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Cushions & Nudges. The important thing was not to let the slump in manufacturing spread. And there the economy's built-in cushions proved their value in helping keep personal income ($353.3 billion) at record levels. As labor incomes slipped $6.2 billion by April, chiefly from the declines in autos. and thus in steel, payments from unemployment insurance, pensions, social security, etc.. automatically climbed $5.5 billion (to $26.1 billion annually) and took up the worst of the slack. Increasing federal, state and local outlays for needed schools, hospitals, dams and roads helped keep construction growing to a record $48.8 billion. The 1957 housing slump was turned around (1,170,000 new housing starts in 1958) with the aid of beefed-up FHA, VA and Fannie May programs. Good weather and fine crops gave farmers a 20% boost in income. Finally, the defense planners who had helped accelerate recession with an ill-timed economy wave in the summer of 1957 got back on the missile beam by mid-1958 with a $5.3 billion increase in the contract awards.
It all helped, but the new economy is too big for the Government to do more than nudge it along the road to recovery. Says Treasury Secretary Robert Anderson: "People should stop worrying about all the little things Government can do. There was a minimum of stimulation from the Administration. The basic resiliency showed up in business.''
Even at the worst of the recession, there was no overall pattern of woe. New England, with its troubled textile industry and heavy manufacturing, was sorely tried. Many of the Midwest's one-industry towns had some rough months. In Peoria, Ill., where Caterpillar Tractor is not just a barometer of business but the whole weather bureau, 9,000 men were out of work until Cat worked off its big inventory of bulldozers and earth movers. But at the same time, South Dakota's farmers were so thick in clover that tax receipts ran 10% higher and the department stores of Cedar Rapids, Iowa were 4.5% ahead of last year. In the South, where new industry was moving in 50% faster than last year, most of what was known about the recession was what the people read in the news dispatches from the North. Says Southern Co.'s President Harllee Branch Jr.: "We had just enough of a recession to be made aware that one could happen."
The New Consumer. The greatest single force in keeping the recession local—and then turning it around—was the monied U.S. consumer, the same man who, as investor, sent Wall Street's Bull to the moon. By old-fashioned doctrine, recession is a time when consumers cut down their spending. In 1958 the confident U.S. consumer continued to buy, and then some. He became the economic hero of the year—and demonstrated several other facets of the new economy.
While most of the indexes showed steep drops, retail sales never