Depression-Proof?

After a searching two-year look at the economy, the Committee for Economic Development last week came to the conclusion that the U.S. is virtually depression-proof. "Changes since before the war in our financial, budgetary and psychological situation," said the committee's report from top businessmen, have all but done away with the dangers of an oldtime deflationary spiral. While there is no guarantee that there will be no more recessions, the changes do mean that what "might have turned out to be a severe depression would be a moderate recession and what might have been a moderate recession can now be relatively mild."

Such economic stabilizers as the Federal Reserve Board powers to buy Government bonds and make loans to banks (which would give banks needed cash without calling their loans), unemployment compensation and a big backlog of consumer savings "add up to a powerful package." Tax cuts and public works, said C.E.D., should be used only in the event of a serious decline, since "there is a danger of doing too much too soon and causing inflation, as well as a danger of doing too little too late."

As C.E.D. issued its report, there were other indications that jobless rolls were still growing. The Labor Department this week announced that there is no longer a labor shortage anywhere in the country, and that the labor supply in the nation's 149 market areas now ranges from "balanced" to "substantial surpluses." However, there were other signs that the economy was still enjoying good health. The Federal Reserve Board reported that industrial output in February edged up about 1% above the January level, although it was still more than 8% under a year ago. New housing starts shot up a better-than-seasonal 10% in February to 73,000, fourth highest of any month in the past three years.

In a survey of the spending plans of consumers, the Federal Reserve Board reported that there was only a small drop in prospects compared to last year. The number of people who plan to buy houses, new cars and furniture or major appliances was down, but the same number plan to get used cars and more expect to make home improvements. Of the 2,800 people interviewed, about 40% said their incomes are higher than a year ago; about 25% are making less.

There were other optimistic reports from the Commerce Department, where a survey of 5,000 companies showed that they expect sales this year to be almost on a par with 1953. The stock market also saw a rosy picture ahead. The Dow-Jones industrial average closed the week up 1.73 points to 301.4, highest in 25 years.

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