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August 02, 1980 - Image 5

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Publication:
Michigan Daily, 1980-08-02

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The Michigan Daily-Saturday, August 2, 1980-Page 5
ECONOMISTS SA Y WORST IS OVER
Unemployment rises slightly

From AP and JPI
The nation's unemployment rate -
defying many predictions - rose only
slightly in July, hitting the 7.8 per cent
level it had reached two months earlier,
the government said yesterday. Many
economists viewed this as new evidence
the worst of the recession is over.
Moreover, the Labor Department
reported that the number of Americans
holding jobs rose in July for the first..
time in five months.
DESPITE THE encouraging figures,
however, government officials and
Carter
strategy to
include
industry
tax relief
WASHINGTON (AP) - Treasury
Secretary G. William Miller said
yesterday that any new Carter ad-
ministration strategy to revitalize the
economy will include special tax relief
for the nation's battered industrial sec-
tor.
Miller, however, refused to confirm
or deny reports that Carter will unveil a.
major new economic policy next week
in a move to counter the tax cut plan
proposed by Republican presidential
nominee Ronald Reagan.
WHITE HOUSE press secretary Jody
Powell said yesterday he did not know
when the economic package would be
announced. "There have not been
decisions made about the contents of
some package," he said.
The press secretary said that ad-
ministration officials are in the process
of consulting within the administration
and on Capitol Hill about "the economic
situation and what steps might need to
be taken."
Meanwhile, House Speaker Thomas
O'Neill Jr. told reporters, "The
president is going to make a major ad-
dress to some group next week on his
program for revitalization of the
economy."
. BUT O'NEILL refused to elaborate
on what would be in the new package.
Other congressional sources said the
plan might be unveiled next week
without a formal presidential speech.
However, they added that Carter would
probably elaborate on his proposal at
the Democratic National Convention,
which begins Aug. 11.
The sources said top administration
officials, including Miller, discussed
their plan to propose a new, long-range
economic strategy with House
Democratic leaders Thursday. The
sources added, however, that few
details were disclosed.
The possibility that Carter might an-
nounce a new economic strategy comes
at a time when the administration is on
the defensive against Republican at-
tacks blaming Carter policies for a
recession and high levels of inflation.
The sources, who asked not to be
identified, said White House officials
are particularly upset over Reagan's
$36 billion tax cut plan, which they con-
tend is irresponsible.

private economists cautioned that the
unemployment rate would continue to
creep up in coming months, peaking at
about 8.5 per cent late this year.
July's rate increased 0.1 per cent
over June's 7.7 per cent level, a figure
which economists had attributed to
seasonal distortions in the work force
count. The rate had jumped 0.8 per cent
in both April and May.
Sar Levitan, a labor economist who
directs the Center for Social Policy
Studies, called July's figure "sur-
prising" and said he had expected it to
exceed eight per cent.
"EVEN THE most optimistic
economists anticipated a higher rate,"
hesaid.
Treasury Secretary G. William
Miller said yesterday the jobless
figures since May "show we are at a
plateau." He told Congress' Joint
Economic Committee, "We believe we
are bottoming out" of the recession,
although economic recovery has yet to
begin.
Janet Norwood, commissioner of the
Bureau of Labor Statistics, appeared a
bit more conservative than Miller.

EMPLOYMENT DECLINES have
leveled off, she told Congress, but "the
signs are not yet strong enough to
suggest a trend."
The stable unemployment picture
comes in the wake of other encouraging
economic news. The government repor-
ted earlier this week that the Index of
Leading Economic Indicators - a
closely watched barometer of the
economy - rose 2.5 per cent in June,
compared with declines of 2.3 per cent
and 3.9 per cent the two previous mon-
ths.
Moreover, housing starts climbed by
30 per cent in June and auto sales have
shown some improvement from their
dire levels of recent months.
CHARLES SCHULTZE, chairman of
President Carter's Council of Economic
Advisers, said the week's reports
should bolster opposition to enactment
of a tax cut before the November elec-
tions.
That view was supported by several
private economists, including Otto
Eckstein, head-of Data Resources Inc.,
which advocates a tax reduction as
quickly as possible.
"This kills a 1980 tax bill. There's no

way Congress is going to act before the
election," he said.
ECKSTEIN SAID July's figures "are
better than expected and show that the
worst slide is clearly over."
But, he warned, "it would be blind op-
timism to believe unemployment won't
worsen in coming months" because
many businesses will continue to keep
inventories low in response to lagging
demand.
The slumps in the auto and housing in-
dustries are past, he said, but the
recession has yet to work its way
through other sectors of the economy.
LEON TAUB, a- senior economist
with Chase Econometrics Associates,
said the rate- of layoffs will subside
somewhat, but unemployment stillwill
increase because more people will be
entering the labor force than can be ac-
commodated.
The jobless rate of 14.2 per cent last
month for black and other minorities
was the highest since August 1977, when
it was the same rate. That compared to
13.6 per cent for minorities in June.
The jobless rate for teen-age blacks
and other young minority workers in-
creased by 2.2 percentage points during
July toa two-year high of 36.6 per cent.

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