Cautious

The sextants of economists are the business indicators, statistical pointers that help to chart the course of the U.S. economy. They range from measures as complex as interest rates and demand-deposit turnovers to such personally felt statistics as the amount of personal income. When the U.S. economy surges forward or turns sharply back, the indicators usually agree --and so do the economists. Now. with the economy resting on the highest plateau in history, business experts are nervously indicator hopping in search of some clue to its next shift. To some, it is headed for another recession or is already in it; to others, business has rested and is about to move forward again.

Wheels & Want Ads. Last week the economic indicators gave little guidance about the economy's future course. Industrial production in July held steady at 109 --for the fourth month this year. Auto sales are headed for the best August since 1955, but the steel industry is chugging along at less than 55% of capacity and steelmen now foresee less of a September upturn than they had expected. Weekly freight-car loadings, a favorite of the indicator readers, offered few clues: they edged up 0.9% after a two-week decline. July retail sales dropped i% from June, but personal income in July hit a record annual rate of $407 billion. Housing starts fell almost 10% in July from June levels --and were 26% below July a year ago.

For those who despaired of getting a bearing from the classical indicators, there was a handful of more modest straws to seize. Wheels, Inc., a Chicago auto-leasing firm, suggested last week that a good measuring rod of the economy is the distance a traveling salesman has to drive to make a sale--the farther the worse. Reported Wheels: salesmen drove 10% farther for each sale in the first half of 1960. Los Angeles' Security First National Bank, which carefully tots the number of help-wanted ads in local newspapers as a telling business index, reported that July ads were down 26% from July 1959, indicating weakening business conditions.

Election Year Caution. What the interplay of indicators--classical or makeshift--can never capture is the mood of the U.S. economy, which motivates most business decisions. Last week that mood was outspokenly cautious. The U.S. economy is temporarily without its most historic feature: momentum. This made the task of the indicator readers difficult and frustrating, but some put it all down to the fact that summer is typically the slack season for business expansion, and that U.S. businessmen are traditionally hesitant about making business decisions in an election year. As a so-so third quarter draws toward a close, most businessmen and economists still look for the economy to turn up in the fall.

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