Unemployment & Confidence

Still on an ominous rise, unemployment in the U.S. reached the highest December total in 20 years last month. While there is always some increase in the figure during the year's last month, the 1960 rise was three times as big as the normal seasonal change. The result, the U.S. Labor Department reported last week, raised the unemployment total by half a million to 4,450,000 or 6.8% of the U.S. labor force, highest since 1940. The figures were made even more sobering "by the fact that employment, which has held up well in recent months, declined by 1,173,000 to a total of 66,009,000. This was some 300,000 above the same month a year ago. Seymour Wolfbein of the Labor Department predicted that unemployment would rise 1,000,000 in January.

In the face of the bad unemployment picture, there were many signs of great confidence about the economic outlook. Department store sales in the week ended Jan. 7 ran 4% or 5% above the same week last year. More encouraging, the University of Michigan survey of consumers' intentions showed that consumers were feeling optimistic. Unlike the 1957-58 recession, when consumer confidence steadily weakened for a year, consumers seem to believe that the recession will continue to be mild, have not lost buying confidence though they still are "uneasy about business and their own financial situations." The report took an optimistic outlook for auto sales in 1961.

Probably the best display of confidence was in the stock market. The market rose steadily through the week in heavy trading, chalking up its eighth successive day of rise. Even at week's end, after the unemployment news was out, the market ran up its biggest one-day gain of the week (5.15 points) in the broadest trading in its history. It ended the week up 12.01 on the Dow Jones industrial average, to 633.65, highest since Aug. 29.

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