A Touch of Chill

After scooting along at sprinter's pace, the recovery seemed ready to slow down a bit to catch its breath. The Commerce and Labor departments reported last week that unemployment in mid-December rose nearly twice the normal seasonal increase, pushing the jobless totals above 4,000,000 and 6% of the labor force. Employment also slipped nearly 700,000 to 64 million. To some sensitive economists, the report brought worries that the recovery might be losing its zip. But the slowdown in employment, as had been expected (TIME, Sept. 29), was chiefly due to weather.

Winter's chill, with freezing temperatures blanketing most of the nation, had caused much heavier than usual cutbacks in farm, construction and other outdoor work. Employment in auto factories and many other heavy industries continued to rise, but at a slow pace largely because companies were working employees overtime rather than hiring new workers. In December factory paychecks rose to a record weekly $88.04, as company after company put its existing force on overtime. In turn, the overtime boosted the average work week to 40.2 hours, and to a point where companies must now start hiring new workers to achieve further gains in production.

Autos & Stores. Except for employment, business statistics were still on the climb. The Federal Reserve's key index of production climbed another point to 142 in December, was only three points short of the alltime high. Detroit's auto industry picked up more speed, with Ford, General Motors, Studebaker-Packard and American Motors all working some plants on a six-day week. Production so far in 1959 is 7% ahead of 1958. Steel production, also rising, reached 75% of capacity last week, the highest point in 15 months.

The sharpest rise was in housing, clipping along at the rate of 1,430,000 starts annually, just an eyelash away from record 1955. The U.S. consumer was also still spending heavily on anything else that struck his fancy. Chain-store sales in December topped 1957 by 9.8% with both Sears, Roebuck and Montgomery Ward reporting new records for the month; auto variety chains jumped 18.5%, drug chains 11.9%, shoe chains 11.3%, apparel chains 12.8%, grocery chains 8.5%.

The Magic Mark. The fast pace of the recovery was easy to see in the latest annual and quarterly earnings reports. In a preliminary estimate for 1958, International Business Machines' President Thomas J. Watson Jr. reported gross income up 17% to a record $1.17 billion, net income up 41% to $126.2 million and another record. Dow Chemical Co. was ahead 14% in profits for the quarter ended Nov. 30; Superior Oil Co. of California more than doubled its profits in the same quarter; such farm-machine makers as Deere & Co. and J. I. Case, such utilities as Pacific Power & Light, Bell Telephone of Pennsylvania, Southwestern Bell Telephone, all posted big gains.

With that kind of corporate news, Wall Street could hardly be expected to stand still. The stock market went on another buying spree, and by week's end the Dow-Jones industrial average stood at 595.75, after first posting a new high only .11 point from the magic 600 mark.

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