Tremendous Surge

From Wall Street to Walla Walla, the tremendous surge of the U.S. economy was felt across the nation last week. Though the economy still ailed in spots, its recuperative force and obvious vitality showed up so strongly that even the optimistic were taken by surprise.

The most cheering news was a Commerce and Labor Departments report that unemployment dropped 588,000 in September to 4,111,000, the lowest point in the year and much bigger than the usual seasonal improvement. Said President Eisenhower: "This is a much larger decline than could be expected at this time of year, and reflects the accelerating rate of recovery in our economy, which began last April."

The extra push for employment was partly due to Detroit's early changeover for 1959 models, which not only raised auto payrolls but spurred better business in many related industries.

Glow of Furnaces. Steel was living up to the hopes steelmen held for it earlier in the year. Last.week the American Iron and Steel Institute reported that production in September reached 65.8% of capacity, the highest of any month this year. By week's end. producers were running closer to 71%. The reason for the steel upsurge was simply that many firms had cut inventories so low that they were hustling to order before a shortage set in. Jones & Laughlin, fourth largest producer, upped its output to 82% as a result of "a sharp increase in orders.'' As operations in the Youngstown, Ohio district rose to 64% of capacity v. 56% the week before, hundreds of workers trooped back to work. Furnaces glowed again: U.S. Steel relit a blast furnace at its Youngstown works and two open hearths in Pittsburgh; Bethlehem Steel planned to relight four or five open hearths at its Lackawanna works near Buffalo.

New Highs. Steel earnings were also beginning to come back. Jones & Laughlin's President Avery Adams predicted third-quarter earnings will be 81-c- a share v. 47-c- in the second quarter. Nicholas P. Veeder, president and chairman of Granite City Steel Co., which is operating at nearly 100% of capacity, estimated third-quarter earnings at just over $1 a share for the best quarter in the last five. Said Veeder: "By the end of 1959, we expect to be up to the rated capacity of 1,584,000 tons yearly predicted for the end of our current expansion program."

Such news sent steel stocks soaring on the New York Exchange, helped lead the whole market by week's end to a new alltime high of 543.36 on the Dow-Jones industrial average. U.S. Steel rose 4 1/8 during the week to 84 1/2. Bethlehem 2 1/4 to 51, Youngstown 6f to 117. Also helping push the market up was a big play in the nonferrous metals market. Copper shares rose up to 9^ points for the week, partly on the strength of copper strikes in Canada, Northern Rhodesia and New Mexico. Zinc and aluminum stocks also rose. The feeling that the U.S. economy on the climb again would be a spur to world business helped push up stocks in Europe (see Business Abroad).

The new bounce in the economy made itself felt through the broad spectrum of U.S. life. Carloadings rose to new 1958 highs for the fourth week in a row just at the time when they have leveled off in previous years. Consumers picked up their buying, sent department-store sales for the week pushing 7% above last year. Even down on the farm, production was up. The Department of Agriculture reported that the U.S. will harvest a record crop (up 13% above last year), owing largely to more scientific farming and modern farm machinery as well as favorable weather. This was the only place where the economy's upsurge was not unalloyed good news: bigger crops mean more trouble for the already hard-pressed farm-support programs.

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