THE OTAGO DAILY TIMES THURSDAY, MARCH 24, 1949. TOWARDS A DEPRESSION?

Otago Daily Times, Issue 27038, 24 March 1949, Page 6

THE OTAGO DAILY TIMES THURSDAY, MARCH 24, 1949. TOWARDS A DEPRESSION?

The questions whether there was going to be a “ slump ” and, if so, how soon could it be expected, were heard much more frequently in the months immediately after the war than they are now. When that indifferent economist “ the man in the street ” had leisure to give thought to fortunes other than those of war, he was alarmed by soaring prices and his memories of the early ’thirties and of 1920 inspired him to the belief that a depression could be expected within a year. That year—and others—passed, but the war boom still held. Wages—and costs —moved from strength to strength ar.d, with unemployment almost non-existent, some confidence in the future returned. In this country the word “ insulation,” which was much spoken in pre-war years, had seemed in more recent times to have passed from the vocabulary of Labour politicians, but early this month Mr Nash, while expressing his continued belief in his financial system, felt obliged by circumstances to admit that “it was difficult to avoid the effects of inflation overseas spreading to New Zealand.” Coming from the source it did, this admission has given rise to some conjecture. It is fair to suppose, however, that any renewal of interest in the economic future has been inspired rather by the receipt of overseas bulletins containing summaries of the year 1948 and forecasts of the future, and also the reports of a price recession in the United States.

According to a cablegram which we printed the other day, American economists think that there may be a recession, but not a depression. Moscow’s propaganda - economists hopefully forecast that “ a capitalistic economic blizzard is inevitable.” To reconcile these opposites there is an American warning opinion that if people, believe a boom is over, it generally does end. In the United States, the Joint Committee on the Economic Report predicted 1949 to be another “ boom year,” but in January manufacturers’ sales showed more than a seasonal drop. There were falling commodity prices and rising unemployment figures. The following month, the grain and livestock markets, glutted with produce, returned low price levels. Short term tendencies may be confusing, but these did not conflict with the predictions in the January bulletin of the National City Bank of New York. After expressing the belief that the inflationary forces have weakened, it stated: “On one aspect of the outlook general agreement may be reached. It is that buyers’ markets and competitive conditions will prevail in 1949 over a greater part of the economy than in any year since the war began. Such a change, although it implies a test of weaker enterprises, is inevitable and salutary.”