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One notable example is steel, which is learning to operate like a short-order restaurant. Not since 1942 have users ordered steel on such short lead times: six weeks for heavy construction beams, two weeks for sheet metal for automobiles. In turn, steelmen were producing just enough to meet delivery schedules. They were well aware that any sudden economic upturn would not catch them without production capacity. But it could catch customers short on steel. As long as customers continue to buy only for immediate needs, steel may not rise above 75% of rated capacity before June, but the industry expects a 5% to 10% rise from then on, expects to turn out 105 million to 115 million tons for the year as a whole. Construction value will probably increase 5% to a record $49.6 billion, including a hefty 8% boost in housing due largely to easier credit.
On the downside, automen are not only fudging their earlier estimates of 6,100,000 new cars next year. They sold about 5,800,000 in 1957 and at year's end estimated sales of about 5,500,000 in 1958. As for the troubled railroads, they will see still another 5% to 7% drop in passenger traffic, while freight car loadings will show a continuing, but smaller (less than 10%), decline than in 1957. U.S. industry's headlong expansion will taper off in 1958; industry will invest only $34.5 billion in new plants and machines, down 7% from 1957. Autos, aluminum, machinery and many others are planning fewer additions. But utilities, which never caught up in 1957, will have to pile on another $200 million increase to $6.5 billion next year. Many steelmen are also pushing ahead despite lower operating levels. Says Inland Steel Co.'s President Joseph L. Block, who earmarked $280 million for a three-year expansion program: "We plan for continued growth because we believe we are a growth company in a growth industry in a growth country."
The Gold-Plated Recession. In a growth country, the predictions are for growth, despite a recession in the early months of 1958. The gross national product will probably rise at least $1 billion. Technically, the economy will "recede" or move sideways. But if recession is defined even in the mild terms of the 1953-54 slump, it will still be a gold-plated recession. At that time, gross national product dropped by $6.3 billion; industrial production dipped 15 points on the FRB's index, more than most economists foresee for 1958; unemployment then rose to 5% of the labor force, not the 4.5% estimated as the peak for 1958. Moreover, total employment (which tumbled 975,000 in 1954) is expected to rise by the end of '58 above the total at the end of '57. Economists look to the changing nature of the U.S. economy to push the employment totals higher—and also cut back the rise in unemployment. As industry puts up new plants incorporating automation, production line workers play a steadily decreasing role, now total only 20.4 million of the labor force.