Spotty

Since war's end, the stock market has been a faulty barometer of business activity, but a fair guide to what businessmen are thinking. In 1946 everyone expected a slump, and the market cracked wide open --yet for two years there was no slump in business.

Last week Wall Streeters took a speculative look at the slump that had finally arrived, and decided it was not living up to their gloomy expectations. Result: the market's seventh bullish week in the last eight. The Dow-Jones industrial average rose 3.15 points to 179.07, only a shade below its 1949 high.

Less Work. Nevertheless, there was little doubt that business was on the downgrade. The Federal Reserve Board's production index, which had stood at around 166% of the 1935-39 average in late June, was estimated to have dropped another five points, off 34 points from 1948's postwar peak. In early July, the Department of Commerce reported, unemployment had edged over the 4,000,000 mark for the first time since 1942. Though there were an estimated 59.7 million at work, more than in any year except 1948, in some areas there were long lines of the jobless collecting benefits (see cut).

Still, the creeping recession had not yet crept all over. Detroit was riding high, with the auto industry driving for its biggest postwar year. Last week Chrysler Corp. came up with record first-half earnings of $6.12 a share, v. $4.11 in 1948.

At the other extreme, the slump in textiles and jewelry had thrown approximately one in five out of work in Providence. But, paradoxically, there was enough buying power left in slump-struck Providence so that butchers could sell lamb chops at from $1.29 to $1.49 a Ib.

Empty Shelves. The nation's department store sales were well below 1948 (off 11% for the week ending July 30). But some of the drop seemed to be the retailers' own fault. The Wall Street Journal took a shopping tour of 15 cities and found that many a store had cut its stocks so deeply that it could not meet the demand for some items.

In Cleveland, for example, it was "nearly impossible to find attractive summer dresses ... without bobbing into one store after another. In Pittsburgh and Washington you'll likely have to look in half a dozen shops before you find [a summer suit] of acceptable size, style and price."

Where they had cut their inventories too much, businessmen were hastily buying again. On its latest check, the Department of Commerce found that manufacturers' sales were on the rise.

More Credit. So were business loans. After dipping for 27 straight weeks, the Federal Reserve Board reported last week that they had edged up.

FRB did its bit to ease credit further. It cut bank reserve requirements again, thus freeing $1.8 billion more for lending. This was FRB's fifth step in as many months to combat deflation.

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