Passing the Peak?

Though some businessmen worried about deflation, the enemy, on the record, is still inflation. In February, for the sixth straight month, reported the Bureau of Labor Statistics, the cost of living jumped another notch, rose .4% to a new record of 118.7 on the 1947-49 average, 3.6% higher than February of 1956. Except for clothing, every major group of consumer goods was more costly, with food prices up .7% for the month to a Ievel 4.4% higher than at the same time last year. Will the rise continue? Said Labor Statistics Commissioner Ewan Clague: no one can tell "because there are so many factors moving in different directions."

Other economists thought that inflation's peak had probably passed, at least for the time being, but that the overall index might well rise higher in the next few months owing to the time lag on slow-reacting items such as housing. More sensitive indexes charting the prices of wholesale goods, especially raw materials, already seemed to be tapering off or falling. And though consumers are still buying heavily, they are not so anxious to go into debt. Said Chase Manhattan Bank President George Champion: "The tendency to overextend consumer credit is beginning to right itself. Down payments have been stabilized, and maturities are no longer lengthening."

As businessmen weighed the evidence last week, took note of the countermoving inflationary and deflationary forces, few saw any reason for pessimism about 1957's business prospects. Some predictions: P: Borg-Warner Chairman Roy Ingersoll, who is spending $26 million for expansion this year: "We have good reason to anticipate improvement in 1957 in many of the industries which Borg-Warner serves. Sales are on the upcurve in automotive and farm-equipment parts, chemicals, aviation components and oilfield tools." P:General Shoe Corp. Chairman W. Maxey Jarman: "People are buying freely. Employment is good. Retail business will definitely be up this year. I can see no signs of a recession or depression." P: Walgreen Co. President Charles R. Walgreen Jr.: "There are no signs of a recession in the drug industry. We are experiencing the best year in the history of our business--both in volume and profits." P:CJ Coca-Cola President William E. Robinson, just back from a swing through company plants around the country: "With the availability of goods high and profit margins smaller, the consumer goods industry has the most competitive year we have seen since the war. But I found a sober, realistic, serious optimism that is based on a hardheaded analysis of conditions in every region."

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