Cooler Weather

THE ECONOMY

U.S. economic weather report and forecast, based on last week's statistics:

The economy remains overheated in many sectors but is becoming perceptibly cooler. Industrial production fell by a fraction of a point in August, the first drop in a year. Retail sales continue sluggish. Storms prevail in the housing market. Private housing starts declined for the seventh straight month, and the scarcity and high cost of mortgage money assure that rough weather will persist. Interest rates on U.S. Treasury notes reached 8%, the highest in 110 years.

Inflation hangs on. Ford raised the list prices of its 1970 cars by 3.6%, an average of $108 an auto. But beef is going down; wholesale beef prices are off as much as a dime a pound from their highs of last June. Official Government forecasters figure that the high pressures in the money market are finally beginning to reduce demand and, in turn, production. Economic growth, now only 2% at an annual rate, will stay below normal well into 1970. Prices, however, seem unlikely to level off until next year at the earliest. Recession probability: zero this month, but increasing in the months ahead. Winds are changeable, and the overall climate continues to be highly erratic.

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