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-- :
January 14, 1957
to
January 20, 1957
President Eisenhower asked Congress to boost
Federal spending $2.9 billion above this year's
estimated $68.9 billion to $71.8 billion for
the fiscal year that starts next July 1. The 1957-1958 budget, presented to Congress on January 16, estimates revenues for the next
fiscal year at $73.6 billion, leaving a $1.8 billion surplus. For
the current year, ending June 30, he forecast a $1.7 billion surplus
(based on $68.9 billion of spending and $70.6 billion of revenue).
But Mr. Eisenhower said tax cuts must wait at least another year.
The new budget, if adopted, would be the third successive balanced
budget of the Eisenhower administration. Spending for the coming
fiscal year would be the highest sin~e fiscal 1952-1953, at the height
of the Korean War. (Wall St. J. 1/17 p.12)
EISENHOWER OUTLINES
$71.8 BILLION BUOOET
Industrial production in December rose one
point to a record 147%, seasonally adjusted,
of the 1947-49 average, the Federal Reserve
Board reported. This compared with a rate of 144i in December 1955.
Increased auto production in December played an important role in
boosting the over-all seasonally-adjusted index. For the full year
1956, industrial production averaged 143~ of the 1947-49 average.
This represented a four-point gain, or 3~ over the 139'1, reported for
the previous year. (Wall St. J. 1/17 p.5)
INDUSTRIAL PRODUCTION
RISES IN DECEMBER
CONSUMERS IN
BUYING MOOD
According to a nation-wide survey conducted by the
Survey Research Center of the University of Michigan
in November and December, the consumer is satisfied
with his financial situation and confident of the future. Plans to
buy new cars were substantially more frequent than earlier in 1956,
but not as widespread as the high level reached in the fall of 1954.
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.
The survey also reported that plans to buy homes have increased in
recent months, but was less optimistic regarding prospective purchases of household goods. Such plans gave little indication of recovery from their earlier decline. The survey showed that buying inclinations had det~riorated somewhat among the lowest income group
(under $3,000), while the middle and upper brackets showed improvement. (N.Y. Times 1/16 p.49)
The F. W. Dodge Corporation has reported that in
the 37 states east of the Rockies, construction
contracts for 1956 set a new record at $24.4 billion, topping 1955 by 3i• Non-residential contracts were up &fo,
heavy engineering rose 1CJ{o, and residential awards dropped 4i. For
the month of December, volume of construction contracts awarded was
down 18/fo from 1955, the fourth consecutive month in which awards lagged behind year-earlier levels. Residential contracts were down 37'1,
from December 1955 and non-residential awards, 14i. (N.Y. Times
1/15 p.45)
1956 BUILDING
CONTRACTS UP ?Jfo
STEEL EXPANSION
SET AT $1.7 BILLION
Iron and steel companies plan to spend $1.7
billion on new equipment and construction in
1957 - more than ever before in a single year.
In repor~ing this, the American Iron and Steel Institute said that
such an investment would be 421, larger than the estimated 1956 outlay
of about $1.2 billion. The plannett expenditure would be more than
six times what the industry was spending a decade ago. (N.Y. Times
1/16 p.2)
Senator Homer E. Capehart has introduced a bill on
President Eisenhower's detailed proposals for a
commission to study all phases of credit and finance. The bill calls for a "national monetary and financial commission." It suggests an investigation along several lines, including
an "evaluation" of existing means for money and credit control, such
as the Federal Reserve System. The inquiry would also appraise the
relative powers and advantages of all kinds of financial institutions
and would review Federal and State laws affecting them. (N.Y. Times
1/15 p.2)
SENATE GETS BILL
ON FINANCE STUDY
The Commerce Department reported retail sales
rose 3i last year to a record $191.4 billion.
The 1956 volume, which compared with $185.5
billion in 1955, was helped by a 4~ gain in department store sales
RETAIL STORE SALES
ROSE 3~ IN 1956
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Federal Reserve Bank of St. Louis
reported by
as a factor
no estimate
er prices.
lion. This
1/14 p.6)
the Federal Reserve Board.
in the higher sales figure,
on how much of the increase
Total retail store sales in
compared with $19.3 billion
Higher prices were considered
although the Department gave
might be attributed to highDecember reached $19.5 bila year earlier. (Wall St. J.
RESERVE PASSIVE
IN '56 CREDIT
Contrary to popular belief, the Federal Reserve
Banks did not take money out of the market last
year in pursuance of their restraint policy; but
through Government security purchases and other operations, they put
some money into the market. M. S. Szymczak, a member of the Federal
Reserve Board, said at the National Credit Conference, sponsored by
the ABA, that constant study and review must determine exactly how
much credit may be used at any particular time. The restrictive
policy in 1956, he said, mean~ that the reserves supplied to and
withdrawn from the banks by the System was essentially unchanged;
what the System did was merely t__o refrain from making new Reserve
credit available to meet all demands at current rates. (J. of Comm.
1/15 p.l)
HOUSING STARTS
FALL IN 1956
Housing starts in 1956 decUned to 1.1 million units,
according to recent BLS figures. This was l&;, under
1955 and the lowest level since 1953. Builders
generally blame the 1956 sag on tight credit conditions. Many expect
a further drop in home building this year to well below one million
starts. But Federal Housing Chief Cole has said he believes the 1957
level will be about the same as that of 1956. (Wall St. J. 1/18 p.1)
CASH DIVIDENDS DROPPED IN
DECEMBER BUT TOPPED '55
The nation's corporate shareholders received f?f{o less cash dividends in December
than a year ago, but their take for the
full year went up f?f{o over 1955 to establish a new record. The Commerce Department attributed the December decline in dividends by
corporations issuing public reports to a lower volume of year-end
"extra" dividends. Total payments during December reached $2.2 billion, compared with $2.4 billion in the like month of 1955. Despite
the drop, however, December still was the second highest dividend
month on record. All but four industry groups reported higher dividends in all of 1956 over the previous year. Non-ferrous metal companies boosted payments by nearly one-third, while advances of 1Cf1;
to 15i were reported by the electrical machinery, iron and steel,
oil refining and miscellaneous conc·e rns. (Wall St. J. 1/1 7 p. 3)
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Federal Reserve Bank of St. Louis
The swiftly-expanding steel industry has been operating at or near capacity since it recovered from last
summer's steel strike shutdown. There's no prospect
of any immediate major slump, but demand from several important steel
using industries isn't coming up to expectations. Steel scrap prices,
at times a tip-off to fu~ure steel production, are going down. The
new outlook apparently is keyed by the realization that rosy estimates of steel use by auto makers aren't being fulfilled. In addition, appliance manufacturers' steel buying is showing an unexpected
sag. When ~eel men were making their predictions for 1957, most
figured on close-to-capacity operations in the first half of this
year, with a decline in the second six months. But the recent order
trend, marked by scattered cancellations and deferments from the auto
and appliance industries, is giving rise to a belief that the dropoff may come before mid-year. (Lally, Wall St. J. 1/14 p.1)
STEEL DEMAND
SLACKENS
TAX ANTICIPATION BILLS
The Treasury's offering of $1.6 billion of
DRAW RATE OF 3.305i
159-day tax anticipation bills drew a rate
.
of 3.305i. The bills were offered for cash
and in exchange for $1.6 billion of 91-day bills marketed as a special issue to raise new cash last October. This issue drew a 2.6271,
rate. However, the rate on the October issue is not directly c_omparable. The current offering of bills differs in that it carries
a longer maturity, is a tax anticipation issue, and cannot be paid
for by credit in tax and loan accounts. (Wall St. J. 1/14 p.18)
TEXTILE INDUSTRY
WELCOMES QUOTA
Prospects for the cotton textile industry are
brighter than in many years. The announcement
last week of "voluntary" Japanese quotas on textile shipments to the United States has served as a tonic to the
American industry. The quota program provides for an over-all liinitation of 235 million square yards to be shipped here from Japan in
each of the next five years. A key result of the settlement is that
it returns some form of stability to the indus~ry. Exeautives now
contend that they can proceed with long-range expansion, research
and sales planning, without fear of being swamped by Japanese goods.
(Spielvogel. N.Y. TiJiles 1/20 III, p.1)
PUBLIC SPEEDED
RATE OF SAVINGS
The Securities and Exchange Commission reports that
savings by individuals increased $3.9 billion during the third quarter of 1956. This compares with
a $2.2 billion gain...in the previous three months and a $3.5 billion
boost in the like period of 1955 . Total savings at the end of September 1956, were $653 billion. Officials said it was too early to
estimate what happened to savings in the fourth quarter. (Wall St. J.
1/17 p.3)
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