Full Speed at Half Time

As 1956 passed the halfway mark, every economic indicator pointed to prosperous times for Canada: plentiful jobs, increased wages and booming business. The only worry was that some of the spiraling factors would get out of control, upset the balance, and bring on inflation.

In the year's first half:

P: Employment reached an alltime high of 5,664,000, while wages and salaries climbed 10% above the 1955 figure.

P: The gross national product rose to an annual rate of $28.3 billion, indicating a 6% increase over last year's record.

P: In the first two months of the fiscal year (April and May), the government piled up a budget surplus of $274 million, more than double its 1955 cash balance.

P: Stock-market prices, indexed at 248.5 in January, shook off the effects of profit-taking sprees and moved to 270.

Even in the face of such rosy statistics, a few government economists tried to peer beyond the immediate prosperity and warn about its possible effects. With business so good, many companies are undertaking major expansions; as a result, the imports of steel, machinery and other supplies from abroad (mainly the U.S.) are running up a record trade deficit. The demand for goods of all kinds by the well-heeled Canadian consumer, as well as increased wages, is tending to raise prices. Although the cost-of-living index has held fairly steady since the first of the year, there are signs that it may be heading upward. Bread prices increased 1-c- a loaf last week; soft-drink dealers added a penny a bottle; brand-name coffee rose to $1.27 a pound.

The government has already taken action to curb some of the spending. Central-bank interest rates have been moved steadily upward to 3%, and the order has gone out to chartered banks to tighten mortgage money for business and home loans. Businessmen and builders whose plans have been stalled by the credit curbs have protested, but the government has no intention of loosening up the supply of money. To all appearances, the present flow is ample to keep the economy expanding.

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