State of Business: The Bright View

Most of the nation’s economists appeared to think last week that the recession had at last hit bottom. Typifying the more confident mood, William F. Butler, vice president for economic research of the Chase Manhattan Bank, predicted that a vigorous recovery will boost the U.S. economy to a level of “full prosperity” in 1962. “The potential exists,” said Butler, “for a good rate of expansion in markets for private durable goods, business plant and equipment, housing, automobiles, appliances and other consumer durable goods.”

The economists’ expectations for the future are still more hope than fact, since a recession usually bottoms out before the statistics record the event. The wariness still felt by many businessmen was reflected by President Kennedy, who noted that it is “impossible to make any judgment” about whether a spring upturn in the economy will produce a real boom. Walter Heller, chief of the President’s council of economic advisers, emphasized that he looks for the recovery to develop at “a relatively slow rate.”

The biggest bar to full recovery remains unemployment. Labor Secretary Arthur J. Goldberg announced last week that 25 more areas have been added to the list of labor markets in which at least 6% of the local work force is without jobs. That brought the total of such areas in March to 101—fully two-thirds of all the nation’s major industrial areas, and the highest such total on record. In the 1958 recession the peak was only 89 areas. The Labor Department also announced that the consumer price index, which dropped in January for the first time in 13 months, rose one-tenth of 1% in February to return to December’s alltime high of 127.5% of the 1947-49 average.

Nonetheless, evidence of better economic prospects was becoming more plentiful. In anticipation of an early Easter, shoppers boosted sales in the nation’s department stores 9%—and merchants looked for a record Easter. The upsurge in spring auto sales continued in the second ten days of March; Detroit now expects a 32% gain over February for March as a whole—though March’s total would still be 13% below March of 1960. Production of trucks and autos increased 17.8% last week, and Detroit predicted another gain for this week, which would keep the auto industry abreast of its production target for March.