The Momentum of Growth

At midyear the booming U.S. economy was turning out goods and services at the rate of $479 billion a year and growing so rapidly that many Washington economists now expect it to pass the half-trillion mark before mid-1960. Behind this confidence was the economy's amazing expansion so far this year. Estimates last week of the growth that took place in the April-June quarter showed that the gross national product annual rate rose $12 billion over the first quarter, $5 billion more than expected. Added to a $14 billion gain in the January-March quarter, this made a rise in the annual rate of $26 billion in six months, close to the $30 billion the President and his advisers predicted for all 1959.

Wherever they looked, Government economists saw almost breathtaking change. Personal income jumped $29 billion over the second quarter of 1958 to an annual rate of $380 billion, a new high. Industrial output rose 22 percentage points over June 1958, to 154% of the 1947-49 averages. As consumers opened their purses, retail trade in the first six months jumped $7.5 billion to a new high of $102.5 billion. In the process, it gave a long-delayed boost to many an industry that earlier watched the parade of recovery go by. TV setmakers, for example, expected 1959 shipments to exceed 1958's 4.8 million by almost a million, as individual manufacturers' six-month sales gains ranged as high as 30% for Emerson. 50% for Sylvania.

Housing starts, which gave the recovery so much of its original momentum, rose from 515,000 in the first half of 1958 to 690,000 in the first six months of this year. With the rise came a sharp upward pressure on housing costs. ARCHITECTURAL FORUM reported that the index of building-materials prices jumped 2.7% between January and June, against a 2% gain for the whole of 1958. But other prices were holding steady. Sears. Roebuck, Montgomery Ward. Spiegel, and Aldens Inc. announced that their fall catalogues will show no overall price increase, and some prices are lower.

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