Grey Mood

THE NATION Grey Mood When it's not Sputnik talk, it's recession talk," grumbled a Chicago teen-ager last week. "Doesn't anyone have fun anymore?"

It was indeed a somber mood that hung over the U.S. Added to post-Sputnik uneasiness about the nation's technological lead over Russia was uneasiness about the economy. Total personal income in the U.S. had sagged in both September and October, the first two-month decline since the post-Korea recession of 1953-54, and most other economic indexes show signs of droop (see BUSINESS).

Pinch & Punch. What did the signs add up to? Answers ranged from a breather (Dwight Eisenhower) to a serious recession (Texas' easy-money Democratic Congressman Wright Patman). Various economists and businessmen called it recession, rolling readjustment, healthy adjustment, mild cyclical adjustment, slowdown, shakedown downturn, downtrend, sidewise movement, plateau, leveling off, period of hesitation, soft period, temporary cyclical swing in long-term growth, polka-dot prosperity with the spots getting bigger.

The mild economic pinch was already swinging a powerful psychological punch. In many U.S. cities, recession ranked with Sputniks as a topic of furrowed-brow talk. With new jobs harder to find than six months ago, workers were suddenly anxious to hold on to the jobs they had. Not because they were broke, but because they were worried, people were postponing big purchases, cutting down sharply on luxuries. Mourned a Los Angeles night-owner as he cast an eye over empty bar stools: "I guess I'll have to trim the $2 cover charge. Six months ago it didn't to make any difference. Now people are too uncertain to spend dough." The U.S. public seemed more worried about the economy than during the 1953-54 recession. Consumers are deeper in than they were in 1954, more troubled about the cold war, less confident about the Eisenhower Administration, so they find signs of sag more worrisome. The mood of grey caution took some of the cheer away from what a few months ago would have seemed very good news: Secretary of Labor James P. Mitchell declared that "the persistent rise [in consumer prices] has ended," and the Bureau of Labor Statistics followed up by announcing that its Consumer Price Index, after creeping upward for 13 months in a row. held steady in October.

Psychology & Sputnik. The uneasy sign in the nation's economic picture is not the statistical droop but the mood. If too many consumers postpone purchases out of worry, shrinkage in sales may bring on a real recession. "Psychology," says Vice President Dr. Arthur A. Smith of Dallas' First National Bank, "is the joker in the economy's deck of cards."

But there is also a wild card: the impending Sputnik impact on defense spending. Defense spending is heading upward --and upward, and the words "deficit financing" are showing up in private Washington talk and responsible editorials. With defense spending on the upswing, the breather, recession, cyclical adjustment, period of hesitation, or whatever, may prove to be only a lull between periods of rising prices, which may or may not be called inflation.

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