OUTLOOK IN AMERICA.

Taranaki Daily News, 1 April 1921, Page 7

OUTLOOK IN AMERICA.

CONFIDENCE REVIVING. RETAIL PRICES MOVE SLOWLY. The markets review issued on February 21 by the National Bank of Commerce in New York states that while In some lines there is improvement, all signs indicate a period of hand-to-mouth business, based upon immediate requirements for prompt delivery. Whatever opinion may havq been entertained a month or two months ago, it is now clear that the process of placing business upon a level fairly comparable with that which prevailed prior to 1914 is in progress. Retail prices, as is usual on a falling market, have lagged behind the downward movement of wholesale prices, but further lowering of retail prices must come befgre the business situation can be said once more to be in stable equilibrium. It is difficult to conduct business at a profit in a period of sharply declining prices. Precipitous declines in commodity markets are believed to be passed, except in the case of iron and steel and a few other commodities where the full forces of readjustment have not yet been felt. Even with a continued declining tendency, normal business at a satisfactory profit is entirely possible. The enormous expansion in the United States during the 30 yeamfellowing the Civil War was carried on in just si\ch an era of gradually declining prices. Further substaiitihl declines in commodity prices have occurred during the period January 1G to- February 15; including both raw materials- and semifinished products. In the cotton and grain markets, prices which appeared to have readied a position of at least temporary stabilisation just after the first of the year, have suffered new declines. and petroleum prices whiclf hitherto resisted the downward movement in other markets, began during the period under review to follow the course of other commodities. The slight improvement noticeable after the of the year in tl|e movement of wool and hides has not been sustained and in many grades of these commodities it can scarcely be said that a market exists at any price. A similar view is expressed by Messrs. John Dunn, Son and Co., of New York. Writing on February 7, they say:— “All authorities agree that there has been a gradual, though slight' improvement. Foremost is the slow returning of confidence which at present is tempered with caution, but as each week passes, is gaining in assurance. Liquidation of retailers’ stocks proceeds but slowly. The small merchants as a class -seem to be taking their time in this regard, and are disposed to rid themselves of goods now on hand quite thoroughly lietfore replenishing. The pressure of banking advice and public opinion seems to have little effect in hastening this much needed movement. Fear is being expressed by some, that the period of rebuying may be too long delayed, and finally develop to such importance that a secondary period of inflation may be brought about. It is evident that the period of trade adjustment is by no means completed, some commodities having declined in value to what seems to be bed-rock prices; while others continue to be held at 1-00 to 200 per cent above pre-war levels. Wage reductions have only begun and have far to go, but until such discrepancies in commodity values are at least partially overcome and until the ultimate consumer -is receiving the full benefit of these decreases, whges cannot be brought down to any great extent. The length of time required for these readjustments to be completed and for rates of wages to reach a correspondingly lower level, will probably be (he measure of the duration of the presperind of business depression.