to compare their pulse readings of the U.S. economy. Their conclusion: business is good, and should get still better in the next few months. The boom, which had shown signs of deflating, now has more zip than ever before. Recovering fast from the long steel strike, industrial output went up about 15% in the past two months. The Federal Reserve Board estimated that last month production equaled the peacetime high set in April 1951.

But what encouraged businessmen most was the fact that some soft spots in the economy were hardening up. In the chemical industry, hit by a mild recession a few months ago, flasks and test tubes were bubbling as never before. Textile plants were also humming again, and retail sales had picked up so fast that there was a shortage in some items such as boys' wear. TV makers once more wore 21-in. smiles as sales spurted--and TV prices rose--with the opening of new TV stations. Admiral Corp.'s President Ross Siragusa reported his sales were running 20% ahead of last year, predicted that 1953 should set a new record, and that soon there would be two television sets in every home.

By scraping the bottom of the labor barrel (unemployment was at a new postwar low of 1,438,000, only 2% of the work force), automakers were able to add second shifts and keep output up. Ward's Automotive Reports predicted that October production would total 623,000 cars and trucks, best monthly record in a year and a half. Industry was still expanding fast. Construction outlays totaled $9 billion in the third quarter, the highest quarterly level in history.

The boom's new upsurge probably meant another hike in the cost of living. Though food prices had declined slightly (down eight-tenths of 1% in mid-September), other costs were rising. As federal rent controls expired last week, ceilings were dropped on 2,000,000 housing units (ceilings on the other 4,000,000 under federal controls were kept by local action). Landlords of many freed units wasted no time in jacking up rents. Though the boosts were limited in most places to about 10%, tenants feared that the landlords were just biding their time --waiting the day when there was no danger of controls being slapped back on.

Underneath the bubbling pot of inflation, the Government kept the fires hot. Last week the Treasury Department announced that in the first quarter of the current fiscal year the U.S. had gone nearly $4 billion in the red, and would probably be $10 billion in the hole by next July. As in the past, the deficit--and the creation of new money to foot the bill--was sure to mean more upward pressure on prices.

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