The Economy: Still Robust in the Third

Profit for everyone-this is what our profit system, our private enterprise system, our private risk system can and must accomplish.

-Frederick R. Kappel

As it speeds toward the end of the most prosperous year in history, the U.S. economy has gone far toward reaching that goal. After 44 months of heady expansion, in which corporate profits have soared about 50%, U.S. companies last week began releasing third-quarter earnings that guaranteed more shattered records-and then some. Profit figures in the third quarter rose 20% to pass $32 billion for the first time.

This well-being has been profitable for the entire economy, as corporations spend and expand, but it has also been shared in more specific ways. Personal income has risen steadily, and many executives will come in for fat bonuses this year. Last week the Commerce Department reported that cash dividends to stockholders have increased 10% since the first of the year.

Nearly every industry is setting new marks. Robust increases were reported by such varied companies as Alcoa (up 19% over 1963’s third quarter), American Cyanamid (24%), Caterpillar Tractor (76%), Continental Can (26%), Eastman Kodak (39%), IBM (12%), Polaroid (83%) and Weyerhaeuser (123%). Steelmakers, who face labor negotiations next spring, were pleased but slightly red-faced about their spectacular profits: Republic up 79% , Jones & Laughlin up 97% , Youngstown Sheet & Tube up 180% .

There were also losers, of course. While American Tobacco and Liggett & Myers forged ahead with sizable earnings increases, Lorillard slipped in nine-month earnings despite a third-quarter gain and R. J. Reynolds suffered a 12% setback in profits. Strikes caused a sharp 71% break in Kennecott’s profits, and Chrysler sputtered into a 50% decline because of unusually high changeover costs. These were the exceptions, but the good news contained a dividend of hope for them too. The current quarter, which is usually among the year’s most profitable for many corporations, is sure to be even better than the third.