Mixed Signals

Is the U.S. headed for another prolonged struggle with double-digit inflation? So it seemed last month when the Government announced that consumer prices had surged ahead at a compounded annual rate of 15.4% in July. But the latest signs are inconclusive, if by no means reassuring. The Labor Department reported last week that wholesale prices -which usually foreshadow consumer price movements by several months -;rose by "only" 0.8% in August, after a big 1.2% jump in July. The August increase, which translates into a 9.6% annual rate, was held down mainly by a drop in prices for farm products, but the figures also showed ominous increases in the cost of many industrial commodities, including electric power, natural gas and oil, which will become more in demand as the weather cools and the recovery proceeds.

On the unemployment front, the jobless rate remained unchanged in August from July's 8.4% of the work force. While unemployment among adults dipped down encouragingly, from 7.3% to 7%, the rates for blacks (14%) and teen-agers (21.1%) were up once again. Other statistics confirmed that the recovery is continuing, however. Factory orders climbed 3.6% in July from a year ago. A robust $1.02 billion rise in consumer credit in July -the highest such increase in eleven months -suggested that Americans are regaining their willingness to borrow in order to buy major appliances and other big-ticket items. One disquieting note: corporations had scaled back their 1975 capital spending plans by $730 million between June and August, meaning that there will be that much less business buying to help finance the rebound from recession.

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