Evening star., 1949-08-30
Our Economic Prospects

The latest news from the domestic eco
nomic front offers good example OF why
pessimistic forecasts should be taken WIN
at least as many grains of salt as optlmistlc
ones. Two months ago, reacting to rising
trend in unemployment figures, numerous
Cassandras among uS-including Leaders
of Americans for Democratic Actlon-Were
warning that the Nation would head into
disaster" comparable to the crash OF lszS
unless the Government took immediate
pump-priming action to pep up business.
In the brief time that has since elapsed,
however events have made their gloom
seem altogether premature and excessive.
Thus, within the past few days, reports
from three separate sources, Tar from sup
porting the alarmists, have tended to con-
Arm the more cheerful observers who all
along have held to the view that our econ
,omy has too many favorable factors in 1t
to suffer serious setback at this time. One
of the reports-from the Labor Department
shows that the cost Of living has under
gone another slight decline. The second
report-made by Commerce Secretary Saw
yer on the basis of an extensive survey
indicates that business conditions through
out the country promise to be vigorous and
steady, enough so to warrant optimism as
far as the immediate future Is concerned.
And the third report-from the Bureau OF
Employment Security-revealS that there
has been a sharp drop since mid-July IN
new applications for jobless benefit pay
ments. They are now at their lowest level
since last November, and the general out
look is for continuing slackening IN the
rate of industrial lay-offs.
All of which strongly suggests that the
pessimists have been far of base in their
recent cries of alarm about the possibility
of an impending crash. Instead OF fatten-
ing into a full-scale depression, our recess
sion seems to have been following the
course Of a temporary showdown which may
now be approaching its end after effecting
an adjustment in our economy from an
inflationary period to a new period OF
stability. Actually, ever since 1t began some
months ago, the showdown has always ap-
peared to lack the makings of real eco
nomic tailspin. The chief reason for this
has been that the basic conditions OF the
United States today are very different from
what they were in 1929-personal debt is
much lighter, there is no wild stock specu-,
lation, national income is far greater, indi-
vidual savings are incomparably larger,
farm prices are strongly supported, and
the demand for durable goods is enormous.
It is because Of these and similar factors
that events have tended to discountenance
the Cassandras and justify a moderately
optimistic view.
In long-term sense, of course, nothing
in the current picture rules out the posi-
bility of an eventual depression. But as
suming that the Government does not
adopt unsettling policies, or that labor's
demands do not throw things out of whack,
or that the international situation does not
blow up in our faces, our immediate domes-
tic prospects may be described as bright.
Indeed, the forces still at work in our econ
omy seem so strong and favorable that we
have good reason to hope TOR continuing
high employment and relative prosperity
for number of years to come.