Another Voice

To the procession of economists, financiers and assorted experts testifying in Washington on the course of the U.S. economy. Commerce Secretary Sinclair Weeks added his bit last week. Secretary Weeks's appraisal: "Spotty." He was worried about inflation's steady spiral, which pushed living costs to an alltime high in June (see NATIONAL AFFAIRS). Yet the economy seemed well able to absorb the high prices--at least for the moment. In 1957's second quarter, the gross national product climbed to an annual rate of $433.5 billion, some 5% more than last year; half the gain was due to inflated prices, but the rest was a result of new production. Predicted Weeks; 1957 "will be the best year in the history of the economy."

One reason for Weeks's optimism was that buyers are no longer living off accumulated stocks, instead are building up inventories again. In the first quarter businessmen slashed inventories at a rate of $800 million annually, but in the second quarter they reversed course, started adding to inventories at a yearly clip of $1.5 billion. With steel operations up 2% last week to 81% of capacity, the industry predicted a steadily rising market through summer. As matters stood, Bethlehem Steel, Republic Steel, Youngstown Sheet & Tube already had the highest first-half sales and profits in history. The steelmen's best customers, Detroit's automakers, were doing even better. Chrysler's first-half profits zoomed 380% to $89.7 million as sales jumped 44% to $2 billion; Ford totaled earnings of $171 million on record first-half sales of $3 billion. Even giant General Motors did not fare too badly: earnings slipped 4% to $481 million, but sales climbed by $45 million to $5.9 billion.

The one great worry for businessmen was the mounting cost of expansion. Floating a $60 million bond issue last week cost Pacific Gas & Electric Co. more than 5% for a security Wall Streeters said would have gone for 4.8% a fortnight ago. For those unwilling--or unable--to pay top interest, the market was slim indeed. Railroad credit ratings are so low, said Pennsylvania Railroad President James M. Symes, that the roads cannot finance new equipment unless the Government helps; he suggested that the Government create an agency to buy as much as $2.5 billion worth of rolling stock, then lease it to railroads.

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