Described by Eisenhower economists as a sideways movement, the downward turn in 1954 was overcome in a relatively quick reaction. Late in the year the major indices began to move up again and by July 1955 it was evident that those who were optimistic and bullish would win out. The automobile and home construction industries outdid themselves. Automotive experts had hoped to dispose of about six million cars during 1955; the public gobbled up 7%2 million. New housing starts were expected to reach about one million; actually, there were about 1.3 million. The Gross National Product, the total of all goods and services produced, climbed close to the $400 billion mark. Consumers increased their spending by $20 billion—probably accounting for the quick recovery from the 1954 “sideway slip.” But to do this, they drew on their saving accounts and bought on the installment plan as they had seldom done before. By the year’s end, urban mortgages were 18 per cent higher than 12 months previously. At $35 billion, consumer debt was roughly half the disposable income, the highest debt-income ratio ever.
Most of the continued upward movement was in the private sector of the economy. Stimulated by easy terms on autos, houses and hard goods, sales volume zoomed, business inventories went up (some $4 billion worth) and capital outlays, or expenditures on plant and equipment, hit a record rate of about $30 billion per annum. During the summer, steel prices went up by $7.50 a ton on the average (after a one-day strike, the shortest in history) . General Motors voted a 3-1 stock split and the Federal Government began to wonder whether we weren’t getting ourselves into a real inflationary situation. The consumer price index began to push up again when everyone thought it had leveled off, while the largest Christmas sales splurge in U.S. history rounded out another wonderful year for the American businessman.