More Billions from Defense

From the Pentagon came new figures showing that the major impact of stepped-up Defense spending still lies ahead for U.S. business. In fiscal 1958. just ended, new orders--the key to future activity--rose from $2.1 billion in the opening quarter to $3.9 billion in the second, $4.7 billion in the third and an estimated $5.3 billion in the final quarter. New construction orders rose even more swiftly than the overall rate: from a $40 million-a-month level last fall to $300 million in June.

Because of production lead time, the actual cash payments from the Pentagon went up more slowly, reaching $38.7 billion for the year, v. the $39.1 billion expected. The shortfall throws that much more actual spending over into fiscal 1959. Last week the Defense Department scratched the most recent estimate for 1959 spending of $40.5 billion and wrote in $40.7 billion, probably only the first of several upward revisions.

Slowest segment of the economy to respond to the Department's turnaround on spending is the aircraft industry. While Defense has placed many new orders, most companies are just entering the stage of stepped-up employment. With orders nicely backlogging. the spurt of inventory building and deliveries is at least three months away.

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