STATE OF BUSINESS: Sales Surge

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Retailers, who gloomily saw sales slump a month ago, last week had plenty to cheer about. A last-minute burst of holiday shopping wiped out losses of early December. Last week's sales, said the Federal Reserve Board, were so "extraordinarily good" that they boosted December's retail total to 1% or 2% above the 1956 record.

Even better, cash registers kept on jingling merrily after Christmas. "Our post-Christmas season started off with a bang," said Rich's department store in Atlanta, which broke all holiday sales records. Reported Dallas A. Harris & Co.: "Crowds on Dec. 26 were just fantastic."

Businessmen found less cheery news on the credit front. Money was about as tight as in November, when the Federal Reserve Board cut its discount rate from 3½% to 3%, and there was a growing grumble of complaint about it. Last week Harvard Economist Sumner Slichter added his voice. Tight money, said he, is actually defeating the Fed's purpose of fighting inflation. Wrote Slichter in Business Scope, a biweekly published by professors: "The present recession is largely the result of overdoing credit restraint, and is causing us to consume valuable inventories of goods and to reduce the rate at which we construct much-needed plant and equipment. In other words, the recession is making it easier in the long run for demand to outrun the supply of goods. Hence, the present recession tends to increase the likelihood of a rise in the price level."