Record Activity In U.S. Economy Last Year

Press, Volume XCV, Issue 28183, 23 January 1957, Page 15

Record Activity In U.S. Economy Last Year

The closing weeks of 1956 brought records in most fields of business activity in the United States, says the First National City Bank in a survey of American economic conditions. The gains over the figures of a year ago, which were the highest on record up to that time, were not large in physical terms, but they were satisfying in view of the readjustment that some industries went through. The year just ended was one of contrasts, says the bank. Most of the comprehensive measures proclaim it a year of new records — 412 billion dollars in goods and services produced, personal income totalling 325 billion dollars, a peak of 67 million employed (nearly 70 million including the armed forces), and factory wages exceeding 2 dollars an hour.

Not all business and individuals, however, shared this prosperity in full. Laid-off automobile workers, home builders, steel workers called out on strike, and business men whose profits were pinched by rising costs were among those for whom 1956 fell short of hopes. At this time a year ago, few observers would have believed that business could withstand a drop of one quarter in automobile production, a 15 per cent, cut in the number of homes started, and a five-weeks steel strike without more serious repercussions. Adjustments were also needed or under way in agriculture and in the textile, farm machinery and other industries. Offsetting Stimuli Yet the combined drag of these important sectors of the economy was more than offset without resorting to easy money or to government stimulus. The strength of consumer demand for non-dur-able goods and services, the heavy backlog of local government projects, and business investment needs kept the economy steady and headed upward. Not only was a general recession avoided, but gross national product—the nation’s aggregate output of goods and services—rose also quarter by quarter and at the year’s end had reached the record annual rate of about 422 billion dollars, which was 20 billion dollars. or 5 per cent., greater than a year earlier. “The key to the resilience of the economy in 1956 was the capita] goods boom. It is likewise the key to the 1957 outlook. In 956. business outlays on new plant and equipment increased 22 per cent, over 1955, and in 1957 businessmen

expect to spend 11 per cent, more than in 1956. It is doubtful that labour and materials could be found for a greater increase. “Thus, a switch from rapid growth to a levelling off in capital outlays seems indicated. This need cause no dismay. A levelling off of the current rate would still produce a record-breaking investment total for 1957 and provide strong support for the economy. Demand for capital goods has not subsided, but is being spread out more evenly,” the bank says.