Mcallen Daily Press

THE BUSINESS OUTLOOK

During the most recent period for which trustworthy statistics are available, the business barometers generally showed slight declines. At the same time, there was, as Business Week phrases it, a "brightening of the longer-term outlook . . . . A greater degree of confidence can now be placed in the business prospect for the spring and early summer."

Looking at the picture from business' point of view, the recent deal whereby the TVA purchased the Tennessee Electric Company for what appears to be a fair, going concern value, is considered in some quarters the best news of months.

It is likely, these experts think, that it will serve to some extent to break the log-jam in utility expansion, and will make it possible for the companies to obtain new capital at reasonably low rates of interest, on the theory that the investor will be recompensed if the government purchases the properties in which his money is placed. Furthermore, it has been argued that the deal may foreshadow a slowing up of government encroachment in the utility field, for the reason that if the TVA and similar bodies must pay a fair price for what they purchase they will be unable to make rate reductions of sufficient size to create wide public support for the government ownership movement. That, of course, remains to be seen.

Another encouraging factor is found in corporation earnings' reports covering the last quarter of 1938. On the average, profits were just about doubled, by comparison with the summer quarter, and were on about the same level as at the end of 1937. Especially good showings were made by automobiles, paper, textiles, chemicals and electrical equipment. It should be remembered, however, that in some cases, the improvement is striking, only on a comparative basis--that is, a company which breaks even during a quarter is considered to be doing well if in previous periods it operated in the red.

Of immediate interest is a substantial increase in "pump priming" by the Treasury. It is estimated that the cash deficit for the first half of this year is likely to run around $3,000,000,000 a month twice the deficit in the last half of 1938. In other words, the government is going "full throttle" in its efforts to revive business. And that will unquestionably be felt in the production and consumption indexes this spring.

An increase in CAR LOADINGS, MOTOR production will probably hold to moderate levels for a month or two. Great hopes are pinned on DOMESTIC CONSTRUCTION, but these may fall somewhat short of expectations if building costs continue to rise, as they are doing now at the rate of 1% per month for small hope. According to one survey, CIGARETTE makers look forward to lower manufacturing costs and subsequent higher profits this year, due to the elimination of compulsory tobacco crop restrictions. RAILROAD EQUIPMENT industries are showing new signs of life, as the lines go into the market for new rolling stock. It is forecast that the value of AERONAUTICAL products this year will be 50% above the peak reached last year.