The Nonbuying Mood

A rise in consumer spending is essential to the Nixon Administration's plan for an economic upturn later this year. But hope for that rise dwindled last week with the findings of a University of Michigan quarterly survey of 1.300 families, which showed consumers less inclined to buy than at any time in the 18-year history of the survey. During April and May, for example, the proportion of families intending to purchase new cars was 20% below the same period a year ago. Based on consumers' personal financial expectations and buying plans, the survey's index has been dropping steadily since President Nixon's first full month in office. It went down from 78.1 in this year's first quarter to 75.4 in the second. Because the findings have always led the changes in the economy by at least one quarter, the survey takers predict that the present slowdown will extend through the third quarter and probably until year's end. If so. the recession will have lasted twelve months, the longest stretch since 1953-1954.

The slump should continue to be mild-because consumers' buying ability remains strong: almost half of those polled said their earnings have increased over the past year. But people are reluctant to make purchases because they see no sign that inflation is easing, and they are increasingly worried about unemployment. The consumers' gloom will not be dispelled, says the survey, until the Administration produces convincing evidence that it is winning the campaign against rising prices and containing the spread of unemployment.

*Although now it is deepening. The industrial production index fell .8% in May, its biggest drop since November; it has gone down in eight of the last ten months.

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