STATE OF BUSINESS: Banner Year?

Before a midyear Washington conference of business leaders in the U.S. Chamber of Commerce Hall of Flags last week, Dr. Emerson P. Schmidt, top U.S. Chamber economist, unfurled a banner prediction: "Nineteen fifty-six promises to be our best year in history in terms of production, employment and earnings. This prosperity ought to carry over into 1957."

Most businessmen at the symposium agreed with Dr. Schmidt's judgment that the year's "readjustments are, for the most part, behind us." Construction seems likely to top the record $44 billion mark forecast earlier this year by the U.S. Government. Steel production in May soared over the 10 million-ton mark for the eighth straight month. While home building trailed last year's record level by 17% in 1956's first five months, largely because of the credit pinch, the Administration hinted last week that easier mortgage money is on the way. Auto dealers throughout the U.S. were paring inventories of unsold 1956 models at the rate of 4,000 cars a day.

Despite auto layoffs, employment and factory earnings in May topped last year's record levels for the same month. The brightening outlook was reflected on Wall Street: the stock market last week more than recovered the points lost on news of President Eisenhower's illness.

One big "if" in the outlook is the steel industry. In Manhattan, the Steelworkers angrily rejected industry proposals for a five-year contract, dismissed as "picayune" the companies' offer of an annual 6tf hourly raise and other benefits (including premium pay for Sunday work, starting in 1959), which the companies said would boost labor costs 65¢ an hour in five years. Snorted Steelworkers' President David McDonald: "The titans of industry have labored and brought forth a louse." But most steelmen remained hopeful that a contract would be signed by the July 1 deadline.