Across the U.S., 1957 will be remembered as the year with the dip at the end.
After racing ahead at close to 100% for much of 1957, production of all manufacturing industries dipped to 82% of total capacity. Between August and November, production measured on the Federal Reserve index dropped six points to 139. Steel skidded to less than 70% of capacity, though total production, estimated at 113 million tons for the year, almost matched boom year 1956.
Oilmen, grumbling about refinery stocks of 437 million bbl., one of the highest early winter supplies in history, chopped back production 5%. Appliances, autos, machine tools all felt a slowdown. Private housing starts dropped 10% to less than 1,000,000 new houses, for the first time since 1947. And as freight-car loadings fell 16% at year's end, railroads were in such a fever to cut rising costs and bolster sagging profits that the Pennsylvania and the New York Central, giants of the industry, talked longingly of merger.
Around the nation, there was a sprinkling of layoffs and forced "vacations"; Chrysler shut down major plants for the year's last two weeks, laid off some 60,000 workers, Ford another 35,000. As the jobless rose to about 3,700,000 in December (2,500,000 in December 1956), economists speculated that unemployment might hit 4,500,000 by midwinter.
The Record Setters. This statistical downtrend at year's end had economists and statesmen worried, particularly since some of the prophets saw the economy getting worse before it gets better. But even including the year-end dip, 1957 was a remarkable year for business. The U.S. economy had operated at forced draft for all but the final few months. And in so doing it produced what in many respects was the most prosperous year in history.
Scores of companies set new sales and profit records, and so many others came close to old records that 1957 easily topped the peaks of '56. The gross national product increased another 5% to an alltime high of $436 billion. Industrial production edged up to a record average for the year of 144; employment reached an alltime peak of 67.2 million before dropping at year's end; corporate assets swelled to $229 billion. Wages continued to rise. The average hourly pay rose from $2.05 in January to $2.10 near year's end. Despite worry over the squeeze on earnings from rising costs, industry's profits will probably wind up only slightly under last year's boom levels of $43 billion before taxes, $21 billion after taxes, while stockholder dividends (about $12 billion) exceeded 1956.
Boom Psychology. Such real accomplishments of 1957 were obscured by the fact that the U.S. suffered from an advanced case of boom psychology. Prosperity had become such a part of U.S. life that many Americans expected new records as regularly as payday. Any temporary downturn brought cries of disaster.