Threat of Inflation Clouds Recovery
Latest weekly statistics' showed gains in steel production, freight carloadings, electric power output (at a record high), crude oil production and bank clearings. Weekly business failures dipped to the lowest level in two months.</br></br>The president's Council of Economic Advisers told Congress complete figures showed the economy during the second quarter made a stronger rebound than had been anticipated only a month ago. Take home pay of factory workers set a record in July. Yet all was not happy along the economic front.</br></br>It costs more to live all the time. The GovernmentÛªs consumer price index rose two-tenths of one per cent in July to a record higli of 123.9 per cent of the 1947-49 average. This is the worrisome factor in the economy: the steady degradation of the dollar.</br></br>The Federal money managers seem to be confronted with a painful puzzler. How do you stop inflation without snuffing out the flickers of improving business?</br></br>The managers of the Federal Reserve tightened money a little this week. By selling Government securities, they reduced the average net free reserves of the banking system to just a shade over $400 million. These are cash deposits commercial banks keep with Federal Reserve banks.