January in December

It was like January in December. In the weeks before Christmas, when retail sales are usually at their highest, retailers were cutting prices as though it were slackest of seasons. Consumers who expect such cuts as their just due in January had bargains galore to give as Christmas presents.

As usual, prices of luxury items such as furs (see Furs), were first to fall. In New York, Gimbels marked jewelry prices down 75%. The midwinter mail-order catalogues were loaded with price cuts up to 49% on soft goods. (Montgomery Ward reduced women's cloth coats 30%.) Most surprisingly, some stores reduced toys as much as 80%. There were even storewide clearance sales on women's shoes, rugs, lamps, furniture and stationery.

What had happened was clear: many items had gone up in price too fast, had priced themselves out of the market. U.S. retailers, who had loaded their shelves with far more goods than they had last year, found that their unit sales were not much greater than in 1945. Retail sales were up 19% over last year, in dollar volume. But much of this was made up by price increases. In many cities December sales in the first two weeks actually showed less of an increase over 1945 than did the whole year. Sales were still high, but the trend was down. So smart merchants decided to slash prices, and get rid of merchandise they considered overpriced, before the end of Christmas buying made matters worse.

Despite the spotty slump in retail prices and some commodities, the prices of many basic materials continued up:

¶Domestic lead prices went up for the third time since decontrol, finally reached the level of imported lead. The new price: 12.55¢ a pound, delivered in New York, highest in history (previous high: 12.25¢ in 1917) and nearly double the wartime price of 6.5¢.

¶Cocoa climbed to a new high of 25.5¢ a pound (v. 14.5¢ on October 1 under OPA control).

¶Prices of steel sheets, steel strips and standard steel rails went up $1 to $5.60 a ton. Steelmakers predicted that nearly all other steel products would soon follow. One reason: the scrap shortage had sent prices soaring to $32.50 a ton (v.$20 last year).

If all steel prices went up, many a durable-goods manufacturer might decide to boost his prices too. But in the face of falling retail prices, it looked as if price boosting would be risky from now on.