New Strength for the Boom

Said a Wall Street trader: "When you expect stocks to go down and they simply refuse to do it, it's time to start looking the other way." Last week, so many investors looked the other way that they gave the bull market its second biggest shove since its birth last June. A surge of buying, much of it from notably cautious investment trusts, sent blue-chip stocks soaring as much as eight points, and pushed the Dow-Jones industrial average to 208.09, the highest since June 1946.

There was good reason for the bull-throated roar. Many companies were passing out bigger dividends, and earnings in general had held steady. But more important, the eight-year-long boom, after being prematurely buried time & again, was surging up bigger than ever in many segments of the economy.

Housing was a prize example. In 1950's first two months, some 160,000 new housing units were started, 60% more than a year ago. Television manufacturers even managed to step up their already phenomenal production to 91,766 sets a week, 18% higher than last year's best. The auto industry was still breaking all production records. The U.S. and Canada turned out 133,462 cars and trucks last week.

Quick Recovery. The steel industry, bouncing back fast from the coal strike, boosted output 21.7 points in two weeks. At 95.5% of capacity this week, production was still climbing. Although the coal settlement had added anywhere from 10-c- to 25-c- to the cost of producing a ton of steel, the steelmakers, wary of Congress' watchful eye (see below), apparently planned to absorb the cost and not hike prices.

Despite the boom, there were dark spots. Unemployment was up to 4,684,000 in February as reported by the Department of Commerce. This was due less to a drop in jobs than to the fact that the economy was not expanding fast enough to absorb the estimated 1,500,000 annual newcomers in the growing labor force. Easter shopping had also been disappointing for department stores; soft goods were moving so slowly that textile mills saw trouble ahead.

But there was no letup in the heavy sales of durable goods. Consumers had more money to spend: in January, the Department of Commerce said, personal income reached an annual rate of $212.9 billion, the highest in twelve months,

Cautious Optimist. All in all, most U.S. businessmen shared the cautious optimism of Harvard's white-haired Economist Sumner H. Slichter. In Chicago last week, he predicted a high level of business through at least igso's third quarter. There might be "some further drop in production and employment," said Slichter, "[but] I do not believe that it will be severe or long." And while Slichter thought that Government and unions would wield still bigger power in shaping the economy, it would remain one "run, in the main, by tens of millions of consumers each buying what they prefer, and by millions of business managers each using his own judgment as to what to make and how to make it ... So long as the economy is run in large measure by decentralized decisionmaking, it can be counted on to be adaptable and progressive and to grow rapidly in productivity."

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