Still Declining

Industrial production is still dropping. Last week's Federal Reserve Board index showed April production down two points to 126, the lowest in 3 1/2 years and twice the drop that Administration economists expected.

In 1958's first quarter, the Commerce Department reported last week, the gross national product fell by $10.6 billion to an annual rate of $442 billion, the lowest point since the third quarter of 1956. It is expected to decline even more in the current quarter.

But the rate of decline was being braked by increasing signs of resistance in the economy. A rise in April housing starts generated optimism among home builders (see Bellwether Industry?). The number of the jobless collecting benefits dropped 70,900 to 3,194,000, lowest since Feb. 15. Personal income and retail sales are holding up well. The auto industry, black sheep of the economy, is also showing some life; May auto sales started off at the best rate since January, and production last week rose 8,000 to 86,738 units.

But there are some dark months ahead for autos. Dealers now have about 760,000 cars on hand, hope they clean them out before the introduction of 1959 models. To help clear the decks, the industry is expected to operate at an even lower rate than usual during the summer, may shut down earlier, stay closed longer when it retools for 1959 models. Counting heavily on a cleanup of the '58 models and the popularity of the new '59 cars, Ward's Automotive Reports hopefully predicted that "factory unemployment gloom will be quickly followed by a fourth-quarter burst of production prosperity that may rival 1955."

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