Will They Take It Away?

Republicans will take over control of the Government at a time when U.S. business is at its alltime peak. Before the election, some glib economists had predicted a recession by the end of next year; many businessmen, conceding that 1953's first three quarters should be fine, openly worry about the fourth quarter--and after. Some Republicans are disturbed because they feel that business has nowhere to go but down, and that an easing in the supercharged rate of business may well be ahead. But the current facts of U.S. economic life hardly indicate any sharp decline in the foreseeable future:

P:Arms spending, now running at the rate of $46 billion a year, will not hit its peak rate of $59 billion a year until next June. Under present plans, it will then level off at a slightly lower rate for two years.

P:Personal income is now running at a record rate of $273 billion a year; savings (e.g., currency and bank deposits, insurance, securities and savings and loan associations) are at an alltime high of $283 billion.

P:Manufacturers, turning out civilian goods at a rate of $25 billion a month, are receiving orders so fast that they are not cutting into the $75 billion worth of orders already on their books.

P:Industry, now expanding its plants and equipment at the rate of $27.5 billion a year, has plans to spend at the same rate in early 1953. With a Republican administration, businessmen may spend even more.

P:The housing industry is expected to turn out 1,000,000 units next year, about the same as in 1952.

P:The auto industry, with bigger steel allotments, will be able to turn out 1,150,000 units in the first quarter, hopes to produce more than 5,000,000 for the whole year v. an estimated 4,300,000 this year.

Last week the stock market, taking note of all the rosy figures, opened on the day after election with a flurry of buying, and the Dow-Jones industrial average closed the week at 273.47, up more than three points. But the stock traders, like everyone else, realized that there are some entries on the debit side of the economy as well.

Much of the boom is supported by debt; consumer credit, for example, stands at an alltime high of $21.7 billion, 12% above a year ago. And much of the pent-up demand for goods has been satisfied. There is little doubt that some industries will eventually have to go through painful readjustments such as television, textiles and some chemical companies experienced in the past year. But there,is also the prospect that reductions in taxes (see below), plus a more cost-conscious approach to government in general, will put more real income in the hands of consumers and counterbalance the debits, thus put the boom on a more solid basis.

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