Recession Redefined

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The word "recession" appeared hardly at all in the news last week. In its place there were words of cheer. Retail sales in the first six months of 1947 reached a record high of approximately $51,377,000,000, more than in any full year before 1941. The U.S. Employment Service noted that employment was up to a new record of 58,300,000. It estimated that seasonal employment would boost the total to 59,300,000 by September. With prospects of industrial peace ahead, the stock market kept on advancing. The Dow-Jones industrial averages were up 4.43 points to 181.73.

Buoyed by such news, most businessmen began to find new and softer meanings for the term recession. After the downturn this spring, many an economist had feared a fairly sharp drop. Yet even in industries where there had been a sudden slump, notably textiles, the readjustment had been made with no more than a tooth-shaking jar. Now there was hope that other adjustments could be made in a gradual, orderly fashion. So when businessmen talked of recession, most of them no longer meant a big, sudden crack un the whole economy, but a continuation, industry by industry, of the readjustment already under way.

They still expected that the readjustment would speed up in the fall, after seasonal workers lost their jobs. And U.S. exports, which had taken up the slack in the economy so far, were still a big question. Unless bolstered by a U.S. program of foreign aid, such as the Marshall Plan, they were almost certain to collapse by year's end. But Wall Street felt that the aid would come, no matter how pinchpenny Congress now seemed. All this caused the Federal Reserve Bank of New York, the Sanhedrin of financial theologians, to say in its July report: "While individual commodity prices which got out of line may drop to lower levels, it is thought that the tendency of the overall price level is more likely to be one of gradual adjustment than of violent fluctuation. In many cases, the adjustment, which is already under way, is taking the form of improved quality at stable prices."