Stays briefly in London in January before returning to New York. Jojo has an unusually good year and spends a considerable amount of time at home, encouraging parents' hopes for further improvement. Writes in her diary on July 29: "Incredible that after working steadily on this novel, with very few sidetracks except wretched and futile attempts at money ... I have gotten no further than 12 pages or so." Cuts her ties with Scribner's when they refuse, after her repeated urgings, to bring out a collection of her short stories. Rosalind Baker Wilson (daughter of Edmund Wilson) brings Powell to Houghton Mifflin.

Sunday, Monday and Always, a collection of short stories, is published in June by Houghton Mifflin and receives excellent notices, with many reviewers using the occasion to celebrate Powell's work in general. In the fall, London-based publisher W. H. Allen agrees to bring out The Locusts Have No King; Sunday, Monday and Always; and the forthcoming novel, The Wicked Pavilion, in England, restoring Powell to print there for the first time in several years. Becomes active supporter of Adlai Stevenson in his presidential campaign against Dwight D. Eisenhower. Works sporadically on "Yow," a children's book about cats, which she does not finish.

The demolition of Powell's beloved Hotel Lafayette and the adjoining Hotel Brevoort helps provide impetus to complete The Wicked Pavilion. Powell takes photographs of the rubble and models the novel's "Café Julien" on the Lafayette. In her diary, lists the novels that have most influenced her: Sister Carrie (Dreiser), Dodsworth (Lewis), Sentimental Education (Flaubert), Satyricon (Petronius), Daniel Deronda (Eliot), Dead Souls (Gogol), Lost Illusions and The Distinguished Provincial (Balzac), Our Mutual Friend and David Copperfield (Dickens), and Jenny (Undset).

Meets Gore Vidal in March and forms friendship. Frequents the Cedar Bar on Eighth Street, where she meets many artists, including Franz Kline. The Wicked Pavilion is published in October; it is reviewed on the front page of the New York Herald Tribune book review and appears for a week on the New York Times bestseller list. Afraid of Jojo's violence, she and Joseph look into the possibility of a prefrontal lobotomy; Dos Passos convinces them not to go ahead with the operation. Louise Lee suffers a debilitating stroke in March and does not return to the Gousha household; this upsets Jojo greatly and his parents reluctantly confine him more or less permanently to the New York state hospital system.

Begins a residency in April at Yaddo, arts colony outside Saratoga Springs, New York, and is happier there than at the MacDowell Colony; begins a new novel, later published as A Cage for Lovers. Through the writer and bookstore owner Peter Martin, meets the young Jacqueline Miller (later Rice), who becomes one of her closest friends and later serves as her executor. In November, endures first in series of severe nosebleeds; she is told in December that she is suffering from anemia. Contributes book reviews regularly to the New York Post.

Rewrites Angels on Toast as a paperback for Fawcett Books under the title A Man's Affair. Writes television script based on story "You Should Have Brought Your Mink."

Completes novel A Cage for Lovers, after a long series of rewrites demanded by the publisher; the book is published in October with little fanfare or appreciation. Joseph is informed in December by his advertising agency that he will be retired on January 1, 1958.

Family finances collapse after Joseph's retirement. By October, the family is forced to move from 35 East Ninth Street, and begins a series of residencies in hotels and sublets. Powell writes a great deal of free-lance work and searches for a job. At the suggestion of Malcolm Cowley, Viking Press contracts Powell for a novel that will become The Golden Spur.

Margaret De Silver rescues Powell and Joseph from their poverty with a generous trust fund.

Powell and Joseph move to 43 Fifth Avenue. Powell spends much of the spring at Yaddo, where she becomes close friends with novelist Hannah Green, but leaves after another violent nosebleed. Joseph is diagnosed with rectal cancer in May; an operation relieves pain but his health continues to deteriorate. Powell returns to Lake Erie College to receive an honorary doctorate.

Powell is hospitalized for anemia; doctors suggest removal of a growth, which she refuses. Spends much of the year taking care of her husband.

Joseph dies on February 14. Margaret De Silver dies on June 1. The Golden Spur is published by Viking in October. Edmund Wilson's "Dawn Powell: Greenwich Village in the Fifties," the most significant critical piece on Powell's work during her lifetime, is published in The New Yorker.

The Golden Spur is nominated for the National Book Award but does not win. Powell works with Lee Adams and Charles Strouse on a musical comedy version of The Golden Spur. Moves to a penthouse at 95 Christopher Street, prompting a lawsuit from her former landlords at 43 Fifth Avenue. Autobiographical sketch "What Are You Doing In My Dreams?" is published in Vogue. Begins work on "Summer Rose," a novel.

Returns to Lake Erie College in May to lecture, meet with students, and deliver graduation address. The American Academy of Arts and Letters presents her with the Marjorie Peabody Waite Award for lifetime achievement in literature. Powell finds herself in more professional demand than in the past, with regular offers for well-paid free-lance work and a significantly higher advance for her next novel. Her health is poor; she has begun to lose weight and suffers from anemia. Diagnosed with colon cancer in August, she realizes that she is probably mortally ill. The Golden Spur musical project is indefinitely postponed.

Completes "Staten Island, I Love You" for Esquire, a reminiscence of her walks with Joseph Gousha 45 years earlier. Continues to work on "Summer Rose." Her weight drops to 105 pounds. Enters St. Luke's Hospital in September, where she refuses a colostomy. Returns to her home, where she is tended by Hannah Green and Jacqueline Miller Rice, and visited often by Coburn Gilman. Signs a hastily drawn will in which she donates her body to medical research; returns to St. Luke's by ambulance. Dies on the afternoon of November 14. (In 1970, the Cornell Medical Center contacts Jacqueline Miller Rice about the return of Powell's remains; Rice gives Cornell authority to bury them in New York City Cemetery on Hart Island, the city's potter's field.)