Healthy Enigma

"Business," laconic Cal Coolidge once remarked, "will either be better or worse." In Washington last week, a divergence of opinion about the state of the U.S. economy presented the nation with an equally Delphic appraisal. Said one top Government economist: "The danger of inflation has passed and the nation is in a phase of healthy economic readjustment." Federal Reserve Board Chairman William McChesney Martin Jr. disagreed. Testifying before the Senate Finance Committee, he insisted that inflation is the most critical economic problem facing the country, and that a rolling business adjustment is needed to avoid serious deflation. Said the A.F.L.-C.I.O., mirroring the views of some key Democrats: the Administration's tight-money policy, as enforced by the Fed, is "designed to hasten a recession."

Whatever the official pronouncements, the overall economy seemed in a remarkably healthy state. Employment set a new record in July, and unemployment dropped. The Gross National Product reached an annual rate of $434.5 billion in the second quarter, $5 billion above the first quarter and $23.5 billion above the same period in 1956. Personal income for July rose to a record $345.5 billion, is running 6% ahead of 1956 for the first seven months. Businessmen feel that business will remain good: the majority of 205 industrial concerns polled by the National Industrial Conference Board look for larger dollar value of new orders and higher dollar sales this fall than last, also anticipate higher profits before taxes. Four out of every ten intend to boost their capital expenditures this fall.

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