More Fair Weather

To most businessmen, the outlook for the first half of this year is for continuing fair weather. But what about the second half? Speaking last week before a group of businessmen in Manhattan, Harvard Economist Sumner Slichter said: "The outlook is for little change during the first three quarters of the year and for a rise in production in the fourth quarter."

Economist Slichter ticked off the signs of strength. Though home construction is down, "business plans for outlays on plants and equipment are rising--are 13% more than in 1955." As for manufacturers, unfilled orders totaled $55.5 billion at the end of December, or nearly $4.6 billion higher than July 1955 and up about $9 billion from the comparable period of the year before. New orders are also growing, reached $29.3 billion in December, the highest point since the statistics were first compiled in 1948. At the last official count unfilled orders for all types of machinery stood at $15.6 billion, a gain of better than $2 billion in a year. In December alone machine tool orders came to $157 million, up 50% in two months.

Though inventories are climbing, the huge number of orders pouring in makes any excessive accumulation unlikely. The low points in housing and autos will probably come well before the end of the year, predicts Slichter, "so that both of these industries will be expanding in the closing months of 1956." Furthermore, wage increases are coming in dozens of industries, from aviation to steel and the building trades.

Concluded Slichter: "With Government spending rising, with residential construction slowly rising, with outlays of business on plant and equipment rising slowly, and with wage increases raising payrolls, an expansion of total expenditures in the closing months of the year seems inevitable."

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