Fair & Warmer?

After a winter of snow and recession, the weather turned warmer across much of the U.S. last week, bringing customers out and nurturing business hopes that the economy will soon hit the upward trail.

Though the signs of improvement are scattered, they are more numerous than they have been for months. One critical exception: employment.

The Labor Department's preliminary estimate of unemployment in mid-February was up some 400,000 in a month, or four times the normal seasonal rate, to a total of 5,800,000 jobless. This meant that 7% of the work force is unemployed, up from 6.6% in January. But there was one hopeful note: new claims for jobless benefits declined some 33,000 in the last reported week, indicating that the worst may be over.

Too Many Cars? The disappearance of February snows brought car buyers out. After a grim initial ten days in February, auto sales for the second third of the month rose 11%, jumped another 13% in the final third. Even so, auto sales through mid-February are still trailing the same period last year by an unhappy 23%. Talking optimistically, automen hope February's rousing finish is the start of a spring surge. But Detroit is taking no production gambles. For the first two months of 1961, production was down 42% from 1960's January-February output of about 1,300,000 cars. Automakers are still braking the assembly lines.

Chrysler shut down entirely; Ford, Chevrolet and Studebaker closed plants. The industry last week assembled only some 92,500 cars v. 100,000 the previous week.

The sales surge helped pare dealer inventories by some 25,000 cars, but even so, dealers still have slightly over 1,000,000 cars on hand. In part, Detroit's production cutbacks reflected the complaints of overstocked dealers. Automakers argue that dealers had almost the same number on hand this time last year, but the dealers reply that sales were better last year.

Detroit is also trumpeting the theme that with the variety of new compacts and models of the standard lines, dealers need big inventories to satisfy customers.

Many dealers are not convinced. Says Chicago Chevrolet Dealer George Bond: "It's impossible to fill every order from stock anyway." Adds an Atlanta dealer: "If you tried to stock every single model in every single color with every single type of equipment, you'd come up with 10,000 cars." Many dealers think that Detroit is putting out too many models as it is, and that car buyers are simply confused. "I'm convinced we could sell just as many cars with fewer models," says another Chicago dealer. "We've heard from Detroit that they are discontinuing some models next year, and that suits us just fine."

Bottoming Out Steel? Despite lagging auto production, the steel industry continued to show signs of gradual upturn, a turnabout from last year, when steel output dropped despite the second-best year in Detroit's history. Steel production held steady at an estimated 55% of capacity, an eight-month high, pushing February's output 7% over January's output. "We think that the special recession in steel has passed its bottom," said Avery C. Adams, chairman of Jones & Laughlin Steel Corp. Steelmen are also keeping a ready eye on the weather: the F. W. Dodge Corp. announced that awards for new construction in January climbed 15% above a year earlier--and a spring building surge would give steel sales a hefty boost.

Retailers were already enjoying the benefits of balmier weather. Department store sales jumped 11% over the same period last year, boosting February totals 4% over blizzarded January. Moreover, the consumer got a break as well. The Labor Department announced that for the first time in more than a year, the consumer price index failed to rise. Led by lower prices for clothing, used cars and food, the January consumer price index declined 0.1%.

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