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Published Wee kly by the FEDERAL RESERVE BANK of CLEVELAND
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January 28, 1958
to
February 3 , 1958
ECONOMISTS IN DOUBT
OF A SPEEDY UPTURN
A majority of economists testifying before the
Congressional Joint Economic Committee (January 29) expressed doubt that the pickup in defense orders would cure the current recession. Only one of six economists on the panel expressed confidence that the recession would be
short-lived. Of the other five, all of whom expressed more caution
than the President's economic report had, two recommended immediate
action to increase Government spending or cut taxes. The others suggested that such activity could be needed soon if the recession were
not quickly halted. The economists also raised doubts about the
President's expectation that housing and state and local spending
would further help to lift up the economy this year. The economists
agreed that the main cause of the recession--declining business investment in plant and equipment--would probably continue to act as a
depressing force throughout 1958. (N. Y. Times, 1/30 p.1)
MITCHELL EXPECTS
4 MILLION JOBLESS
The Secretary of Labor, James P. Mitchell, said
today that he expected unemployment next month
to be 4 million to 4.5 million. The rise from
December to February would be largely seasonal. He foresees, however,
a small decline in unemployment in March and April and "a more decide d decline" in May and June . Mr. Mitchell conceded that,.an unemployment figure of more than 4 million "is a higher level than we
would want to see, " but he reaffirmed his confidence that business
would t urn up b y mid-year. (N. Y. Times, 1/31 p.1)
Steel mill operations are being scheduled
sli ghtly higher this week by producers in
the two leading steelmaking centers of
Chicago and Pittsb urgh, but a decline i s indicat ed for t he Youngstown
distriot. February product ion in the industry a s a whole got unde r
FEBRUARY STEEL OUTPUT
EXPECTED BELOW JANUARY
Selection of these ite ms does no t imply this bank's guara nty of th e ir accur a cy,
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nor ag reement with the vie ws e x pre ssed .
way at approximately the same levels that have prevailed for the
past few weeks. Some steel companies continue to believe, despite
growing optimism on the order situation, that output this month will
drop below the daily rate of January, which was the worst production
month in years. March is being counted on by the mills to bring a
mild recovery. (Lally. Wall St. J., 2/3 p.26)
AUTO OUTPUT
UP SLIGHTLY
Despite shutdowns, additional layoffs, and a four-day
work week by several automobile producers, output of
passenger cars in the U.S. this week will rise slightly
over the total assemblies last week. For the week ending midnight
February 1, auto makers will build an estimated 108,693 cars. This
production, though, will be 23 .5'fo under the 14.8,411 cars turned out
by the industry in the comparable week last year. Current output is
fairly closely in line with sales of the new cars, which are estimated to be more than 2a{o below sales in January 1957. (Wall St. J.,
1/31 p.2)
COPPER MINE
TRIMS OUTPUT
The Anglo-American Corp. group of copper mines in
Northern Rhodesia, Africa, announced that its production will be curtailed by lOo/o, or 27,000 tons a year,
beginning in March. This is the last of the major world copper producers to tut output in an effort to adjust production to reduced
consumer demand. (Wall St. J., 1/29 p.16)
The Army's pencil-shaped moon now whizzing around the
globe, as sized up in Washington, seems sure to •••
increase the chan~es for new summit talks with Russia
this year and strengthen Uncle Sam's hand in negotiations leading
up to such talks; and bring directly to American scientists new
information about the universe that will be valuable not only for
military purposes but for peaceful domestic uses as well. (Clark,
Faltermayer. Wall St. J., 2/3 p.1)
SATELLITE
SEQUELS
STOCK MARKET
Showing the best gain for any month since last August, the stock market last week edged higher as
January t ame to a close. The advance, howeveF, was quite selective;
trading was moderately active. A great deal of the volume centered
on issues influenced by news developments and corporate reports.
As measured by The New York Times combined average for fifty stocks,
the market touched its best level in three months, successfully penetrating the resistance points at the high levels of November and
December. The gain in the index for January was 14.46 points.
This compares with a loss of 14.78 points in December. The gain
last month was the widest for any month since August. Trading in
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January was the best for any corresponding month since 1955.
(Forrest. N. Y. Times, 2/2 III p.1)
BANKS EASE
CASH POSITIONS
The nation's banks continued to work into more comfortable cash positions this week from natural influences rather than from central bank assistance,
which was at a minimum. They paid down their rediscounts to the
lowest since June 1955, and the New York banks again were free of
debt. Contributing materially to this returning money ease has been
a return flow since Christmas of some $1.5 billion from circulation;
more money has come back than went out before the holiday. Red.uced
loan demand also has been a factor. This week, New York banks had a
slight gain in business loans. (J. of Comm., 1/31 p.1)
The Treasury has offered a thre~ -way cho,i ce of
securities to holders of five maturing issues
totaling $16.8 billion. The new choices include the first very-long-term bond since 1955. It is a 3-1/21, bond
maturing in 1990. The others are a one-year certificate bearing
2-1/21, interest and a six-year bond bearing Jfo. The refunding revealed dramatically the sharp change in the money market in recent
weeks. The last offering of a one-year certificate, for example, was
in November. It bore an interest rate of 3-3/4%, compared with the
2-1/'4, on this offering. (N. Y. Times, 1/30 p.33)
TREASURY TO OFFER
32-YEAR 3-1/'4 BOND
Long-term U.S. Government issues rallied slightly on
Friday after declining sharply in the previous session.
However, most of these securities ended well under the
previous week's close. In the final session, trading began on a
"when issued" basis in three new Treasury securities. Demand was
fairly brisk and all the new issues closed at premium prices. The
announcement, which came late Wednesday afternoon, of the terms of
the new Treasury financing sent prices declining rapidly in both
the long-end Governments and the high grade GOrporates in Thursday's
session. The Treasury 40-year 3s of 1995, which are in the most
direct competition with the new 3-l/2s of 1990, suffered the sharpest
setback. Some dealers closed the issue at 93-20/32 bid, down 1-28/32
on the week. (Wall St. J., 2/3 p.21)
LONG-TERM
ISSUES
CORPORATE BOND
OFFERINGS LIGHT
Bond borrowing by corporations promises to remain
in the doldrums until mid-February, when General
Motors Acceptance Corp. plans to market its proposed $150 millio:i.1 of new debentures. The present lull in corporate debt underwri ti'ng probably is not completely unwelcome to the
Wall Street community; the upturn in bond prices has been sharply
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arrest e d, at l east t emp or a rily, by the i nt ervention of t he U.S.
Treasury i n the ma rket with a new 3- l/2{o i ss ue , due 1990 . (Wa l l
St. J., 2/3 p . 21)
Construction contracts in 1957 rose 2{o over t he
1956 total and "undoubtedly set a new all - time
record," F. W. Dodge Corp . , construction market ing specialists, said. The 1957 figure of $32 billion was the first
annual construction contract total ever computed, since previous
Dodge statistics covered only 37 States east of the Rockies. Back
data on the 48-State basis was compiled for 1956 in order to make
possible a comparison. December contracts totaled $1. 98 billion, a
decline of 4% below December 1956. A rise in contracts for residential buildings was more than offset by declines in non-residential
and heavy engineering contracts. Residential building contracts for
1957 amounted to $13 billion, 1% ahead of 1956; non-residential building was up 1%; and heavy engineering amounted to $7.8 b i llion, up 4%.
(J. of Comm., 1/30 p.1)
BUILDI NG CONTRACTS
SET RECORD IN 1957
Consumers' instalment debt increased by
$531 million in December and was at a record
total of $34 billion at the end of the year.
The Federal Reserve Board said the increase was slightly smaller
than the rise in December 1956. The Board reported that most of the
December increase in time payment credit was on purchases of automobiles and on personal loans. There was virtually no change in
the amount of credit to cover purchases of household appliances and
other consumer goods. (N. Y. Times, 2/1 p.26)
INSTALMENT DEBTS SET
A RECORD AT YEAR-END
The Department of Agriculture has reported that
farm prices increased '2{o during the month ended
Jan. 15. This was accompanied by a rise of nearly
J.% in the prices pai·d by farmers for goods and services used in
production and family living. The mid-January farm price level was
about 3.8/fo above that of a year ago but about 21% below the record
high set in February 1951. The level of prices paid by farmers
was the highest on record and about 3% above that of a year ago .
Prices received by farmers as a whole averaged 82:{o of pari ty,
compared with 81% in December. (N . Y. Times, 2/1 p.26)
FARM PRICES
UP 2{o IN MONTH
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