When?

Here & there, the U.S. economic skies cleared a bit last week. The stock market climbed again; the U.S. auto industry broke all previous records by rolling out 148,277 cars and trucks, the biggest week in its history. But the recession's storm clouds still scudded threateningly over the horizon.

In almost half of the nation's 98 biggest production centers, unemployment had already mounted to 7% or more of the local population. "In some cases it has become an acute problem," reported Employment Security Director Robert C. Goodwin. "The labor market has fluctuated since last November . . . largely [toward] higher rates of unemployment."

But U.S. businessmen also heard a reassuring voice. It was that of Harvard's hardheaded Sumner H. Slichter, who commanded a hearing because his forecasts have been more accurate than those of most economists. Writing in the New York Times Magazine, Slichter said businessmen like Vermont's Senator Ralph Flanders were right in attacking the "psychology of fear" but, unlike them, Slichter did not think the economy's upturn would have to wait until people got back their confidence.

The upturn was coming, said Slichter, whether people had any confidence or not. The reason: people are already consuming goods faster than the U.S. production machine is turning them out. For five months, said Slichter, while many businessmen cut back their inventories, consumption has been outrunning production.

Even in areas of the economy where the drop in business had seemed most striking (e.g., retail sales), the slump was deceptive. In both unit and dollar volume, the first six months of retail sales in 1949 were close to 1948's first half.

Slichter thought that, paradoxically, production would keep going down through July. That would make people feel more pessimistic than ever. Said Slichter: "The revival will start . . . while gloom is still thick and while the price level is still falling . . . Each month that consumption exceeds production strengthens the foundation for recovery."

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