Too Good to Last?

To the naked eye, the skies over U.S. business were as bright as new-minted nickels. Last week the auto industry produced 102,098 cars and trucks, more than in any week since mid-1941. The steel industry, roaring along at 94.1% of capacity, was turning out far more steel than in any peacetime year. Many a prosperous company upped its-dividend, e.g., Du Pont from $1.25 to $2 and International Harvester from 65-c- to $1. Despite the worst freight-car shortage in 20 years, Barren's latest Weekly Production Index held at 117, within one point of the postwar peak.

U.S. business was, in fact, so good last week that some businessmen wondered: is it too good to last? The National Automobile Dealers Association, for one, thought it was. Meeting in Atlantic City, the dealers compared notes. They found that order lists were melting away far faster than expected because of 1) high production and 2) cancellations due to high prices and living costs. They expected that spot deliveries would be commonplace by year's end. Emerson Radio likewise took a dim view of the size of the market. In the first big break in radio prices, it reduced the price 20% on its leading portable model. There was little doubt that department-store buying, which had lagged since Christmas, was well down from the peak. Last week's sales were only 9-13% in dollar volume above those of a year ago. Counting the price rise in a year, current unit sales are probably below last year's.

Paradoxically, commodity prices, which had temporarily leveled off in January, were on the rise again. (Hogs reached this week the alltime high of $29 per cwt.) But the rise was viewed by economic crystal gazers as a last fling before prices settled down, as a result of temporary factors (bad weather and large Government grain purchases for export) rather than any new inflationary steam. At "the speed with which industry was spouting out goods last week, the time when supply would meet demand in most things--and when prices would settle down for good--did not seem too far off.

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