THE ECONOMY: Boom

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Despite a low moan now & then about a possible depression, U.S. business is feeling no pain. One of the best long-range indicators of what businessmen expect is their spending for new plants and equipment. In its current monthly bulletin, the Federal Reserve Bank of Philadelphia states that such expenditures are now running at a record annual rate of $16 billion, more than three times the annual average for the two decades preceding the war.

This staggering total actually means somewhat less than it seems when the effect of postwar price boosts is discounted (in 1939 dollars, it adds up to roughly $10 billion). But, in a reverse way, the price inflation also makes the picture look even rosier. By prompting the postponement of hundreds of building programs until costs go down, it disguises the real—and much greater—size of the nation's active potential to expand. It also testifies to the strength of the confidence on which present expansion is based: industrialists are pushing $1,000,000 projects with no less eagerness than when they originally planned them as $800,000 projects.

Bird's-Eye View. Allowing for this rise in costs, and even with all the postponements, the rate at which new capital investments are being made is still at an alltime high. The utility and oil industries account for much of it. Electric light and power companies are in the early stages of a five-year expansion program that will cost $5 billion before it is finished. By the end of next year, oil companies will make additions and improvements worth some $4 billion, a boost of more than 22% in their total investments.

General Motors, with massive new plants going up or already built near Boston, Cleveland, Atlanta, Flint, Mich., and Los Angeles, and Ford, with almost as many equally well distributed, are also major investors.

But much of the spending is not being done in such noticeably big pieces. Smaller companies in almost every other industry are making small but widespread changes in the industrial landscape. They are building extensions to existing plants or raising new ones in a vast scramble for spacious positions close to power, labor, raw materials, markets, or cheaper tax rates.

Commuter's-Eye View. Some of the plants, like the efficiently elegant one recently completed by Johnson & Johnson (surgical dressings) in Cranford, N.J. (see cut), are far removed from the belching smokestacks that were once the hallmark of industry. Each week brings news of new factories that will change the economic shape of some small town. Last week, for example, Ball Brothers Co. (glass preserving jars) announced the opening of a $3,000,000 plant in El Monte, Calif., and the Electric Auto-Lite Co, (lighting, starting and ignition equipment) announced that it will soon start work on a $1,000,000-odd plant in Hazleton, Pa. Already completed in Cornelia, Ga. was the $1,000,000 plant of the Chicopee Mfg. Corp. (a textile-making subsidiary of Johnson & Johnson).

If he chose to read his own newspaper on the way to work, the average bus or train rider could find plenty of reason to think that the U.S. economy was in an ominously nervous state. But if he looked out the window, he could hardly fail to see some reassuring signs. The men who manage and man the nation's factories are not contemplating an early shutdown.