Next: Reflation?

In full-page ads last week, Manhattan's downtown bargain store, S. Klein's, blared the message 100,000 DIAMONDS--EVERY SINGLE ONE PRICED AT LESS THAN DEALER'S ORIGINAL WHOLESALE COST. When Klein's doors opened, its Union Square store was besieged by milling throngs of diamond-hunters. By nightfall, some 6,000 shoppers had trooped in, and a large part of the $500,000 worth of jewels had been sold.

What Klein's experiment seemed to prove, amid talk of slow sales and mutterings of recession, was that there were still plenty of buyers--with plenty of cash--if the price was right. Steelmakers opened their books for 1954 first-quarter orders and were surprised at the rush (although U.S. Steel and others began offering to pay freight charges for their customers).

Even the Fair Deal's onetime economic weatherman, Leon Keyserling, could see few storm signs ahead, told a Manhattan audience: "The years ahead...can witness an unparalleled period of economic stability and growth...It is my firm conviction that we can lift our annual national product from about $375 billion now to close to $500 billion by 1960."

The same optimism was reflected in a survey by Congress' Joint Committee on the Economic Report: "Although there are forces within the economy which may be moving downward, none of them appear either formidable or powerfully controlling." Even the. predicted cuts in Government spending were turning out to be smaller than anticipated and the growing concern over Russia's possession of the superbomb seemed to guarantee no further cutbacks in the defense budget. With uncertainty over the arms program out of the way--and an easing of credit already taking place--it looked as if the immediate prospect was less one of deflation than a moderate amount of "reflation."

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