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Dog days of summer may point to economy with a bit more bark

THE latest batch of economic statistics fits snugly with these ho-hum days of August, even though they reach back to what was happening in June and July. There are two times of the year when activity -- and people's interest in it -- seems to wind down: at the calendar end in December, and right now at the end of summer, when people are either on vacation or vowing that they will be this time next year.

Auto sales were up in the first 10 days of August, but not as much as one might have expected, given the financing deals that were being offered. Sales were up 7.4 percent from the same 1985 period, but at General Motors they were off 4.5 percent. Third- quarter auto production is being cut back, and that will weaken potential GNP for the quarter.

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Retail sales for the month of July rose an almost invisible 0.1 percent. The June retail sales figure, originally reported as a rise of 0.2 percent, was revised to a 0.1 percent decline.

The July figure, excluding autos, showed a 0.6 percent increase; but of course autos are a part of the total. What that means, if we don't try to make one month mean too much, is that spending on nondurables was holding up very well, but consumers were reluctant to take on more debt for buying durables.

For some months, many analysts have been pointing out that the consumer could not lead the way in the second half of the year -- that the trade figures would have to improve or capital spending would have to be stronger for the economy to gain strength.

Going back to June statistics, business sales rose 0.5 percent and business inventories rose 0.4 percent. Assuming that this inventory increase was not because goods could not be moved, this may herald a stronger attitude concerning the coming months. The largest increase came in the wholesale category and could indicate that wholesalers are stocking up for an upturn in business this fall.

Wholesale prices declined 0.4 percent during July, continuing a general trend for the year. On the basis of the first seven months of the year, prices are declining at a 6.2 percent annual rate. Thus, purchasing power is increasing without higher wages.

Finally, last Friday the Federal Reserve Board reported that industrial production had fallen 0.1 percent during July. This was the third consecutive monthly decline, and the first time since the 1982 recession that that had happened. The decline, however, was 0.5 percent in May and 0.3 percent in June, so one could conclude that the temporary weakness in industrial production has about run its course. This in fact is probably what has happened.

Industrial production has been weak for more than a year because of the growing trade deficit. Consumers have been spending more of their incomes on imports than on goods produced here, and exporters have had trouble increasing their sales outside the country because of weak economic conditions elsewhere in the world.

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What does this latest batch of numbers tell us? None of the typical conditions of recession are present. Prices are going down, not up. The Federal Reserve is accommodative. There is no ``tightness'' in the economy or shortages of materials. The trade deficit is bad, but probably the worst is behind us. Even tax reform may be settled in the coming weeks.

With no real reason for the economy to weaken further, September could be the month when growth begins to take hold again.

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