(2 of 10)
The stock market rally in response to these favorable signs caused some Wall Streeters to talk as if the millennium had suddenly arrived. Said Stephen Weisglass, president of Ladenburg, Thalmann & Co., a brokerage house: "This is the first leg of a great bull market that will take us to an alltime high by 1983, if not sooner." Such euphoria was obviously not shared by most businessmen, but it cannot be entirely dismissed. Stock prices have a respectable, though far from perfect, record as an indicator of future trends in general business, and can also help nudge the economy in the direction they foreshadow. Bull markets on Wall Street make some people feel richer, thus more willing to spend, and they make it easier for companies to raise money by selling new stock issues rather than by borrowing. That is a tendency that would be especially helpful now, when many corporations are sagging under the burden of repaying heavy debts incurred at crushing interest rates.
But for every cheerful sign, there is at least one gloomy one or, more often, one-and-a-half. Every week brings fresh news of falling sales and profits, new factory closings, more layoffs. Some samples from last week: Exxon, the world's biggest industrial corporation, announced that it would permanently close 850 gasoline stations in the Northeast and Midwest, and dismantle part of its giant Bayway refinery in New Jersey to cope with a decline in retail business. Sales of the Big Three automakers in the middle ten days of August fell a striking 35% below those of a year earlier. In Detroit, where determined optimism has always been a kind of religion, the big guessing game last week was whether sales of U.S.-made autos for all 1982 will be merely the lowest since 1961 (5.56 million cars) or drop even below that miserable mark.
Overall, U.S. factories and mines in July operated at 69.5% of capacity, compared with an average of 85.7% in 1979. And in industry after industry executives say that they can see few signs of any rise in orders that would permit a boost in production soon. A typical report, from Lynn Michaelis, chief economist of Weyerhaeuser Co., the giant wood-products firm: "Pulp sales currently are the lowest they have been in 15 years. The paper markets, which had been holding up until now, are showing signs of weakness." Like many other companies, Michaelis adds, Weyerhaeuser is deferring new investment until there are more conclusive signs of an upturn: "Basically, we have no major capital projects slated beyond this quarter."