Silver Threads Among the Grey

The word "recession" was rapidly becoming one of the hardest-working polysyllables in the language. A Los Angeles coffee shop advertised 65-c- "recession specials" (salmon patties, veal cutlet), and

President Eisenhower, at his midweek press conference, tied the "recession" tag to the economy for the first time since droop set in last autumn (and once even slipped into calling it a "depression"). Added the Labor Department: the total of laid-off workers drawing unemployment-compensation checks hit 3,130,200 in mid-February, a record 7.5% of the 42 million earners covered by the system.

Millions of families with incomes not nicked by the recession were gripped by a mood of tight-fisted caution. Liquor dealers reported a drastic switch from costlier to cheaper brands. Chain-store sales were brisker than in booming early-1957 because many housewives were forgoing the comparative serenity of the corner delicatessen or grocery store and shopping in supermarkets to save pennies to put into savings accounts. In Chicago a young woman borrowed $500 from a downtown bank at 4 1/2% interest, offering as collateral her $650 savings account drawing 2% interest. She just didn't want to dip into her savings. Commented a bank official: "This kind of thing is getting fairly common."

Five-Cent Coffee. But the nation's mood was wariness--not despair. Many a family was taking advantage of easier credit to buy or build the house that "tight money" kept out of reach during the 1957 boom. Federal Housing Administration loan applications during 1958's first eight weeks added up to 31,929, as against 18,662 in the same span of 1957.

Another promising sign was the long overdue beginning of a down-creep in retail prices. General Electric Co. dropped "Fair Trade" pricefixing on small appliances, and rival manufacturers promptly followed along (see BUSINESS). That much-mourned casualty of inflation, the 5-c- cup of coffee, made a comeback in Los Angeles restaurants. The Bureau of Labor Statistics announced that its consumer price index crept upward again in January, but the increase was largely the result of Florida's disastrous winter, which sharply upped fruit and vegetable prices. And the index only faintly reflected the discounts, trade-in allowances and bargain sales that have lately been trimming actual prices to consumers.

If U.S. labor unions would' quit pushing for a new round of wage boosts while the economy is drooping, retail prices might well decline far enough to stir plenty of consumer interest. In Manhattan, where the end of "Fair Trade" pricing on appliances brought a hot price-cutting war, housewives showed a frantic, elbowing eagerness to spend money for toasters, irons, rotisseries, clock radios.

"Dime-a-Dance." Perhaps the best economic news of the week was evidence of basic agreement between responsible Republicans and Democrats in Washington. The agreement was hidden by a barrage of partisanship touched off by Harry Truman's blast at the Administration's stony-hearted attitude toward the recession. Republicans replied in kind, waving at Harry such red-flag terms as "dime-a-dance oratory" and "typical Truman claptrap." Even the President joined in the counterattack. "The economy of this country is a lot stronger than the spirit of those people that I see wailing about it," he told the National Food Conference in Washington. Amid the flap, Capitol Hill's Joint Economic Committee quietly reported a bipartisan conclusion: if further easing of credit and "acceleration" of federal spending fail to end the .recession, then "tax reduction will be in order"--but "such action is not now recommended."

This position on tax cuts was precisely the Administration stand as set forth from different platforms last week by President Eisenhower, Treasury Secretary Robert B. Anderson. Labor Secretary James P. Mitchell and Budget Director Percival F. Brundage. The Administration, they said in effect, will urge cuts if the economy fails to perk up as expected. The promise underlined an essential fact about the recession: while the U.S. Government cannot prevent downturns, it is inescapably committed to combat them, whether the President is a Republican or a Democrat. Because of this commitment, Vice President Nixon could say with considerable confidence of his own last week: "The American people can make their plans for 1958 with confidence rather than fear!"

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