Midsummer Express

The Congressional Joint Committee on the Economic Report thought it had some fever-hot news: U.S. employment, production, income, prices and profits were all close to record highs in June. Yet by the time the committee reported its figures last week, they were already out of date. Everything had gone higher--and was still rising.

The pacesetter in the new whirl of the inflationary spiral was a 9% wage hike by U.S. Steel Corp. (see NATIONAL AFFAIRS). Big Steel's Ben Fairless promptly announced that steel prices would have to go up also. Bethlehem Steel Corp.'s Eugene Grace and most of the industry followed Big Steel's lead on wages, and began figuring price increases, too. In addition to the wage increase, the new prices would also have to cover higher coal prices (which added up to $1.25 a ton to the cost of finished steel) and a freight rate increase which hit in May, just before the industry cut prices (TIME, May 10). The weekly Iron Age estimated that steel would go up as much as $10 a ton--a whopping 16%.

Confusion Confounded. The new increase will be piled atop the boosts made last week because of the new f.o.b. system of selling steel. Some of last week's increases: about $5 a ton in Philadelphia, $4-plus in Cleveland, up to $8 in St. Louis. On top of these some companies piled extras, pleading the elimination of the basing-point system (TIME, July 19). 'Detroit's Great Lakes Steel Corp. made its new f.o.b. prices $4 a ton more than the old ones, to match those of distant competitors, plus freight to Detroit.

By the time the confusion over basing points is cleared up*--and the new raises added--some steel users expect to be paying as much as $80 a ton for finished steel, up to 30% more than last month. A sprinkling of new wage increases also sent up the prices of glass, copper wire and cable (5% to 13%) and dozens of other items. (United Air Lines, Inc. applied to the Civil Aeronautics Board for a 10% rise in passenger rates.)

Raises Compounded. The most painful . rise of all came jn food, the one item that housewives might have expected to drop, in view of bumper crops in prospect. But damand was also up, thanks to civilian employment, which had reached a peak of 61,296,000 in June, 1,217,000 more than ever before. Thus, the price of meat in Kansas City soared to a local record of $40.50 a hundred pounds for beef steers, and a world record of $34.25 for feeder (i.e., still-to-be-fattened) steers.

When New York City officials urged housewives to buy substitutes, they found flounder up 10-c- a pound, salmon up 8-c-, eggs up 2-c-. Dun & Bradstreet's wholesale price index of 31 foods jumped 3% during the week to an alltime high of $7.36. The way things were going, some economists predicted that by year's end the U.S. would find its cost of living up another 7%.

Trouble Compounded. For all that Manhattan Butcher Anthony D'Amelio angrily boarded up his shop and Boston Dealer Malcolm McCabe called meat packers "a bunch of robbers," there was no effective buyers' strike against the stratospheric prices. Along with higher wages, consumers had more liquid assets than ever to spend ($130 billion in Government bonds and bank accounts alone, according to the latest Federal Reserve Board survey), and were spending them. In place of an expected midsummer lull, retailers reported that the dollar volume of sales across the U.S. last week was up 6% to 10% over last summer.

When will the new upsurge reach its crest? Looking at the new increase in domestic demand, most businessmen thought the crest was still months away. And the economy has yet to feel the impetus of ECA. When it comes, businessmen feared it would bring material and manpower shortages that would curb production and thus run up prices still more.

* To speed the day, the Department of Commerce last week issued a map, so that buyers could determine which source of supply was nearest, and possibly get steel cheaper. The map showed the location and ownership of all steel mills in the U.S., their capacities, type of furnaces, etc.

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