Up Production, Up Prices

As the second quarter ends this week, Government economists felt better about the continued growth of the U.S. economy. In the April to June period, they estimated that the gross national product rose to an annual rate of $505 billion, $5 billion more than the first quarter, when the economy at last hit the magic half-trillion mark. The Administration's economic experts expect the G.N.P. to move up to $510 or $512 billion in the third quarter, to $520 billion in the fourth quarter. While this would be below the wild-blueyonder January estimates of some forecasters, the G.N.P. would average out for the year at close to the Government's earlier forecast of $510 billion.

Prices, too, are still going up. They edged up another .01% in May, to reach a new high of 126.3 (1947-49=100). These higher prices in turn will trigger an automatic pay increase of 1-c- to 2-c- per hr. for 200,000 workers, mostly in the aircraft and meat-packing industries.

Up Retail Sales. Despite the increase in prices, the actual purchasing power of the average factory worker increased by nearly 1% in May, after a four-month decline. This was due to an increase in the average work week from 39.4 hours to 39.8 hours. Consumer buying power was reflected in department store sales, which rose for the second week in a row and were up 3% over last year.

To the nation's gloomy steelmakers, the continued rise in the economy brought hope of an upturn for them. Although production in the first week of July is expected to be the lowest this year--about 50% of capacity--steelmakers still talk of a summer upturn. As Charles M. Beeghly, president of Jones & Laughlin Steel Corp., puts it: With the gross national product at more than a $500 billion annual rate, "something has to give. Either the steel industry will be called upon to support this activity level by increased production, or this record level will not be sustained. We believe it will be sustained."

Down Unemployment? The Labor Department also took an optimistic view of summer and fall labor prospects. In May there were 3,460,000 unemployed. June will add a half-million more. But by fall, the Labor Department hopes that unemployment will fall below the 3,000,000 mark for the first time since 1957.

The auto industry will give a big boost to employment by scheduling its biggest production since 1950 for September and October. Mindful of the election coming up, United Auto Workers President Walter P. Reuther saw that as a deep-dyed plot by Big Three carmakers bent "on juggling production schedules for political reasons." Once Election Day was past, and the Republicans were reelected, he went on, "output would have to be cut back drastically with resultant layoffs and extensive short work weeks." The Big Three angrily retorted that there was too much money involved and too deadly a commercial rivalry at stake for any such shenanigans. His charges, huffed Ford, "are false, irresponsible."

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