Not for many years has a
Christmas season begun with so many tidings of spreading discomfort and
lack of joy about the U.S. economy. Already racked by a devastating
double-digit inflation, the nation is now also plunging deeper into a
recession that seems sure to be the longest and could be the most
severe since World War II. Consumers who a few weeks ago worried mostly
about rising prices now fear for their jobs and incomes as well. For
many Americans, the Yuletide will be a time of less elaborate meals,
infrequent parties, fewer and cheaper presents. All last week the bad news mounted. The auto industry reeled from a
new-model sales rate 35.8% below last November's already somewhat
depressed pace. Ford and Chrysler announced massive new layoffs for
this month. Automakers now plan to close at least 14 assembly plants
and put as many as 230,000 production workers, clerks, accountants and
executives out of work before Christmas, and about 20% of General
Motors' 500,000 U.S. employees will be idle in January. But the decline is no longer confined to autos and home building, which
is down 33% from early 1973, as it has been for most of this year. In
classic fashion, the recession* has begun to work its way through the
entire economy. Although demand for home freezers is still high, with
housewives stocking up on food to beat rising prices, sales of other
major appliances—TV sets, washing machines, dryers, vacuum
cleaners—are turning sick, and layoffs are spreading in the plants
that make them. Blue Christmas. General Electric last week announced the sixth in a
series of production cutbacks that have slashed the 23,000-man payroll
at its sprawling Appliance Park in Louisville by about 50% since
August. Even sales of some processed foods are shaky: General Foods
will close a Jell-O and puddings plant in Dover, Del., for seven days
at the end of this month while it works off heavy inventories. For retailers, Christmas 1974 may be black rather than just blue.
Department stores and retail chains normally count on ringing up about
25% of their annual sales in the weeks between
Thanksgiving and Christmas, but they may be unable to do so this year.
While retail sales rose 7% in dollars over the past year, that was
equivalent to a drop in real terms once the impact of inflation was
discounted. Several big chains, among them F.W. Woolworth and W.T.
Grant, have suffered steep declines in third-quarter profits; at the
biggest of them all, Sears, Roebuck, earnings fell 29%. Anticipating thin shopping crowds this season, stores are cutting down
on part-time sales help and even committing the unheard-of act of
promoting pre-Christmas bargains, such as brand-name $14 shirts for
$6.99 in Boston. Korvettes discount department stores in Manhattan are
offering scrip worth $ 110 in merchandise to customers who bring in
$100 in Christmas Club checks. Chicago's Montgomery Ward chain, which
has an unusually high inventory of unsold goods, has decided to bring
back last year's energy saving and cut down on costly Christmas
lighting displays. The grim mood is evident in the talk of business and Government leaders.
