Insistent Signals

The warning signals of recession flashed more insistently than ever across the U.S. economy last week.

Unemployment rose to its highest level in 4 1/2 years. The February jobless rate was 4.2%, up from 3.9% in January. In human terms, the figures mean that 3,800,000 people were out of work last month, compared with only 3,400,000 a month earlier. The configuration of the increase looks even more disturbing than the totals. Labor Department officials said that about three-fifths of the unemployment rise during January and February involves workers who have lost their jobs, rather than new workers who have not yet found positions. Unemployment among nonwhites, which was surprisingly stable in the fall, jumped last month from 6.3% to 7%--a portent of social as well as economic difficulties.

As economists expected, the brunt of the overall increase in joblessness has hit blue-collar workers in durable-goods manufacturing, the major sinew of U.S. economic abundance. In just twelve months, the durable-goods jobless rate almost doubled--from a post-Korean War low of 2.5% to 4.7% last month. The troubled auto industry, beset by a winter of declining sales and layoffs of thousands of workers, accounted for one-third of the February rise in unemployment, Government statisticians said.

Automakers' problems look almost picayune compared with those of the mighty aerospace industry, the nation's largest manufacturing employer. Last week sixth-ranking Lockheed Aircraft Corp. announced a $32.6 million net loss for 1969, against a profit of $44.5 million the year before. Because of a contract dispute with the Defense Department, the company wrote off $150 million against pretax income. Now it has asked the Pentagon for a $600 million cash advance. Without the money, said Lockheed Chairman Daniel J. Haughton, the company will have to stop work on four major military programs: its C-5A cargo jets, Cheyenne helicopters, missile engines and ships. All four programs involve disputes between Lockheed and the armed forces over eventual contract prices.

Downsigns. The Nixon Administration's efforts to combat inflation by slowing the economy have long been expected to squeeze corporate profits. Even so, the latest figures on last year's earnings sketch a darkening portrait of business fortunes. A survey last month by the New York Stock Exchange showed that the net income of 559 Big Board companies dropped 11% in 1969 from the year before. Some industries fared much worse. Earnings of the twelve largest U.S. airlines plunged 43% last year to $152 million, as operating costs soared and the growth of passenger traffic slowed. Retailers have also experienced disappointing profits, partly because they have been forced to cut prices to lure inflation-conscious customers. For example, J.C. Penney Co.'s net income rose only 1.7% last year to $110.9 million despite a 13% sales gain to $3.75 billion. Almost all of the economic figures that wiggle watchers study now point down. The statisticians have stopped saying "Wait until next month." Right now the price of cooling inflation is taking its toll of the nation's labor force and much of its industry.

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