Spring Buds

Some gloomy guessers had feared that 1949 would not see the usual seasonal spring upturn in the U.S. economy. But last week, there were hesitant signs that it had started.

Unemployment, after reaching a peak of 3,221,000 in mid-February, had eased slightly. In March, the U.S. Department of Commerce reported, employment had increased by 479,000, mostly on farms. (Since newcomers had entered the labor force, the drop in unemployment was only 54,000.) Another bright sign came from General Motors. Demand for its cars was still so big that, with steel in better supply, G.M. last week stepped up production by shifting key departments to a 54-hour week (v. 40 hours before), with a 30% increase in take-home pay for the workers affected.

Despite all the talk of retrenchment, the Securities & Exchange Commission and the Department of Commerce reported that retrenchment was more a word than an actuality. After a poll of hundreds of U.S. companies, SEC estimated that spending for new plants and equipment this year would be only 4.7% under 1948's record of $19.2 billion.

Yet there was no question that the shakeout of inflated prices was spreading and that consumers had tightened up their spending. In addition to cuts in the price of whisky and Ford cars (see below), there were reductions in many basic products, such as lead, zinc, copper, tallow. In its new midseason catalogue, Sears, Roebuck listed many prices anywhere from 10% to 50% cheaper than in its January book.

Amid these signs of deflation, President Truman stubbornly insisted that inflation was still the threat. But most Government economists were talking differently. Dr. Ewan Clague, Commissioner of Labor Statistics, estimated that the cost of living might drop 10% within a year. Outspoken Marriner S. Eccles, Federal Reserve Board member, agreed that the time had come to drop talk of inflation. Said he bluntly: "I believe we have been in a recession for several months. But it will not be too severe nor of long duration."

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