The Big Summer

Tradition has it that when hot weather spreads across the land, U.S. business slides into a slump. But in prosperous 1955, with Americans earning bigger wages, going more places, buying more goods, spending more money than ever before, the season's usual slump never came. As U.S. businessmen quickened their pace last week for September's bracing upturn, all signs pointed to the best autumn ever.

Summer wages had never been better.

July take-home pay for a factory worker with three dependents averaged $69.84 a week, up almost 6% from last year; for the seventh month in a row U.S. factories hired more workers than they separated. In August new claims for unemployment benefits dropped to 173,300, the lowest level in two years. Though farm income --the economy's soft spot--dipped 4% below last year for the first seven months, receipts for July took the normal seasonal gain over June, rose 10%, to $2.1 billion. "Most farmers," said Under Secretary True D. Morse, "are keeping financially sound."

Gains on the Rails. The summer of prosperity meant that Americans could and did enjoy themselves. Resorts were packed with vacationers. At home they snapped up more airconditioners, bought more motorboats, spent more money fixing up homes and lawns and gardens. In mid-August the nation's department stores showed a 6% sales gain over the comparable week for 1954. In fact, spending was so free that a cloud of inflation loomed on the horizon. Farm equipment prices moved up (an average, 6% for Ford Motor Co., 7% for Caterpillar Tractor Co. and Deere & Co.); building materials, coal, work clothes and soft goods were edging upward. But Administration economists were carefully watching the trend (TIME, Aug. 15).

Industry caught the spirit of optimism.

Dow Chemical Co. President Leland I. Doan, after telling stockholders that 1955 sales were running 18% ahead of 1954, said: "The outlook has never been better." Railroads were doing well. Union Pacific turned in a seven-month net of $42,388,048, up 20% from the comparable period of last year, and Illinois Central lifted its net a thumping 54% to $14 million. With 1956 auto production just getting under way and heavy construction still booming, steelmakers, already at 91.4% of capacity, wondered how they could fill their fall orders. The magazine Iron Age said that the demand for steel would sustain operations at 100% of capacity if only the steelmakers could reach that goal.

Roses on Wall Street. On the strength of all the rosy reports, the stock market, after a four-week pause to adjust itself to tightened credit (TIME, Aug. 29), bulled up again. Metals, railroads and building materials strode ahead, and the Dow-Jones industrial index closed the week at 463.70, a climb of more than 10 points for the week.

As summer closed with a flourish, the National Industrial Conference Board reported what businessmen thought about the rest of the year. Of the 131 major manufacturers in its survey, most thought that the record levels of employment (65 million) and gross national product ($385 billion) would hold up. Sales, production and capital expenditures might soar even higher. Half predicted that second-half profits would be even better than the year's first half, and more than three-fourths predicted that 1955 earnings before taxes would easily surpass 1954's. Said the N.I.C.B.: "Business in the remainder of 1955 will be just as good as it was during the record first half, if not better."

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