Evening star. [volume] (Washington, D.C.) 1854-1972, 1956-07-01

dip slightly in the next three
months. but should reach New
Years Day. 1857, on the upgrade
if official gueSses hold good.
Climbing prices may disguise
the summer sag. because overall
production is measured in dol.
lars Consumer prices now match
the highest ever and may move
on to new cost-of Living peaks.
Dollar Loses a Cent
The jump in May, announced
last week. was four -tenthS of
per cent. biggest monthly gair
in three years. The Labor De.
partment'S index reached 1854
per cent OF the l947-49 average
That means the dollar ha,
lost a bit more than one cent
in buying power since a veal
ago. The rise in food prices was
chiefly responsible, and this i;
not expected to stop until har-
vest time.
The view that a summer busi-
ness lull will be followed by 9
fall upturn was expressed, with
only minor variations, in inter
views by ranking economists
staff advisors and officials OF
the Federal Reserve Board
White House, Commerce De-
partment and Congress.
Secretary of Commerce Weeks
has voiced the same optimism
though he recently said pub
licly what other officials ac-
knowledged privately-that the
economy was very spotty" ano
some important industries have
sasged off more than we thought
they would"
Confidence Seen Restored
And while others SHE'D away
from mixing election-year poll
tics with their economics. Mr.
Weeks predicted: Business will
not let down enough to hurt
Republican prospects, I'll tell
you that"
Another high White House
advisor suggested the greatest
gain of the past fortnight was
the heartening-up OF business
confidence This official said
The only thing that bothered
me four to six weeks ago was
the way people were talking. y
The springtime pessimism was
caused by an utterly unseaSonal
slump in auto sales. the lag
in housing, disappointing farm
income, a squeeze down on
already-tight credit by the Fed
eral Reserve Board, and a iona
skid of stock market values.
Yet other powerful Segments
of the economy. particularly
construction, kept on rising. So
the overall indexes of produc-
ton. jobs, income and profits
have remained high and quite
stable.
Alarm Over President
On June 8, President EiSen-
hoWer's second major illness in
nine months sent new thrill
OF alarm through the stock ex-
changes. It was short lived,
and one week later the chief
economist of the United States
Chamber of Commerce, DR.
Emerson p Schmidt, insisted to
newsmen there would be no
business tailspin even if Mr.
Eisenhower decided not to run
for reelection.
There would be a brief initial
shock" DR.. Schmidt said. but
the underlying elements OF
growth still would make this the
countrys biggest year. And
this prosperity should carry
over into 1851"
This optimism is not unani-
nous. On the same Chamu /
platform with Dr.. Schmidt,
Washington banker Justin
Bowersock warned there is "a
possibly malignant amount OF
weakness IN the economy. He
favored quick tax relief and an
easing OF credit TO avert pos
slbly Longer ana more severe
recession than the mild third
quarter dip which officials FORE
see.
Satisfaction Is Outlook
But administration policy re-
fleets general satisfaction with
the business outlook. Despite a
prospective budget surplus of
$l.8 billion or more at this turn
of the Federal fiscal year, Secre-
tary of the Treasury Humphrey
fatty rejects tax reduction, and
Federal Reserve sources lndi-
Gated there will be no major
move to pump more money into
the banking system.
These two anti-receSSion
weapons therefore remain in the
Governments hands to counter
any slump that begins 20 look
serious.
With several key industries
having trouble, why anticipate
q late-year upturn?
The answer, as given in con-
sensus by the economists here,
Is that the sinking industries
may now be touching bottom
Even if they do not reco, er
markedly in the second half OF
1856, the rise Of other industries
should carry the total economy
forward.
Farm Prices Rising
Farm prices, it was pointed
out, have risen at last after a
four-year decline. In five months
the parity ratio"-the measure
Of prices received by farmers as
against the prices they pay-has
risen from 80 to Is.
The auto industry, bellwether
TO-. Vaaatav 1AHa,. a.. m a