The Waterbury Democrat., 1938-07-06


 cluSions regarding the busi
 l. That the downward spiral is now definitely in reverse and that recovery will come much sooner than they had previ- ously predicted--probably by fall.
 2. That the pace of recovery, once 1t does come, will be rapid rather than slow.
 }. That the pattern of the current climb out of the re- cession is following the lines of similar situations in 1921, 1924, and 1882, when the production of non-durable (consumer) goods started upward while the production of durable goods still Jagged.
 The Reasons Why
 The New Dealers base their cheery report on these determin- ing factors:
 l. With the exception of the railroads, the financial struc- ture of business generally is sound. Banks and insurance companies are untouched and farmers have suffered no seri- ous impairment, despite the de- cline in agricultural income.
 2. Consumer spending has been relatively well maintained: first, because individual re- sources have not been exhausted on a wide scale as they were in 1931-33; and second, because consumers have not developed a hoarding complex, due chiefly to the existence of the Federal Deposit Insurance system, elim- mating fear of bany failures.
 3. The localization of major declines in manufacturing, min- ing and related industries which account for more than half of the rise in unemploy- ment since last September prevented the spread of a panic psychology throughout the country.
 4. Liquidation of the large high-priced inventories of con- sumer goods that were on hand when the recession developed last fall. Shelves generally have been well cleaned out and with demand increasing, buyers are placing new orders with manu- lecturers.
 5. High prices, which played a leading role in precipitating the recession, have been ma- terially reduced, thereby stimu- lating both retail and wholesale buying.
 The economists placed great stress on the last item. AS long as prices continued high, they de- clared, buying continued to de- cline, but as soon as prices be- gan to tumble, buying began to revive. This explains why the price-cut announcement of U. s. Steel was received with such jubilation by the White House group,
 Speeders-Up
 Inner council analysts give three reasons for their prediction that recovery, once under way, will be rapid:
 l. The governments ncv spending program is boosting re- lief and public works expen- ditures from around $150,000,- GOO a month to more than $300,000,000 a month.
 2. The steady growth of foreign trade--due, incidentally, chiefly to war purchases.
 3. Stepping up of production by many manufacturers in or- der to beat the gun on the wage-hour law, which becomes operative October "A. On. that day its mandatory 25-cents-an- hour, 44-hours-a-week scale be- comes effective and many plants, in order to take advan- tage of present lower production costs, are increasing their out put.
 The economists emphasize that only slight improvement, if any, will be shown in the overall in- dustrial indexes during the next few months. This will be due, they say, to the fact that the dur able goods industries will be much slower in picking up than the con- sumer foods industries, thus hold ing down the general index level. Real key to the situation will be developments in the consumer goods industries. Records of previous economic collapses show that the one unfailing signal of impending recovery was an up- turn in consumer goods production. OFF THE RECORD