Mutes in the Trumpet

Anyone who searched the U.S. economy last week could find evidence to support almost every shade of opinion, from rose to deepening blue. The statistics, as they have been for months, were mixed. Yet an increasing number of businessmen--and many more Wall Streeters--seemed to be looking only at the dark spots.

One notable example was the stock market, which started out strong, bouncing up 8.30 points to 441.04 on the Dow-Jones industrials average. But as the week progressed, a new report on railroad freight-car loadings showed a sharp drop to 703,688 cars for the week or 13.8% below 1956 levels; loadings of grain, ore and manufactured goods were all down. What worried Wall Streeters was the fact that freight-car loadings normally increase until the end of October, then fall off steadily until year's end. This year the decline started several weeks early, due largely, according to the Association of American Railroads, to "a general falling off in the level of business." In a twinkling, the market reversed itself, on the final day fell 6.33 points to end the week at 434.71, only 14.92 points above the 1957 low.

Up Oil. Those who looked beyond the car loadings could find considerable encouraging news. Retail trade is still at a higher level than in 1956, while personal income continues at a rate of $346.5 billion, $15.4 billion higher than last year. Detroit's automakers built 129,170 cars last week, the most since June and nearly 10% more than during the same week last year. And strong earnings reports kept rolling in from dozens of big and little companies. In electronics and appliances, General Electric, Motorola, Westinghouse, all had better nine-month earnings than last year. Oil companies such as Cities Service, Ohio Oil, Standard Oil of California, Standard Oil of New Jersey also posted new gains; Jersey Standard had an alltime record of $660 million for 1957's first nine months, 9 1/2% better than 1956.

Despite all fears about lower operating rates, few steelmen had poor business to report. National Steel, Armco Steel and Bethlehem Steel all had good sales and earnings, Bethlehem with its best earnings ever (see PERSONNEL). And for U.S. Steel, Chairman Roger M. Blough noted nine-month earnings of $329 million for a 9.7% return on sales v. $243.3 million and an 8% return in 1956. All told this year, said Blough, the industry will produce 115 million tons, just under the 1956 level. Next year, though the industry may slip back to an operating rate somewhere between 70% and 80% (v. 80% now) for six months or so, the tonnage drop will be less since the industry will add another 5,000,000 tons to its current 138 million-ton annual capacity. Thus, actual production will keep pace with this year's. Added Blough: the industry's customers are living off inventories built up in 1956 and early 1957. "We expect this reduction will continue into next year. But every ton of steel taken out of these inventories will eventually go back in."

Down Optimism. Despite the basic health of the U.S. economy, the bubbling exuberance of a few months ago was giving way to an increasingly muted confidence as evidenced by the National Association of Purchasing Agents, which reported that its members "have lost some of last month's optimism." In many ways that was a hopeful rather than a pessimistic sign. The Federal Reserve has been battling with its tight-money policy to hold down overambitious businessmen, discourage excessive expansion and marginal operations. Having nipped the bubble off the boom with increasingly tight money, the Federal Reserve would now have to judge how much optimism has been quenched, and when it will start turning into business-cramping pessimism.

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