Set to Roll?

The pulse-takers of the economy sounded more optimistic last week than at any time since the year began. As the first quarter ended, New York's Guaranty Trust reported in its monthly survey that businessmen had virtually stopped talking about a slip in business, more and more were talking about a "boom already set to start rolling again." In Washington Commerce Secretary Sinclair Weeks said that business activity was hitting a pace undiminished from the record rate reached in the final 1955 quarter, with chances "better than even" that '56 business would top the previous year.

Behind the optimism lay concrete achievements. Manufacturers sold $2.5 billion more goods in February than the year before, recorded $3 billion more in orders. Employment headed for a first-quarter record, while the Labor Department reported take home pay at a high for the month of February, 5% better than in February 1955. Structural steel fabricators closed their swollen books for February with 40% more orders than in the same month a year ago. Steel scrap rose as much as $6 a ton in one of the sharpest rises in history, and March steel output was expected to break all monthly records. As business loans continued to rise, top Manhattan banks hiked interest charges for brokers' loans on securities from 3.5% to 4%, the highest rate since the early '30s.

Scattered preliminary first-quarter company reports bore out the bullish picture. Texas Co. President Augustus C. Long predicted better first-quarter earnings for Texaco than in '55; Consolidated Foods netted 29% more in the 36 weeks ending March 10 than in the like period a year before; Granite City Steel forecast a first-quarter record for steel shipments.

Although auto output, the major soft spot in the economy, continued to sink, the industry was actually doing better than it seemed. For while production was down 20% in the first three months under '55's first quarter, retail car sales were down only 5%. The industry was now underproducing for the market, where last year it was overproducing. At midweek in Detroit, while some companies were still laying off employees, Plymouth recalled 2,400 workers.

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