State of Business: The Plateau

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Never in the postwar era has the U.S. economy held so steady for so long. Though official fourth-quarter figures are still to come, the best estimate last week was that gross national product in the quarter was some $504 billion at an annual rate, almost precisely the same level as the third quarter and close to the second quarter of 1960.

The high plateau was achieved despite November's drop in industrial production to 105 on the Federal Reserve Index (1957 = 100), lowest monthly rate since the steel strike a year ago. Moreover, business inventories in the fourth quarter were estimated to be dropping at an annual rate of $4 billion, v. an $11.4 billion rate of increase in the first quarter. The economy was kept steady by increasing demand. Led by good auto sales in October and November, retail sales held up in the quarter. Plant and equipment spending was steady and Government spending was up.

Living costs were still on the rise, bringing an automatic 2¢-per-hr. cost-of-living wage increase for some 225,000 U.S. workers, chiefly in the meat-packing and aircraft-missile industries. The Bureau of Labor Statistics reported last week that a jump in food prices pushed the cost of living to a new peak in November of 127.4 (1947-49 = 100), up from 127.3. It was the first food price increase in November since 1951.

With personal income at an alltime high, holiday spending was heavy. In Manhattan last week, Bonwit Teller's, Ohrbach's and Macy's all rang up one-day sales records. In Detroit, Christmas sales were up some 3% over record last year. At week's end most merchants were still too busy totting up sales slips to know just how merry a Christmas it was.