Threat to Health

Scarcely noticed in the long-swirling debate about how to achieve prosperity without inflation is the fact that since recession-shadowed early 1958 the U.S. economy has sensationally achieved just that (see chart). Last week Administration officials reported that the U.S.'s gross national product added up to an alltime record rate of $464 billion a year in the first quarter of 1959--a hefty $37 billion above the first quarter of 1958.

During the G.N.P.'s upswing, the U.S. cost of living held just about steady, meaning that the added output was solid growth, not mere bloating. Last week the Bureau of Labor Statistics announced that in February lower food prices brought the consumer price index down one-tenth of a point to 123.7 (the 1947-49 average = 100). That was two-tenths of a point below last November's record high, and only four-tenths of a point above the March 1958 level.

But ahead loomed a real threat to the economic health built up over the past twelve months: the United Steelworkers' demands for fat "general contract improvement" when current contracts with the steel companies run out on June 30. (Since January the Steelworkers have been running weekly newspaper advertisements touting the national economic benefits that would flow from an "Extra Billion Dollars" in Steelworkers' hands.) Big wage or fringe-benefit boosts in steel, with or without a strike, might well touch off a new wage-price spiral. Against that threat President Eisenhower gave stern warning at his news conference last week. "Here is a place where labor and management must show statesmanship," said the President, making an almost unprecedented statement on labor-management negotiations specifically impending. The "measure of their statesmanship" will be to see that steel prices do not go up. The Government should keep out of "the business of collective bargaining," said Ike, but if the U.S. is going to preserve its free economy, labor and management, particularly steel labor and management, will have to remember that "the whole public is affected by everything they do."

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