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THE MICHIGAN DAILY
Friday, June IS, 1971
Page Twa THE MICHIGAN DAILY Friday, June 18, 1971
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McCracken: Economic growth too
slow to alleviate unemployment
4
WASHINGTON VP) - Univer-
sity economist Prof. Paul W.
McCracken, chief economic ad-
visor to the Nixon administration,
says the economy is moving too
slowly to cut into the high rate
of unemployment, a prime ad-
ministration goal.
Dr. McCracken, chairman of
the Council of Economic Advis-
ers, said the President will de-
cide in July or August whether
to stay with present policy or
propose new economic stimulants,
such as a tax cut.
In an interview with The As-
sociated Press, the economist
supplied the first official word
that the administration is dissat-
isfied with the pace of the eco-
nomic recovery.
McCracken said he thought eco-
nomic statistics for April, May
and June, including the quarterly
Gross National Product figures,
will reflect a "substantial, and a
pretty good, expansion by histor-
ical standards."
"At the same time," he said,
"we have to recognize that the
expansion is not yet moving fast
enough to eat into the unemploy-
ment picture. And I think it is
important for us to achieve the
degree of economic expansion
which will do it."
Nixon embarked on an econorsi-
ic expansion program this year
to trim the unemployment rate,
which rose from 3.9 per cent of
the work force in January, 1970,
to 6 per cent in January of this
year.
Last month, the figure movcd
up to 6.2 per cent, instead of de-
clining as anticipated,
The President had projected a
9 per cent increase in total eco-
nomic output this year as being
the rate of expansion needed to
reduce unemployment below 5
per cent by the end of the year.
Stepped-up federal spending,
with budget deficits totaling $3
billion in fiscal 1971 and 1972, and
an expansive monetary policy by
the Federal Reserve, were count-
ed on to help.
"I suspect that we have not
yet seen the full effect, of those
policies translated into the econ-
omy," he said. "As to whether
what has been going on is what
we want to stay with throughout
the year, we'll have to evaluate
that."
Nixon said in a news confer-
ence last month he would decide
whether to propose additional tax
cuts of other measures to further
stimulate the economy after see-
ing the results of second - quar-
an expansion that is vigorous
enough to begin working down
unemployment."
McCracken would not predict
whether the administration would
move faster in specific situations,
such as this year's steel negotia-
tions, to hold down wage and
price increases.
"The Consumer Price Index
has done fairly well lately, rising
at the rate of about 3 per cent
per year," McCracken said,
"The tendency of raw materials
prices and industrial prices at
the wholesale level to rise more
rapidly is disturbing, but I would
be very surprised to see the
Consumer Price Index on a sus-
tained basis going back up to the
levels in 1969 and 1970."
McCracken said appropriations
approved so far by Congress raise
the possibility .of exceeding the
spending level set by Nixon's
"full-employment budget" for
fiscal 1972.
The President has scheduled
federal spending at a level
slightly below the revenue that
would be coming in if the econo-
my were at full employment. To
exceed that level would be infla-
tionary, Nixon said in his Feb-
ruary budget message.
McCracken indicated that, be-
cause of the job problem, the ad-
ministration is less concerned
about a deficit.
"In terms of the very near-
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Prof, McCracken term economic situation, one
could make the case that there
ter economic statistics, most of is slack in the economy, this is
which will become available in not all that serious," the White
July. House adviser said.
McCracken said it was not un- He added, however, that "the
usual for unemployment to re- basic guideline of keeping expen-
main high for six to eight months ditures within full employment
after an expansion of business
activity resumes. receipts is still a pretty good rule
"What we just may be seeing to keep the budget from getting
here is that businesses last year too far off the path."
took unusually strong measures
to cut their costs," he said. . Daily Official Bulletin
"The other side of the coin is FRIDAY, JUNE 18
that you can get an unusually
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"Clearly one of the objectives Ices.
in economic policy now is to have Tuesday, June 22
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