In the Hammock

Like a vacationer stretched out in a hammock, the economy took its ease while the experts debated the future. Is it suffering merely from a seasonal lack of energy, or from a torpor that will last beyond the dog days of summer? Said New York's Guaranty Trust Co.: "The widespread expectation of an upturn in business this autumn is in some measure the product of hope rather than of tangible signs of rising activity." Guaranty's reasons: "Consumer caution" and a lack of "buoyancy in business operations." The Federal Reserve Bank of Chicago also reported "less than vigorous" showings in the economy, and Boston's First National Bank noted "a number of soft spots."

Whatever the meaning of the signs, they have failed to discourage business optimism about the rest of 1957. There was no doubt that consumers were showing caution in certain areas, e.g., appliances, but overall national spending has hit record summer levels. Retail sales last week were still high (4% above last year), and steel production was edging up in anticipation of fall buying. Reported Boston's First National: "Confidence in the fall outlook remains firm, despite the low visibility and the lack of any clearly discernible trend in production." Many forecasters were taking an optimistic view of the second half, said Chicago's Federal Reserve Bank, because of the economy's natural pattern of growth and several specific expectations. Among them: an auto upsurge when 1958 models come out, a rise in residential construction, a retail-sales boost as rising personal income sparks a gain in consumer spending, a rebuilding of stocks following inventory adjustment.

Among those with the best reason for optimism were the big corporations that continued last week to report healthy earnings figures. Announcing record U.S. Steel earnings for both the quarter and the half, Chairman Roger M. Blough foresaw "reasonably good business in steel-consuming industries during the rest of the year," predicted a slight upturn in U.S. Steel's production in the last quarter. The oil industry reported a highly profitable six months, helped account for a sizable part of the 6% profit gain over 1956's first half chalked up by 741 U.S. corporations in a survey by the First National City Bank of New York. Profits of Standard Oil Co. (New Jersey) reached a record $463 million for the year's first half, $38 million more than an early estimate. Cities Service President W. Alton Jones announced record first-half profits of $36,315,490, and its wholly owned subsidiary, Dhofar-Cities Service Petroleum Corp., announced a second oil strike in the district of Dhofar in the sultanate of Muscat and Oman.* The two wells, on a 32,000-sq.-mi. concession held by Dhofar-Cities Service in partnership with Richfield Oil Corp., may mark the beginning of a major new Middle Eastern field.

*For other news of the sultanate, see FOREIGN NEWS.

This file is automatically generated by a robot program, so reader's discretion is required.