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Published Weekly by the FEDERAL RESERVE BANK of CLEVELAND
February 18, 1958
to
February 24, 1958
The Department of Commerce has reported that the
annual rate of the nation's output declined by
$7.4 billion--a little more than 1.5%--in the final
quarter of 1957. The largest part of that was a sharp reversal in
the trend of inventories, from up to down. _The Department's estimate
of the decline was slightly larger in dollar terms than the preliminary estimates that appeared in President Eisenhower's economic report .
to Congress last month. This dollar difference had essentially no
effect on the percentage maintained. (Cleve. Plain Dealer, 2/24 p.18)
GROSS NATIONAL
PRODUCT DOWN
1
Personal income in January showed no change from
December,the Department of Commerce has reported
--but the Agency said the high level of dividend
payments prevented a drop. Seasonally adjusted, personal income was
at an annual rate in January of $343.5 billion. But excluding dividends, the Agency said, the figure would have declined by an annual
rate of $2 billion from December to January. The January rate was
$7.5 billion above the like month of 1957, but was down a full $4 bi~~
lion from the August high of $347.5 billion. (Wall St. J., 2/24 p.lQ)
PERSONAL INCOME
STEADY IN JANUARY
New claims for unemployment insurance benefits
last week continued a downward trend, the Department of Labor's Bureau of Employment. Security has
reported. The decline--normal at this time of year--began in midJanuary. It is an indication that unemployment may be rising at a
slower rate than before. (Mooney. N.Y. Times, 2/22 p.1)
JOBLESS CLAIMS
CONTINUE TO DROP
LORAIN STEEL MILL
RECALLS WORKERS
over.
Recall of 1,000
Division of the
Lorain that the
All of the recalled workers,
workers by the National Tube
U.S. Steel Corp. buoyed hopes at
worst in a wave of layoffs was
some laid off for as long as a
Selection of these items does not imply this bank's guaranty of their accuracy,
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Federal Reserve Bank of St. Louis
nor agreement with the views expressed.
month, will be back on the job next week. Spokesmen for U.S. Steel
in Cleveland said that the No. 2 and No. 4 seamless mills would be
placed back into operation and that two additional steelmaking open
hearths would be refired. Resumption of work on the two mills, said
a spokesman, resulted from "a sufficient backlog of orders to justify
their operation." Including a major layoff four weeks ago, the division had furloughed a total of 4,300 of the plant's force of 11,000
in recent months. (Cleve. Plain Dealer, 2/19 p.7)
FORD CUTS
LAYOFF ESTIMATES
Layoffs and production cuts continued to spread
among the Big Three auto makers, although Ford
Motor Co. tempered the extent of a layoff this
week at its main River Rouge plant near Detroit. Ford said it actually will idle 6,000 employes for this week at the Rouge plant, which
turns out F0rd cars. It originally announced Friday 14,000 workers
would be affected. The layoff of 6,000 means a net reduction of
2,000 in employment this week at the plant, because 4,ooo workers
are to return to their jobs today. The layoffs will be scattered
generally through the Rouge plant, which employs 32,000 workers,
Ford said. (Wall St. J., 2/24 p.3)
Retail business has been betrayed by the weather.
At a time when the elements could do much to help
the economy out of the doldrums, nature has become
extremely unfriendly. Cold, snow, and freakish storms have combined
to keep shoppers away from stores. Result: dollar volume so far in
Februa.-:-y is more than 5<fo below; the 1957 level in department stores
and probably is similarly lower in other segments of retail trade.
(Koshetz. N.Y. Times, 2/23 III p.7)
WEATHER BETRAYS
RETAIL TRADE
The frigid weather that swept across much of the
nation caused power sales to rise in every major
geographical area of the country, the Edison Electric Institute reported. During the week ended February 15, the industry distributed 12.4 billion kilowatt hours of electricity, 3.gfo
ahead of the 11.9 billion kwh produced in the week ended February 16,
1957. (Wall St. J., 2/20 p.22)
COLD WEATHER UPS
DEMAND FOR POWER
The Federal Reserve Board called its most powerful
anti-recession weapon into play and cut the reserves that it requires commercial banks to hold
against .deposits. The action will release $500 million that is now
frozen in special Federal Reserve accounts, and ultimately, will add
$3 billion to the lending power of the American banking system. A
FRB CUTS RESERVE
REQUIREMENTS
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Federal Reserve Bank of St. Louis
spokesman said that this is a further step to promote recovery . The
Board voted a 1/2{o cut in the demand deposit reserve requirements of
all Federal Reserve System banks. The move will directly affect
6,400 commercial banks that control 85~ of the country's commercial
bank deposits. The reduction will lower demand deposit reserve requirements to 19-1/2/o at central Reserve city banks, to 17-1/2'/o at
Reserve city banks, and to 11-1/'4 at country banks. Time deposit
requirements were not changed. The cut will take effect February 27
in central Reserve and Reserve cities, and on March 1 at country
banks. The cut is the first the Board has order~d since the 1953~54
recession. It dr0pped reserve requirements in June 1953, and again
a year later. (Slevin. N.Y. Herald Trib., 2/20 p.1)
William McChesney Martin, Federal Reserve Board
Chairman, appeared February 19 before a Senate
Banking Sub~ommittee to give his views on the
economic outlook for business and to answer questions. He was, on
the whole, optimistic. "In _my own view, the underlying strengths of
the economy are many," he said. He predicted, "after not too long a
period of readjustment, a healthy revival of business should set in,
progressing to new records of economic performance and new high levels
of national well-being." The Reserve Board Chairman indicated his
opposition to proposed tax cuts, in reply to questions. He declined
to be pinned down to stating that recovery would come in March.
(Amer. Bkr., 2/20 p.1)
FR CHAIRMAN GIVES
VIEWS ON ECONOMY
President Eisenhower sent Congress the
Administration's $3.9 billion foreign aid
program with a declaration that deep cuts
would result in bigger defense budgets, higher taxes and a step-up
in the draft. In a sharply wgrded special message to lawmakers who
have already indicated their eagerness to slash foreign aid, the
President urged "vigorous continuation" of the program. The $3.9 billion of new money requested is divided up this way: Direct military
aid--$1.8 billion, defense support aid--$835 million, development
loan fund--$625 million, and contingency fund--$200 million. (Wall
St. J., 2/20 p.5)
$3.9 BILLION FOREIGN
AID BILL SUBMITTED
TREASURY ISSUE
The Treasury said it will make
Friday (February 28) of a bond
about nine years to raise $1.25 billion of "new
are needed in connection with the $16.8 billion
this month when cash-ins by holders of mauuring
$1 . 4 billion. (Wall St. J., 2/21 p.1)
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Federal Reserve Bank of St. Louis
an offering next
issue maturing in
money." The funds
refunding earlier
issues a.mounted to
Short interest on the New York Stock Exchange rose
1,088,520 shares from January 15 to February 14 to
a twenty-six-year peak of 3,921,260 shares. Short
interest represents the number of shares borr~wed and sold short in
the hope that they can be bought later at lower prices. Although
reflecting bearish sentiment, the amount is construed by some to act
as a stabilizing influence when it is covered through buying.
(Moseley. N.Y. Herald Trib., 2/20 III p.4)
SHORT INTEREST
AT 26-YEAR HIGH
TIME DEPOSIT
Large New York commercial banks have begun backing
RATE CUT
away from the Jfo rate paid on time deposits for other
.
than small individual savers. The Hanover Bank cut
its rate on six months' time deposits to 2-l/2{o from 3% and its rate
on 90-day deposits to 2fo from 2-l/2{o. Other large banks indicated
they were about to reduce the incentive for foreign banks, in particular, to move their funds from Treasury bills and acceptances into bank
deposits. This action may take the form of a cut in the interest
rate, or it may be refusal of deposits. ยท In the event that a cut of
as much as one-half of 1% becomes general on time deposits, other
than those of the small "thrift" account variety, a deposit volume
of about $2.5 billion would be affected. (J. of Comm., 2/19 p.3)
Cattle prices continued their upward climb
at Chicago yesterday, February 19. Prime
grade slaughter steers hit a new three-year
high while choice stock jumped to its highest point in five years.
A load of strictly prime 1,233-pound fed steers brought the day's
highest price of $35.50 a hundred pounds, up $1 from recent highs
;~nd the highest price for beef animals since February 9, 1955.
(Wall St. J., 2/20 p.16)
PRIME SLAUGHTER STEERS
HIGHEST IN THREE YEARS
Canada's jobless reached a post-war record of
520,000 by mid-January, up 134,ooo from the previous month and 217,000 from a year ago, a joint
Labor Department-Bureau of Statistics release said today. (N.Y.
Herald Trib., 2/19 p.2)
CANADA JOBLESS
AT POST-WAR PE.AK
Lord Mancroft, Minister without Portfolio, told
the House of Lords today that only 1.8% of insured employees in Britain are without work. He
made this statement when asked for the effects of the American business recession on Britain. (Humphreys. N.Y. Herald Trib., 2/19 p.3)
LITrLE UNEMPLOYMENT
REPORTED IN BRITAIN
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