THE GAY RECESSION

...Earlier, there had been some talk about "high-level stagnation" by lower-echelon officials in the Department of Commerce...

...What should be the fiscal and monetary policies of the Federal government, taking account of political as well as long and short range economic considerations...

...Finally—and importantly—there is a strong fear that a large Federal deficit, however temporary, would be inflationary...

...Everywhere one reads that the recession has "bottomed out"—one of the most unpleasant of the many inelegant expressions used by financial writers...

...In many cities, the first two groups live apart from the rest of the community, so that their plight is unnoticed by many fellow citizens...

...About one out of four auto workers is unemployed...

...The first time Secretary of Commerce Frederick H. Mueller used the word was just before the election, when he said the recession was over and the country was in a recovery phase...

...It is not always easy to detect the direction of political and economic winds...

...The tactic of the Administration has been to push hardest for the enactment of long-range programs in the fields of education, child welfare, minimum-wage legislation, housing, redevelopment of distressed areas, agriculture, defense, and foreign assistance—programs that would contribute to recovery but most of whose impact would come later...

...The United States Steel Corporation, for example, though it operated on the average at less than two-thirds capacity in 1960, reported a net profit equal to 8.2 per cent of sales...

...All in all, the loss of goods and services is running about fifty billion dollars a year—or more, if we take an unemployment rate of less than four per cent to be a reasonable target...

...Raising the subsidy on cotton exports from six cents a pound to eight and one-half cents not only impairs the competitive position of American textile firms but also hurts cotton producers in Brazil, Peru, and Mexico by lowering the world price of cotton...

...The pace of mechanization has not changed appreciably...

...New stock issues are often heavily oversubscribed even before the offering prices are announced...

...We should, rather, increase the magnitude of the problem by achieving recovery and then do all that is needed and appropriate to resolve this problem in its new dimensions...

...But what now appears conservative and least risky may turn out to be the opposite...

...The financial pages, on the other hand, are full of cheery forecasts of a spring pickup in new car sales and an increase in the operating rate of steel mills...

...Should there be a severe break in the stock market and should economic activity in the spring months be no greater than in the first quarter—despite a borrowing-from-the-future speed-up in government procurement, disbursement of insurance dividends, tax refunds, and so on—then what appears the most cautious and conservative course may turn out to have been a risky gamble...

...In January, the Democrats took over and there was some uneasiness, but within a month a New York Times headline stated: "Wall Street at Ease on New Frontier...

...Surely, no one who is both informed and intellectually honest can speak with assurance...

...Standard & Poors' price index of five hundred stocks has exceeded previous records so often that new highs are no longer commented on, or even noted, in the daily press...

...Even more urgent, however, is the need for fiscal and credit policies to increase total purchasing power...

...It may be that further adjustment in the dollar exchange rates of strong currencies will have to be made eventually if we are to generate a larger surplus of exports over imports—a surplus large enough to "I Was Hoping We Could Get Together Alone" finance expanding private investment abroad and increased government aid to less-developed countries...

...We are afraid to lower interest rates by any big addition to monetary reserves, so residential building is still restricted by high mortgage rates...

...President Eisenhower and his advisers refused to use the word "recession" during the summer and early fall of 1960...

...The nature of the recession is not that there are fewer jobs but that job opportunities have not kept pace with the growth in the labor force...

...Needed is a large-scale investment in people, to train the greatly increased flow of people into the labor force and to retrain those displaced by technological and structural changes...

...Brokers in cities throughout the country are happy not only because of the rise in stock prices but because of the extraordinary volume of trading, greater than at any time since 1929...

...After the child is born, the husband remains in bed with it to recover from the terrible ordeal, and the mother returns immediately to her work in the fields...

...The important thing is to avoid the trap of attempting to solve it by restrictive measures and by postponing all that is necessary to insure a fuller utilization of our resources...

...Not only the financial community, but many service industries have prospered...

...Wage earners are laid off without pay, but the groaning is done by merchants, building contractors, labor leaders, and politicians...

...We face a stubborn problem of chronic slack, and the road to full recovery is a long one...

...The only emergency measures asked of Congress have been those to lengthen the period of unemployment compensation and to give special aid to "depressed areas...

...at the same time, one and a third million more persons were unemployed...

...so is one out of six steelworkers...

...The risk of continued high unemployment a year or two hence is greater, I think, than the risk of present unpopularity that might result from the President's recommending—and Congressmen voting for—a larger budget deficit for the ensuing year...

...First, there is the President's desire to take advantage of the good will he has in the present, highly conservative Congress to push through major programs of enduring benefit to the country...

...They see the unemployment problem solely in terms of persons displaced by IBM computers, the switch from coal to oil and natural gas, and the increased demand for medical and other services relative to the demand for farm products and factory goods...

...When she does go to bed with labor pains, she is joined by her husband who groans as though he were in great pain, while she bears the child...

...Why is there so little agitation, so little demand for the government to do something...

...the race tracks, the queues are longer this spring at the five-dollar windows than at the two-dollar windows...

...For some weeks, financial writers kept count of the number of five million-share days since January 1, but such days have become so frequent that most writers have now lost count...

...About one and one-fourth million more persons were employed in March of this year than in the same month a year ago...

...The President has acted with great vigor and, at the same time, "conservatively," in the public's estimation...

...The considered judgment of the President's Council of Economic Advisers and many other economists is: "Adjustments that now seem difficult, and unemployment pockets that now seem intractable, will turn out to be manageable after all in an environment of full prosperity...

...It is better, I think, to rely on reports from all the great employment centers...

...The statement of the President's Council of Economic Advisers before the Joint Economic Committee on March 6 is a superb analysis of the present economic situation...

...The expansionary effects of government programs will be welcome even if they occur well after the recession has been reversed...

...But those who have analyzed present unemployment see no evidence that hard-core unemployment has been growing as a percentage of the labor force...

...The fear of inflation continues to deter any bold move to combat the present waste of resources, much as it did under the previous Administration...

...Fourth, the President and his principal advisers have been indoctrinated with anxiety about the country's balance-of-payments position...

...In general, unemployment has been confined to industrial workers, to members of minority groups, and to teenagers...

...Since then the new Secretaries of Treasury, Commerce, and Labor have assured us that recovery would begin soon...

...When one stands at the foot of the Washington Monument, or in the canyons of Wall Street, the apparent direction is often deceptive...

...The Congress and the public, for the most part, remain complacent...

...But one sees little in the newspapers about the acute distress of these and other workers unable to find jobs, more than two million of whom received no unemployment benefits in March...

...Investors and salaried workers have done well because product prices in most cases have been maintained by "adjusting production," a euphemism for laying off those who work for wages...

...Several considerations appear to have dictated against a tax cut, or an immediate large increase in expenditures that would result in a swollen budgetary deficit...

...To many who view the unemployment problem without long perspective it appears that people are unemployed because of "automation" and because of structural changes in the economy...

...The international payments problem may be with us for many years...

...As Walter Heller, Chairman of the President's Council of Economic Advisers, said in his statement to the Joint Economic Committee: "The decline began from a position of substantial unemployment and excess capacity...

...He publishes a reporting service for commercial banks, and for several years he wrote a column, "Our Changing Economy," for the Washington Post...

...Why some persons, and not others, should need a rest— or why expensive machinery needs any rest at all—might be hard to explain to unsophisticated people...

...Third, he may fear that if the timing proved to be wrong, he might be discredited...

...Even the industrial firms which are the sources of much of the unemployment have "weathered well the recent recession," one reads in many company reports...

...But all this has had no great impact...

...Strange as this practice seems to us, it bears some resemblance to what happens during the course of recession in the United States...

...The stock of one small engineering firm in Washington recently launched at seven dollars a share traded at seventeen dollars only an hour later...

...It would be better, however, if people were aware now of the magnitude of the unemployment problem and would urge the Congress to adopt immediately fiscal policies to achieve more nearly full employment and to begin the massive investment in human resources that is needed if the great number of young people entering the labor force in the 1960's are to be equipped for the kinds of jobs that will be available...

...Two-thirds of the 150 major labor markets in the United States now have "substantial labor surpluses" and all others have "a moderate surplus," according to the latest survey of the Department of Labor...

...Paying up to $300 million in export subsidies on cotton and maintaining import quotas on lead, zinc, petroleum, sugar, and other government-supported products does not protect our international payments position, while such measures do much to aggravate those economic difficulties of Latin American and other countries which we are committed to help overcome...

...The President and Congressmen must separately assess economic developments and stake their political futures on this assessment...

...The unreality of the recession to most Americans and the resignation of those who are unemployed is reflected in the attitude of the Congress...

...But the President's Council of Economic Advisers leans toward the view, repeatedly voiced by its chairman, that the present tax structure would generate too large a revenue surplus under conditions of full employment and, for this reason, is inconsistent with the achievement and maintenance of full employment...

...Personal income, though it has fallen since last October, is also higher than it was a year ago...

...He sent to Congress during his first two months in office some remarkable documents, including several excellent programs of economic action...

...Further, there is less danger today of bad timing—less risk that the impact of slow-starting government projects will come too late to aid recovery and instead aggravate an inflationary boom...

...The voting public in November, 1962, will not be charitable to those officials who guessed wrong because the public too was in error...

...Employes of most nondurable goods firms not subject to "inventory adjustments" have felt no insecurity, no sense of hard times...

...Partly, I think, because it is the accepted way of life in our society that wage earners are laid off periodically, whenever "the economy needs a rest" (a silly expression used by a prominent Wall Street Journal commentator...

...Yet primitive people have customs which, though different from ours, are analogous...

...At PHILIP S. BROWN it an economist in Washington who has served as a consultant to both government agencies and private corporations...

...The latter measure provides for both emergency and long-term programs...

...In addition, there is a great deal of underemployment, evidenced by the fact that about one and one-half million employed persons were forced to work part-time in March...

...The market value of securities listed on the New York Stock Exchange rose about $75 billion from October, 1960, to April, 1961...

...Full recovery is likely to increase our demand for imports by one and a half to two billion dollars a year—so the Council of Economic Advisers states—without much likelihood of a comparable rise in exports...

...Boosting the prices of feed grains will increase the costs of dairymen and cattle raisers and ultimately raise food prices...

...Yet at this moment about five and one-half million persons are unemployed (that is, actively seeking jobs), and many more persons undoubtedly want to work but feel it is hopeless to apply for a job at this time...

...We are afraid to lower taxes, lest a Federal deficit cause a rise in wages and prices, so millions of workers continue idle, despite great unfulfilled needs...

...Yet other actions are affecting the nation's economic balance probably more adversely than would a temporary reduction in the Federal income tax...

...Government officials have been serene...

...In some societies, anthropologists tell us, a pregnant woman continues to work in the fields until her baby is about to be born...

...There is no sense of emergency, no pressure from constituents, in most cases, to put people back on payrolls and "to get America moving...

...Most of them are now flying distress signals...

...Second, he has undoubtedly sensed that requests for additional emergency programs might turn Congress against him and that he might end up with no important legislative accomplishment...

...The President has shown remarkable vigor...