Undiscouraged

The figures were for a time past, but when they came out last week they set off discouraging talk for the first time since the economy started climbing again twelve months ago. Government statisticians reported January dips in industrial production, personal income, retail sales and housing starts. A few pessimists began openly wondering whether the recovery had already run its course. Optimists answered that the worst thing wrong with January was the weather. Most economists blame January's slide on weeks of unrelieved snow in the Midwest, frost in the South, and torrential rains in the West. And for once, that rationale made sense even to those who believe that weather is often overrated as a business factor.

January's glum weather kept nearly 700,000 employed Americans away from their regular jobs (v. fewer than 200,000 in January of 1961). As a result, the average factory work week melted from 40.4 hours to 40 hours; this, in turn, helped to bring down industrial production and personal income, both of which are determined largely by the length of the work week. Thinner pay envelopes--and the weather--also kept people away from the stores.

Though slowdown is not unnatural in the second year of a recovery, the majority of businessmen seem to feel that business will get better. Manufacturers are notably confident. Last month new orders for durable goods ran well ahead of sales, rising 3% to a record $16.9 billion. That gave the hard-goods makers a total backlog of $46.7 billion in unfilled orders, largest since the recovery began.

There are other signs of strength for the weeks ahead: steady prices, easy credit, low inventories, rising rates of capital spending and Government spending. The stock market, increasingly accurate as a forecaster (TIME, Jan. 26), has stood up well to the January chill. And Main Street seems to be in a buying mood. According to the Federal Reserve Board's quarterly survey, an unusually high proportion of U.S. families--3.7%--are planning to buy new cars within the next six months. If they do, they will send Detroit toward a 6,500,000-car year and give the whole economy an important lift.

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