Sales Yes, Jobs No

More signs of business upturn appeared last week. Housing starts jumped a sharp 10%, marking the third straight monthly rise from the December low. There was a $3.5 billion pickup in personal income to an annual rate of $409.5 billion--the first gain since last October. Retail sales were still up 1% over February, to an $18.1 billion annual rate. Government economists have increased their estimates of the gross national product for the second quarter from a $502 billion-to-$503 billion annual rate to a range of from $505 billion to $510 billion.

Auto dealers were beginning to wear a trace of a smile as new car inventories hit a twelve-month low of 936,000 cars. By the end of April, dealers expect to slash this figure to 900,000. Now that dealers were beginning to empty their showrooms and back lots, passenger-car production climbed 20% to the highest weekly level of the year--112,551 new cars. The automakers have scheduled a 7% increase in April production to 415,000 cars.

Steelmakers were nervously watching the performance of the auto industry. "Any buying that the auto companies do for the 1961 models will be done this month or next," said Inland Steel's Chairman Joseph Block. "And it will depend very much on what the consumer is doing. We live in hope that the situation will improve." But automakers doubt that there will be any increase in steel orders before the 1962 models are ordered in June. Steel production rose 3.9%, the fourth increase in a row, but last week's gain brought steel to only 59% of capacity.

Unfortunately, the pattern is still of an upturn that does not end unemployment. There are 5,500,000 unemployed, 1,800,000 of whom have not had work for at least three months. As a remedy, William McChesney Martin, chairman of the Federal Reserve Board, last week proposed a "harsh doctrine" to U.S. businessmen: across-the-board price cuts. "Throughout our country, we must not only increase our productivity, but also pass some of the gains on to the consumer in the form of lower prices, rather than having all of it go exclusively to labor in higher wages or to management in higher profits," said Martin at the annual meeting of the Association of Reserve City Bankers. "By this means, demand can be stimulated to provide more jobs for those who are now unemployed, and to keep the economy moving to higher levels and still greater job opportunities in the future."

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