STATE OF BUSINESS: The Man Who Counts

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Much of the current worry over the state of the economy can be crystallized into a single concern: Will the consumer keep on buying, or will he succumb to the notes of pessimism and tighten up his purse strings? By the healthy ring of the nation's cash registers last week, it was clear that the consumer has not suffered any recession jitters. The Federal Reserve Board reported that department-store sales for the previous week jumped 7% above the 1956 level, and that for the month ending in mid-February, sales increased in all but one of the nation's twelve major purchasing zones.

One reason for the consumer's confident spending is the fact that he is so well heeled. The U.S. Department of Labor announced that the net spendable earnings and the buying power of factory workers rose in January to record levels for the month (though still slightly below the alltime peak of December 1956). Though the cost of living is rising (see NATIONAL AFFAIRS), millions of workers will keep up with it through automatic cost-of-living increases in their wage contracts.

The consumer has shown some reluctance to buy certain goods, e.g., sales of major appliances are off slightly. The big question now is whether this reluctance will carry over into new car sales, which regularly enjoy a big spring upsurge-though it failed to materialize last year. Auto manufacturers confidently produced an estimated 578,370 cars in February, 23,000 above last year's rate, and intend to continue high production into March. Though General Motors' sales are lagging and Chevrolet production is being cut this week, Ford and Chrysler are happily filling the gap, using heavy overtime to boost production. (Chrysler has already shipped 10,390 Imperials for 1957, more than all it sold of the 1956 model.) This year so far auto manufacturers are keeping inventories firmly under control so that even if a warm-weather upsurge fails to develop they will not be caught with last year's heavy stocks. But optimism is still far stronger than caution. Said a Chrysler official: "Our real worry is that we won't be able to build up enough inventory to meet the spring demand."