Cold & Uncomfortable

The economic news of the week was as chilling and uncomfortable as most of the nation's weather.

The drop in inventory buying that had helped bring on the recession showed signs of accelerating. The Commerce Department, which reported that total business inventories were reduced another $450 million in December, fears that liquidation in the first quarter of 1961 may be greater than in the fourth quarter of 1960. Its guess: the liquidation rate of $4 billion in the fourth quarter may rise to $5 billion or $6 billion in the current quarter.

Unemployment in January rose less than seasonally, but still climbed 850,000, to 5,400,000 people. The number of long-term unemployed (more than 15 weeks) took a sizable jump, from 1,000,000 to 1,300,000.

Both inventories and unemployment have been affected by the cutback in auto production. The industry, faced with a backlog of more than 1,000,000 unsold cars, has already cut its scheduled February output back to the January level. To the 31,000 laid off in the industry by. mid-January, another 80,000 will be added in the next fortnight with the short shutdown of General Motors, Ford, American Motors and Plymouth plants.

Sales and new orders of manufacturers both dropped 1% in December on an adjusted basis, and manufacturers' unfilled orders stood at their lowest level in ten years at month's end. Consumer credit in December expanded $76 million, the smallest gain since October 1958. Automobile installment credit, the largest single category of installment buying, failed to make a gain over the previous month for the first time in two years. In January, department-store sales across the nation suffered a 3% decline from the same month last year, and a 3% falloff from December. The Commerce Department also reported that the rate of spending on new construction in January fell almost 15% below December; the usual seasonal falloff is about 13%.

Despite the preponderance of bad news, there was still a lively hope of better things to come in the economy, as exemplified by the stock market's frisky performance (see below). If wishing can make business better, Miami business leaders are sure they have just the thing. They have set up a campaign to promote optimism, taken the motto "BIBA" (for Business Is Better Already). Last week, to singing and bands, they publicly burned "Gloomy Gus" in effigy while the audience recited the BIBA pledge: "I will say the word, I will wear the badge, I will sing the song, and I will not pass bad news along."

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