Uneasy Balance

"We asked Congress for a transfusion," cried Price Boss Di Salle last week, "and they gave us an enema." Like the rest of the Administration, Rabelaisian Mike Di Salle was wailing that the weakened controls law threatened imminent inflation. But last week it was plain that an older law--supply and demand--was still at work. Instead of rising, a lot of prices were falling.

U.S. retailers, with business 20% below last year and inventories still top-heavy, were slashing prices in the biggest midsummer sales in years. Even the new relaxed credit terms (a cut in down payments, longer time to pay) failed to bring the expected perk-up in sales. In many lines, the consumer was momentarily king and could still drive bargains--well below list prices--for refrigerators, washing machines, TV sets and even some makes of new cars. For the ninth consecutive week, the Government's index of wholesale prices had dropped, mainly because of shakeouts in commodities. Wool had skidded to $2.15 a lb. compared to $3.80 five months ago. Cotton men, who screamed early this year that if cotton were frozen at 45-c- a lb., their profits would disappear, were now glad to sell for 35-c-. Result: the big makers of bed sheets last week cut their prices from 4% to 10%.

Actually, the only major segment of the economy where higher prices seemed imminent was in automobiles. Both Ford and Chrysler asked Di Salle's OPS for price boosts (an average of 9 1/2%) under the new law, and Di Salle readily agreed that they were entitled to them because of higher costs. Giant G.M. and such independents as Hudson, Nash and Studebaker had not yet made up their minds. But there is still a tremendous buying power in the land that could quickly drive prices up: employment in July soared to an alltime record of 62,526,000. Last week the Wage Stabilization Board gave up its attempt to hold wage boosts to 10% above pre-Korea levels, adopted a new formula, under the new controls law, permitting them to rise with any new rise in the cost of living. The real inflation test will come in the fall, when rearmament begins to take its bite out of consumer goods. For the moment at least, the economy seems to have reached a state of balance--uneasy, perhaps, but nevertheless balanced.

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