Newer Confidence

What businessmen have to be thankful for this week is a flock of fresh omens that the economy may avoid the much-anticipated recession early in 1963.

Solid corporate profits, the fast breakaway of the 1963 cars, growing prospects for a dollar-green Christmas in the stores --all these have contributed to a shift toward optimism in the business community. The new consensus is that the economy may actually rise a bit in the first half of 1963, and at worst will inch down only slightly. On Wall Street, the changed mood was reflected last week in the Dow-Jones industrial average, which rose 14.85 to close at just under 631. The market has risen more than 60 points in the past three weeks.

Music at Cash Registers. Around the country, corporate economists are hedging their earlier predictions of a slump. Said Ford's Henry Ford II: "I don't know of a single businessman who has talked in terms of a recession next year. That kind of talk has come from the economists. But you don't even hear so much of it from them any more." The automakers, of course, have more to cheer about than other businessmen: October's sales of 728,500 U.S.-made cars were the highest for any month in history (and more than 150,000 ahead of the previous high for an October, set in 1955). If the hot pace continues, the auto industry alone--which buys so much steel, copper, glass and rubber--could lead the whole economy upward next year.

There are signs that it may. In its quarterly survey of consumer buying intentions, the Federal Reserve Board found that 4.1% of the families it queried intend to buy new cars in the coming six months, well up from the 3.7% of a year ago. Consumer spending in general is giving strong, if unspectacular, support to the economy. Total retail trade, which leveled off in the late summer, hit a record $20.1 billion in October. Department-store executives from Manhattan to Los Angeles, who used to wait decently until after Thanksgiving before putting up the Christmas decorations and playing scratchy recorded carols, were shamelessly early this year, and report that holiday shopping is off to an unseasonably brisk start. With projections based on income, credit and savings statistics, Sears, Roebuck Vice President Arthur M. Wood expects that retail sales will rise 3% or more in the first half of 1963.

Two Out of Three. Federal and local spending will also rise next year, by about $1 billion a quarter. Recent congressional elections helped fan the new optimism among businessmen, who may vote Republican and deplore Government deficits, but are prepared to enjoy the benefits of Democratic spending habits. The economy's weakest point is that businessmen themselves are scarcely in a heavy spending mood. A recent McGraw-Hill survey of planned capital outlays in 1963 found that manufacturers, whose spending has the most impact on the economy, intend to increase their capital investment by only a disappointing 1.3% next year. But capital spending is one of the few negatives. Unemployment, though still disturbingly high, diminished from 5.8% in September to 5.5% in October. And of the 30 "leading indicators," which usually trend ahead of the whole economy, two out of three are pointing up.

Jewel Tea Economist William Tongue sums up the mood: "Where we used to have rumbling pessimism, we now have rumbling optimism." The optimism, however, is restrained: stability rather than boom is the general expectation. And stability, though preferable to a recession, is nothing to cheer about in an economy that has not boomed for five years. Says Swift & Co. Chief Economist Willard Arant: "Economists have fallen into the bad habit of thinking that if we stay even, then we aren't in a recession. But when you don't measure up to a growth trend, you are actually falling back."

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