Business: Pleasant Combination

“That’s very good,” beamed Presidential Economic Assistant Raymond J. Saulnier. “That’s a very pleasant combination.” The combination that pleased Saulnier was one that took some of the edge off inflation worriers: the first drop in the cost of living in two years, and an auto settlement (see below). What dropped the Consumer Price Index .2 to 123.7 was tne usual late summer decline in food prices as fruits and vegetables came to market in quantity. As food prices continue to drop, the index may edge still lower this month, though higher prices for clothing and new cars will keep any decline slight.

Settlement of the Ford auto negotiations cheered Washington even more by removing a major threat to the recovery. Washington economists now see the gross national product climbing steeply to an annual rate of $440 billion this quarter v. $429 billion in the second quarter and an alltime peak of $445.6 billion last year. Steel production was scheduled last week at a 1958 high of 66.6% of capacity; with incoming orders likely to lift the rate to 75% in the fourth quarter. Keeping pace with the increased tempo, rail carloadings hit a 1958 high of 665,999 cars, only 10.1% under the like week in 1957.

Sales of appliances continued to pick up, led by home freezers. The Frigidaire division of General Motors had to recall 500 additional employees, making a total of 1,250 rehired since Aug. 1. Reporting its August sales were better than August 1957, General Electric said: “The consumer is back in the marketplace. We feel confident the upturn will continue.” Consumers have plenty of money to spend; personal income, which remained high all through the recession, hit a record annual rate of $355.6 billion in August, up $1.4 billion from July and $3.5 billion more than August 1957. And department store sales were running 4% over 1957. Topping off the week’s optimistic news, the Hat Corp. of America reported a sharp jump in sales of $40 hats—which could be a measure of executive confidence.