Cash for Expansion

From the Council of Economic Advisers came a report confirming what most businessmen suspected: profits are back to prerecession levels, and climbing. At $21.6 billion for the fourth quarter of 1958, after-tax profits showed a $3 billion jump from the third quarter; undistributed profits, or the money companies still have after taxes, dividends, etc., were up to $9.8 billion, the highest level since the first quarter of boom year 1957. The high profit level, plus the assurance of a fine first-quarter report for 1959, gives U.S. industry plenty of money in the bank to keep the recovery rolling. Many a corporation will be able to dust off the expansion plans shelved during the recession, and once the spending starts, the floodgates are liable to open for another big round of new plant and equipment investment.

The signs of expansion are already evident. First-quarter construction volume hit a record $10.9 billion. Manufacturers' sales in February edged up 1 1/2%, while new orders climbed 5%. February inventories reached $50 billion, up $250 million from January, though still $2.7 billion under the corresponding 1958 figures. As for the U.S. consumer, who triggers all the activity, he was once more increasing his debts to buy industry's products. Consumer installment debt in February rose $333 million to $3.8 billion, highest monthly gain but one in three years.

One big gainer from the borrowing was Detroit, which has visions of the balmiest spring selling season in years. Ford's advance orders are so big that it will boost April production 20% to 140,000 Fords, biggest April since 1955. And despite labor troubles, Chrysler surprised everyone by announcing that it was "comfortably in the black" in the first quarter of 1959.

This file is automatically generated by a robot program, so reader's discretion is required.