The Economy: Relative Optimism

When both the nation's biggest automaker and its biggest steelmaker report substantially lower earnings, headline readers would normally conclude that the economy is in a bad way. But 1966 is anything but normal, and last week's news of lower profits in autos and steel failed to upset the relative optimism among chart watchers in Detroit, Pittsburgh and Washington—not to mention Wall Street.

General Motors announced profits of $99 million for the third quarter, down 62% from the equivalent period of 1965. Third-quarter earnings dropped 36% at Ford, and 64% at Chrysler. The declines were due not so much to falling...

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