The Morning After

(3 of 9)

NEW ENGLAND, whose chronically ill textile industry has been in bad shape for years, is in deepening recession despite a flood of new electronics plants. Unemployment claims are 100% higher than last year at this time; auto sales are down sharply; and retail business, which was ahead for January (up 3%), took a sudden 29% drop during the February snows, has not yet recovered. Yet mortgage foreclosures are still at a minimum, and such a sensitive economic barometer as New England's winter-sport industry shows a 12% increase.

NEW YORK-LONG ISLAND AREA, with its growing suburbia, has still to feel a serious recession pinch. In the metropolitan area, jobs were climbing again after a January dip until nipped by the garment strike, and upstate unemployment is edging down. In Long Island's booming Nassau and Suffolk Counties, which had been hard-hit by cutbacks in defense spending, new industry is moving in at such a rate that some 75 new plants are under construction to add more electronics, nuclear energy, plastics, clothing, to the area's economy. Peak unemployment hit 45,000 out of 675,000 working in mid-February, but now companies are rehiring workers. Housing in Suffolk County is 100% ahead of last year; Long Island retail sales are ahead, and while autos are down, loans on boats at the Franklin National Bank (total resources: $517 million) are up 50%.

THE SOUTH hears more talk than it sees critical signs of recession. Some Southern towns have their share of auto, steel-and oil-industry layoffs, and many textile mills are on a two-day week. Tennessee's troubled coal industry is 50% laid off. Yet unemployment, percentagewise, is less than in the North. Texas unemployment is up to 5.7% of the labor force, yet retail sales are running 2% ahead of last year, and the University of Texas' index of business activity is 1% ahead of 1957. Department-store sales are down slightly, mainly because of bad weather. But at Atlanta's hard-selling Rich's department store, sales are even with last year. Businessmen count on their growing market, lower labor costs and the efficient new plants built by migrating Northern industry to carry them through the recession without harm. "I take a real deep breath of relief." says Southern Co. President Harlee Branch Jr., whose company still has record demand for electric power, "when I get away from those damned pessimistic New Yorkers."

THE MIDWEST is neither as gloomy as New England nor as bullish as the South. One-industry towns such as Flint, Mich., where General Motors' Buick division laid off more than half its work force, have helped peak Michigan's unemployment to 415,000, or 14.3% of the labor force, and the highest figure since the war. Lorain, Ohio, where U.S. Steel laid off 3,500 of its 11,000-man National Tube Division, is also in deep recession. Peoria, Ill., where Caterpillar Tractor Co. laid off 6,000 of its 23,000 men, is getting ready to dispense free groceries to jobless workers. But in bigger, more diversified cities such as Chicago, Toledo and Cleveland, retail sales, housing and other economic indicators show little serious decline.