Steam Up

Most economists agree that sustained U. S. recovery depends on a real rise in demand for producer goods. Last week there were signs of such a rise. Meanwhile, General Motors' report on 1938 earnings brought home last year's ominous disparity between recovery in consumer and producer goods.

General Motors is the biggest unit in the great U. S. automobile industry (consumer goods). G. M. had a 1938 profit of $102,320,000 compared to a 1937 profit of $196,436,598. The last quarter of 1938 was the ninth best in G. M. history, contributing $63,932,000 (about 62%) of the year's net.

U. S. Steel is the biggest unit in the biggest of U. S. producer-goods industries. Compared to a 1937 profit of $94,944,358, U. S. Steel had a 1938 deficit of $7,755,914 --despite a final-quarter pickup in operations which earned a profit of $4,394,454.

First among last week's omens of better times was the news that steel operations reached a 1939 high of 53.4% of capacity and that U. S. Steel's January shipments were the largest in 15 months, with heavy steels rising in proportion to light.

Other portents: Settlement of the TVA fight (TIME, Feb. 13) apparently cleared the decks for utility modernization, and last week another major purchaser of producer goods--the railroads--seemed hellbent on a spending spree. Union Pacific announced a $15,000,000 expansion program--new rails, box cars, locomotives and remodeled coaches. Missouri Pacific ordered $1,500,000 worth of rails. All told, railway-equipment manufacturers said that already this year they had received orders for 375,000 tons of rails, only 25,000 tons less than 1938's total orders.

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