The Washington times., 1931-02-19

By LEWIS HANEH
Director New York University
Bureau of Business Research
and Former Economist Of
Federal Trade Commission
In appraising the business situ-
ton, we can all start with the as
sumption that everybody wants
business to be good. We all nope
for improvement. =.
All of us believe in ultimate
business recovery. Everybody
knows that we always have recoV-
cred from depressions.
There is no difference OF opln-
ion concerning such generallza-
ton, and in this sense We are all
bulls.
But all this tells us nothing as
to the facts concerning conditions
now. 1t throws no light on the
important question, WHEN Will
business turn up? Vague sentl-
ment and pious hopes get us no
where. What we need in making
our definite plans are definite
facts.
Here Are Plain Facts
This is where difference OF
opinion arise. Now let us look at
a few plain facts concerning con-
diticns in our leading industries.
The automobile industry thus
far has made a distinctly unsat-
isfactory showing. There was
squirt in production in November
and December, led by Chevrolet.
The curve of production rose
more than usual in those months.
But automobile production in
January O83,900 cars and
trucks) made a less than usual
gain, and February estimates in
dicate further tagging. 1t is
quite clear that some manufac-
turers rushed the season at the
end of 1880. and have not been
able tot keep up the usual pace
thus far this year.
The reason is that they are
not selling the cars produced.
Total registrations of new cars
have been backward. Now comes
the January sales report of Gen
eral Motors, which is decidedly
poor.
The sales increased less in
January than in any year since
1926. They were far below jan
uary, 1880. Moreover, the sales
to dealers have been running
ahead of sales by dealers to con-
sumers since last October. That
means accumulating dealer in
ventories.
The evidence thus far is
against the success of the attempt
to rush the season. There is still
room for hope, as the big motor
months are March, April and
May. Thus far, however, the
facts are unfavorable.
Building Is Tagging
There has yet been no improve
ment in building. January con-
tracts awarded fell by just about
the usual seasonal amount. Build
ing permits, as reported by S. w.
Straus for over 500 cities, fell 20
per cent in January, and the
company states that this is about
10 per cent more than the usual
decline in that month.
Railway earnings made a big
drop in December. Gross was
1875 per cent below a year ago.
Net was down 31.3 per cent.
Both figures are bigger than the
declines for 1880 as a whole
The relatively large slump in
net income is significant.
Then what about employment?
Certainly there was no sign of
a gain in January. The plain
fact is that factory employment
in January fell 2.7 per cent, and
total factory payrolls fell 7.6 per
cent. That means fewer workers
and either shorter hours or lower
wages.
The fact is that the decline
in employment and payrolls is
unchecked. I doubt if there has
ever been business recovery from
a major recession until signs of
stabilization in factory payrolls
occur.
Of course, the" steel industry
cannot thrive if it's chief Gus
toners, the railways, automobile
companies and builders, are de
pressed.
Another plain fact is that the
size of the increase in untitled
steel orders was the result of
reduced shipments of steel. The
thing that counts in judging the
trend is the rate at which the
untitled orders change. The fact
is that, after allowing for merely
seasonal variations, the percent
age of gain in the untitled or
derS has fallen off for two
months. That strongly suggests
reduced sales.
Production without sales gets
us nowhere.
Probably I am more anxious
than you are to catch the first
signs of business recovery. They
simply have not appeared yet.
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