THE ECONOMY: A Change in the Wind?

As the stockmarket has gone steadily down, Wall Streeters have commented sardonically that Stock Exchange President Emil Schram has been the only businessman to reduce prices. But last week even this pinch-of-salt joke lost its savor. Waves of selling pushed many blue-chip stocks down to new lows for the year, caused others to fall as much as seven points in one day. U.S. Steel slipped more than four points, Chrysler more than nine points, rock-bedded A.T. & T. nearly five points. By week’s end the Dow-Jones industrial average had fallen 8.31 points to 163.21, the lowest since last October.

The slump seemed all the worse for the fact that it occurred in the face of good news. In general, first-quarter earnings had more than matched the high hopes. Businessmen were getting the kind of labor legislation they wanted. More, the Department of Commerce reported that in the first quarter, production of goods and services had continued to increase. The increase over the preceding quarter was small, indicating that the boom was about at its peak. But that peak was at an annual rate of $209 billion for the gross national product, as high as the alltime peak reached during the war.

Then why did the stockmarket take such a dim view of the future? The answer seemed to be that the day-by-day reports on business were not as comforting as the look backwards. The National Retail Dry Goods Association found that 65.9% of its members are up against a spreading buyers’ strike. Other businessmen have also noticed here & there a drop in employment, a rise in consumer credit, a jump in inventories, a drop in sales.

No one of the changes was big enough to be very important in itself. But as straws they were ominous. Pessimists groused that the much-heralded recession had already quietly started. Optimists kept their fingers crossed.