The Outlook for '58

Only a few weeks ago, economists were declaring that business was better than the sentiment about business. Last week the sentiment seemed to be better than business.

The 1,614 top executives polled by Dun & Bradstreet snorted bullishly over 1958 prospects: 91% expected that their sales would exceed or equal 1957; eight out of ten thought profits would be better or at least as good; only 1% expected to cut production. In Hollywood, Fla. 1,050 conventioneers at the Investment Bankers Association predicted that easier money will bolster the slump in capital investments, that record personal incomes will lift consumer buying to new peaks, that low inventories will be rebuilt and spur manufacturing. To cool down recession talk, the New York Federal Reserve Bank made one of its rare public predictions, said that "the period of most severe decline may have been passed," and only "relatively mild" adjustments seem to lie ahead. Manhattan's Guaranty Trust Co. said that chances of a real recession are diminishing.

This optimism existed in spite of some less rosy statistics. The Department of Commerce announced that manufacturers' inventories fell in October as new orders slipped behind shipments. In the nation's basic industry, steelmakers are sluggishly producing at only 72% of capacity and still trimming production.

After weighing such facts, Prudential Insurance Co. issued its usually accurate annual new-year prediction: 1958 will see a $3 billion dip in capital expenditures, but this will be offset by a rise of $5 billion in state spending and $1 billion in home building. Said President Carrol Shanks: business will hold at the present stable levels for the next six months, and then "the second half of the year is likely to be strong."

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