STATE OF BUSINESS: Keeping the Records Straight

As political orators began addressing themselves to the state of the economy this week, it was clear that between now and November the beleaguered U.S. voter will hear some wildly confusing statements about how he and the economy are doing. Before the Democratic Platform Committee in Chicago, Leon H. Keyserling, lawyer and politically nimble chief economist for the Truman Administration, accused the Eisenhower Administration of sustaining a "cultivated economic slack" designed to eliminate the inefficient small farmer and small businessman and to "keep labor in its place." But from Washington came new forecasts of continued prosperity.

There are some firm records to help separate fact from fancy. If the Administration has aimed at "economic slack," its failure has been colossal. In July, the Commerce and Labor departments announced last week, employment hit an all-time record for the second straight month. The number of U.S. workers on the job reached 66.7 million, a far cry from the 60 million jobs predicted hopefully by Henry Wallace in 1945 and exactly 7% more than the employment level of July, 1952 under the economic stimulus of the Korean war.

Barreling Along. In the past four years, corporate profits (adjusted for inventory changes)—$41 billion in 1955—have stayed about even, while personal income has soared 19% (to $324 billion). The consumer price index in June stood at 116.2, 3 points higher than the June 1952 level. Thus, despite the inflationary pressure of a 20% increase in average weekly earnings since 1952, the cost of living has risen 7 points less than it climbed in the four years between 1948 and 1952, while the median average income ($2,323 in 1955) has gained 75% since 1952.

The nation is spending more money ($250 billion a year) than ever before; e.g., more than 18 million new cars were sold in the past three years. Retail sales are running at the rate of $16.6 billion a year, 23% higher than the 1952 level (see The Luxury Market). But savings are also climbing. Individual savings accounts grew fatter by $5 billion in first-quarter 1956, the fastest rate of gain since the Korean war. The gross national product, sum of all goods and services produced in the U.S., was barreling along at the annual rate of $408 billion in June, seems certain to top the $400 billion mark this year for the first time in history. Since June 1952, when the G.N.P. reached only $345 billion, the growth in U.S. production has averaged 4% a year.

Helping Hand. Not every segment of the economy is sharing the boom. Farm income, which was running at the annual rate of $11.6 billion in the first six months of 1956, trailed 13% behind 1952, largely as a result of the long-standing farm surplus problem. But the farm picture has been growing brighter. Though farm prices weakened slightly over the past month, they have surged 11% above the December 1955 low point; soil-bank aid will plow an additional $225 million into the farms by fall.