The Customer Comes Back

"Consumer confidence has begun to reappear," beamed Bernard Gimbel, berry-eyed boss of Manhattan's Gimbel Bros. Over at Macy's, Chairman Jack I. Straus was quick to match the Gimbel grin. Said he: "Our Christmas sales this year will come close to or break the season's record." From Burdine's in Miami to the Bon Marche in Seattle, U.S. retailers last week reported the same phenomenon: with "big ticket" items such as TV sets leading the way, department stores sales spurted 6% above last year's levels during Thanksgiving week, and many stores have done even better since then.

No one really knew just why the U.S. consumer has suddenly relaxed the stern budget watching that has been so severe a drag on the nation's economic recovery (TIME, July 21 et seq.). Scorning such psychological explanations as Christmas spirit or a diminishing fear of war, the economists could only note that more jobs, longer work weeks, and increased dividends for the nation's 15 million stockholders had lifted personal income by $4 billion in October to a record annual rate of $425 billion. Furthermore, though the cost of living has risen less than 1%, the average weekly take-home pay of a factory hand with two children is up almost 5% over a year ago.

Whatever the explanation, the omens seemed so favorable to Commerce Secretary Luther Hodges, himself an oldtime retailer, that he predicted overall Christmas retail sales would run 4% to 5% above last year's high levels. To justify his renewed confidence in the consumer, Hodges could point to the boom in auto sales, which in mid-November reached a record 23.070 cars a day. The rejoicing in Detroit was not shared equally by all automakers: though General Motors had boosted its mid-November share of the auto market to 54% and Ford held a strong 28%. Chrysler's share had dipped to 10.6% (from 12.5% a year ago) and American Motors' from 6.4% to 5.8%. But taken as a whole, the automakers had revised their 1961 sales predictions from 5,700.000 cars to at least 6,000,000, and some of them were even suggesting that sales in the last three months of this year might well top the alltime fourth-quarter record of 1,700,780 cars set in 1955.

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