Elements of Strength

The old phrase "rolling readjustment" popped up last week. Said the First National City Bank Letter: "The rise in the various parts of the economy is no longer uniform. Some sectors are expanding while a few contract. Some, like housing, may be nearing the end of their adjustment period. Others, like automobiles, are now in the adjustment process. In other lines, however, there are few indications of slackening, and some are still gaining. In short, another 'rolling readjustment' is under way. It is unlikely that autos and housing will carry the rest of the economy with them on the downturn. Substantial offsetting elements of strength are present."

Last week, as autos cut back (see below), housing was showing signs of picking up (TIME, Feb. 6). There were some other segments of the economy that were expanding, moving to offset the slack:

P: The chemical industry scheduled $1.6 billion worth of new plants in '56 and '57, according to a Manufacturing Chemists Association survey.

P: New York's Consolidated Edison earmarked $120 million--its biggest capital outlay in a decade--to increase gas, electricity and steam output this year.

P: Continental Oil allocated $700 million over the next five years to find and exploit new gas and oil reserves in the U.S. and Canada.

P: Sears, Roebuck planned to spend $55 million to $60 million for 1956 capital improvements, in addition to the $350 million already spent for expansion in the past ten years.

Steel production set a record (of 2,472,000 tons) for the third successive week. Department-store sales climbed 8% above the same 1955 week. Manufacturers' durable-goods inventories were still climbing, said the Commerce Department. In December they reached $26.3 billion, a whisper away from the $26.6 billion reached in 1953 just before the cut in buying and inventory recession. But this time there was a vital difference in the nature of the U.S. economy. Sales are now a far bigger proportion of inventories. Said Manhattan's Bankers Trust Vice President Roy Reierson: "Generally, there is no danger."

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