Evening star., 1938-06-05
CONSUMER GOODS
EXPEcTEDT0LEAD
First Recovery Signs Likely
to Appear in Retail
Distribution.
BY J. G. DONLEY.
Il Dispatch to The Star.


Special Dispatch to The Star.
NEW YORK, June 4.-Business OBJ
servers are keeping close tabs on re-
tail distribution, because first signs of
recovery from the current depression
are expected to be registered by the
indexes of consumer spending.
The reason for that expectation.
obviously. is that Washington's efforts
to spur recovery are now-as in 1888
and l934-directed mainly toward bol-
stering the buying power of individual
consumers. through increased expendi-
lures for relief and make-wo projects
and the maintenance of wage levels
through the establishment of mini
NUNS" and the encouragement Of or
ganization for collective bargaining.
If we admit that consumer buying
led the upturn to recovery from the
depths of 1930-1s34, then it appears
that, since the turn of the century the
initiation of business recovery is to be
credited to consumer buying In four
instances out of 10. On six occasions.
however, Increasing activity in durable
goods has led the country out of the
dumps. And previous To the advent
OF the New Deal, the score was 2 to |
in favor OF durable goods as the leader
In recovery movements.
Buying Power Cut.
1t Is an interesting fact, therefore,
but hardly decisive, that retail trade
has improved this week. But the i'm
provernent seems to have come largely
as a result of more favorable weather
after several weeks of trade unduly de-
pressed by adverse weather conditions.
The crux Of the situation account
able for the drop in retail distribution
is, of course, declining employment.
On that score, the Dun d Bradstreet
trade review says that extension of
factory employment curtailment
brought more unsettlement to the con-
fused industrial situation this week.
At some plants man-power had been
reduced nearly to the position of 1888.
In the shifts In operating schedules
those in the downward direction pre-
dominated manufacturers of au-
tomobile parts and equipment had so
few orders on hand that June opera
tions were to be at about half the
May rate j. more whisky distilleries
closed, with others to follow next week;
at some centers output was down to
about 20 per cent of scheduled ca
pacity a number Of cotton goods
mills will participate in plan for dis
continuing operations entirely for one
month on a stagger system; this will
be in addition to the usual summer
shutdown for machinery repairs"
Old Circle Created.
Such trends suggest that lack of
consumer buying is creating the old
vicious circle by reducing the weekly
wages Of other potential consumers.
Statistics on the real income" of the
average consumer confirm that sug-
gestion. According to the latest COM
pilation by the Investors Syndicate of
Minneapolis, with living costs re-
naming close to last years high level
and cash income badly debated, typical
American consumers met the chal-
lenge Of their household budget at the
start of May with only 10 cents in buy
ing power for every dollars worth at
their command last year"
The Standard Statistics Co. finds
that prices of manufactured goods
have not yet felt the full force OF de-
preston influences, because Of rigid
wage and other costs: but, II this de-
preston is prolonged, it will be only a
question of time before prices land
wage rates) are slashed. 1t might well
be that such development would
mark the final stages Of the current
defationary cycle
tCopyright. 1850