Business: Business in 1958

(8 of 10)

and hotels, more roads, toll gates and public conveniences of all kinds, it takes more and more workers to tend them. At the turn of the century manufacturing employed nearly 50% of all nonfarm workers. Today, the proportion is only 30%, and employment in the service industries is far more stable than in manufacturing. Says Economist Gabriel Hauge, onetime adviser to President Eisenhower and now chairman of Manufacturers Trust Co.'s finance committee: "The shift from manufacturing to services is comparable to the shift in the American economy in the 19th century from agriculture to manufacturing."

On to 1959. At the end of 1958 the U.S. was well on its way out of recession. Gross national product was clipping along at $453 billion annually, a new record, and industrial production was back up to 142 on FRB's index, only four points below the alltime peak. Where to in 1959? As usual, the forecasters see clearly for six months: a gradual, continuing recovery without explosive boom. Says Louis J. Paradiso, chief statistician for the Commerce Department: "1959 will be moderate. The graph will go back to saucer form. The momentum of the recovery will show a very good rate of increase in the first half, with the second half showing no acceleration."

Gross national product will probably rise $10 billion in each of the first two quarters, then flatten out to end the year around $480 billion for a 6% increase. Inventories have already reached bottom, will slowly be rebuilt. Businessmen are once again increasing their outlays for plants. Forecast: up $1 billion to $31 billion. Says A.T. & T. President Kappel, who will add $2 billion to the $2.2 billion he laid out last year: "When the recession came along, we had to decide whether to trim capital expenditures as in past recessions. We felt sure that renewed growth was coming, so instead of cutting down drastically—which would only mean having to race the motor later to catch up—we went ahead and proceeded to build quite a lot of useful margin into our plant."

As industry after industry picks up speed, industrial production will climb up to its prerecession peak. Items:

¶ Steel will average 79% of capacity in 1959, says Jones & Laughlin's President Avery C. Adams. He figures a steady rise to 91% of capacity in the second quarter, total production of 115 million tons, "and J. & L. will do better than these rates."

¶ Aluminum, which dropped 8% in 1958. will increase shipments by about 20% to 2,100,000 tons next year, says Alcoa Market Researcher E. M. Strauss Jr., who foresees expanding markets in the auto industry, containers and construction. ¶ Appliances will have a banner year, with sales up 5% to more than 15 million units, says President Judson Sayre of Borg-Warner's Norge Division. The industry will sell 16% more automatic washers, 8.3% more clothes dryers, 3.6% more refrigerators.

¶ Electronics will do better still, says Motorola Executive Vice President Edward R. Taylor, who forecasts a 13% gain in TV sets, another 9% gain in radios. Biggest jump: the new stereophonic sets, which will climb from 750,000 units in '58 to better than 3,000,000 next year.

The industry that could turn the economy's slow growth into a gallop is autos, where the potential market is bigger than at any time