The Good Heart

The Gross National Product, like an electrocardiogram on the nation's economic heartbeat, condenses on one graph the pulsations of the whole U.S. economy. Last week the President's Council of Economic Advisers strapped their electrodes to the economy for another G.N.P. measurement of all goods and services produced in the U.S. The reading: in the third quarter of 1955 the U.S. had the highest Gross National Product in history--an annual rate of $392 billion--up $7 billion. This means that goods and services worth $2,376 were produced, on the average, for every man, woman and child in the country.

The increase was not on a "trickledown" from the top basis. One of the biggest jumps was in consumer spending, where the reading rose $6 billion above the rate of the preceding three-month period. Higher wage and salary payments gave spending its biggest push, aided by a $1 billion drop in the rate of savings.

In some former years, a large part of the rising G.N.P. was an illusion caused by dollar inflation. Since the dollar is now stable, all of the G.N.P. increase means an actual rise in the output of goods and services. The cost-of-living index nudged up three-tenths of 1% last month, to the highest level in a year, but this was only six-tenths of 1% above last January, and three-tenths of 1% below January of 1954. Meanwhile the factory worker's weekly after-tax pay reached a record average in September--$71.55 take-home pay for a married man with two children, $1.25 more than the month before, nearly $5 more than in September 1954. Last week's figures included one serious cause for worry. Between the second and third quarters of 1955, gross farm income dropped at the rate of a billion a year below 1954's rate.

Aside from this, the strength in the rest of the economy was the best argument Secretary of State Dulles could take with him to the Geneva Conference, where his opponents have shown signs that they no longer believe an article of Communist faith--that capitalism is about to collapse any day.

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