"Upstuck"

As the U.S. economy headed into the post-Labor Day period, there was a freshly expectant mood among U.S. businessmen. Factories were revving up across the nation, Detroit was spewing out new cars, and demand for everything from appliances to used cars was on the rise. With new optimism, the First National Bank of Boston reported: "Our economy seems sounder than a month ago."

Early this summer, after Wall Street's long slide clipped $77 billion off the value of U.S. stocks, many people presumed that a recession loomed dead ahead, and more than a few whispered Depression. Now that no such calamity has occurred, the public is coming around to accept what the savvy economists were saying all along: the recovery is not so bouncy as it should be and will likely start to "top out" sooner than originally hoped. But it still has some steam.

More on the Cuff. "Things are pretty good around here," smiles Kansas City A.F.L.-C.I.O. Leader William Lewis. "You can see it mostly in the way the working stiff is spending his money--money he hasn't even earned yet but feels confident he will." Opening new charge accounts, shoppers last week queued up in four separate lines in the credit department at Montgomery Ward's in Kansas City, and the picture was much the same in other department stores around the country. Consumer installment credit, up $2 billion for the year, swelled to a record total of $45 billion in July and helped lift retail sales to a new peak of $19.7 billion.

Much of the increase in credit was for payments on cars. In a strong end-of-season market, new cars are selling for $50 to $100 more than a year ago, and some dealers are already running out of '62 models. To catch up, Detroit plans to produce well over 1,100,000 '633 in September and October--almost 25% more cars than in the same period a year ago. U.S. manufacturers in general expect to increase their output this autumn: their new orders rose by almost $1 billion in July. Said Crown Zellerbach Corp. President Reed O. Hunt: "Everybody talks about business easing off later in the year, but we've seen no sign of it."

Zigzagging. Despite the general optimism, in many areas the economy seemed to be zigzagging, scoring no clear gains or losses. Unemployment grew worse last month, rising from 5.3% of the work force to 5.8%. Part of this could be explained by the fact that vacationing teachers were counted as "unemployed," but part of it represented a genuine increase in the rate of joblessness. On the other hand, the total number of Americans at work, which usually falls in August, rose by 200,000 to a record 69,762,000. The explanation: the number of jobs in the U.S. is increasing, but not as fast as the work force.

Just as inconclusive was the situation in the nation's basic industry: steel. Though the steel companies were producing at only 56% of capacity v. 69% a year ago, their output rose 10% in August, and some steelmen expect gains of up to 2% a week through Christmas.

"We'll Muddle Up." How does the economy look in sum? "Stagnation on a high plateau" is the way it is described by the National Association of Purchasing Agents, which would not be surprised to see a recession in the next two to seven months. Says Jewel Tea Co. Economist William Tongue: "It's 'upstuck'--up but stuck." But Tongue figures that "we'll muddle up a bit more gradually. Given the stimulus of a tax cut next year, we'll continue up in '63." One belief is common: whenever it comes, the next dip will be shallow and brief because production now is moderate, inventories are lean, and personal incomes and savings are higher than ever.

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