The Return To Anxiety
C., L.
Exactly when a recession becomes a depression, whether we will have the one or, in time, both, what can be done to prevent a further slide into unemployment — these, certainly, are important...
...The present trend of government policy clearly contributes to further deflationary forces...
...Nor do the other two main components of private investment, nonresidential construction and accumulation of private stocks, promise to offset the declines likely to come elsewhere...
...At this late date, it is hardly possible to deny the close correlation between government expenditures and national income...
...that slowly the prospect of pink slips and grey faces seems real again...
...when we read that from December to January there has been a decline of no less than 2,000,000 workers in industry, transportation, government and trade, that the average work week has fallen from 41.7 to 39.9 hours since last year—this indicates something rather frightening in the economic trends as well as the life styles and expectations of the country...
...automobile production has been cut by at least 20 per cent since the previous year...
...We are not, apparently, on the edge of a major depression...
...There are similar signs in every economic direction: The Federal Reserve Board Index of Industrial Production stood at 123 in February 1954 as against 134 in February 1953...
...Not only will there be fewer new households in 1954 than at any time during the past decade, but we are gradually catching up with the backlog in housing construction...
...Stocks are being reduced, and non-residential construction is at best expected to hold its own...
...Arthur Burns, Chairman of the Council of Economic Advisors, declares that any similarities between present trends and the first signs of impending trouble in earlier recessions are purely coincidental since—it is reassuring to know—"I never saw any two business contractions alike...
...If the expected decline 116 • DISSENT • Spring 1954 in the first is not offset by increases in the latter two, we are in for more than a "minor readjustment...
...That a number of important cutbacks have already taken place in the consumers' durable goods industries, is common knowledge...
...It stands to reason that a further drop in employment might seriously endanger the whole structure of consumer credits...
...Personal income in 1953 was the highest in history, consumers bought several billions more goods in 1953 than during the preceding year...
...but faced with the massive drifting of a national administration which challenges the administration of Ulysses Grant for mediocrity and surpasses it in cowardice, there is a strong feeling in the air that once again we are being shaped by those mysterious forces of capitalist society which can bring misery or, sometimes, plenty but never a sense of human autonomy and decision...
...Even the recent Economic Report of the President, extraordinary for its complacence, warns that unless the government "uses its vast powers, even a minor adjustment may be converted into a spiralling contraction...
...Furthermore, with the disappearance of the famous "scissors" between agricultural and non-agricultural prices the purchasing power of the farmers has declined by some fourteen per cent since the 1951 peak and seems certain to keep declining...
...But there has been a sudden sharp turn for the worse, and thus far the Eisenhower administration has merely put up a front of imperturbable equanimity...
...Knowing as they did that our post-war prosperity was tied to the fuse of a new and greater international catastrophe, they nonetheless felt that, at the moment, they did not have to worry about their immediate well-being...
...Present indications, however, point the other way...
...and private consumption...
...The level of retail sales has been fairly well maintained but—and this could be crucial in the coming period—only at the price of continued increases in the quantity of outstanding installment credit...
...Private Investment...
...everyone dreads it...
...The depression memories that had burned themselves so deeply into the consciousness of millions were slowly eased: workers paid off debts and relieved mortgages, intellectuals developed theories of American uniqueness...
...But now defense production is being cut back sharply...
...Since the outbreak of the Korean war such investments have been heavily stimulated by accelerated facilities for tax-free amortization that have been granted to defense industries...
...Such credit increased by 4.6 billions from June 1952 to June 1953 and despite the drop in employment has continued to increase...
...Yet there seems little possibility that government spending, dubious as it may be as a basic device for creating economic health, will soon be increased enough to help take up the slack...
...dealers' inventories of new cars were 11.4 cars per dealer in February of this year, an increase of 2.1 cars over a year ago...
...In the last few years the ratio of investment to output has been higher than in any period since the late Twenties...
...Business investment is expected to drop by 4 per cent during 1954, and in some industries drops up to 25 per cent are expected...
...We can neither talk ourselves into nor out of a recession...
...that many more can be sure they will not be working full weeks...
...Estimates now call for expenditures of roughly 71.5 Spring 1954 • DISSENT • I17 billion as against 78 billion in 1953—and we might remember that declining government spending in 1948-49 led to the first signs of a recession in 1949...
...Human beings who begin to wonder when and if they may be next...
...Granted that we are not soon likely to repeat the catastrophe of the 1930s...
...Steel production is only at some threequarters of capacity...
...WITHOUT PRETENDING TO MORE ACUMEN THAN MOST ECONOMISTS, we would point to a few major signs...
...Official spokesmen contend that the cause of a fall in production and employment is some trimming of inventories and a "scramble for liquidity...
...During the past ten or twelve years most Americans could feel a tentative security with regard to their own jobs...
...Now, at the beginning of 1954, when the country is not in a depression and there seems no serious likelihood that it soon will be, one can see, or sense, a return of that subterranean anxiety which is the traditional curse of life under capitalism...
...The automobile industry, with a 20 per cent drop since last year, is the most serious, but almost as serious has been the drop in radio and television...
...Exactly when a recession becomes a depression, whether we will have the one or, in time, both, what can be done to prevent a further slide into unemployment — these, certainly, are important questions...
...Yet what matters for an understanding of the mood of the nation is the fact that hundreds of thousands of people, perhaps millions, cannot be sure that they will be working next month...
...Or when we read that unemployment figures in Detroit have now reached 140,000 or 9.3 per cent of the labor force and that the total unemployment figure in the country as of February was double the comparative figure for 1953 and increased by 584,000 during the single month of February...
...The President's Economic Report coyly avoids such terms as "recession" and speaks of a "minor readjustment...
...No one wants it...
...At the same time, while private residential construction, another important component of this sector of the economy, shows no signs of serious weakening, we are soon to enter a period in which the baby shortage of the depression years will make itself felt...
...But the forced optimism exuded by official spokesmen, together with the vicious campaign to keep people from talking about the realities of economic life, have little to do with facts...
...Within the basic context of anxiety that shapes our age it was possible to experience a certain relaxation...
...It is true, of course, that other indicators do not yet show any signs of significant decline...
...And the least one can do is remember that behind these drab statistics stand human beings with their desires and yearnings and hopes...
...There are three key determinants of gross demand: purchase of goods and services by public authorities...
...But at the moment they may not be quite so important as the fact that for the first time in at least a decade the state of American economic life has become problematic...
...If present policies remain unchanged, the federal government will pump considerably less money into the economy in 1954 than in 1953...
...Meanwhile private mortgage debt has more than doubled since 1945...
...Personal Consumption...
...Government Expenditure...
...This, of course, is much more important in magnitude than governmental expenditure and private investment together, so that relatively small percentage gains in this sector might have considerable salvaging effects upon the total economy...
...private investment...
...Unless, then, defense expenditures should suddenly show an upward trend it would seem likely that we are in for a period the economist might hopefully label "readjustment" but the anxious citizen might well consider a slump...
...Spring 1954 • DISSENT • 115 Sometimes economic trends can be read conveniently from indicators that are unorthodox, economically speaking, but revealing in human terms...
...When we read that help-wanted ads declined by 35 per cent between January 1953 and January 1954 and that some mid-Western papers print as many as 25 columns fewer of such ads per day than they printed last year, or that New York City's relief rolls are now growing at the rate of one thousand persons every week, this tells us not only something immediate about the state of our economy but also about its impact on human beings...
Vol. 1 • April 1954 • No. 2
