POLICY: Wrestling with Slumpflation

Beset on all sides by worsening economic news—a deep dive in labor productivity, a continued spiral in interest rates, a lag in business spending for plant and equipment—the Nixon Administration clings fast to an optimistic scenario. It insists that the slumping economy will turn up and the nation's frightening inflation rate will go down, helped by the Federal Reserve Board's continuing efforts to hold down growth of the money supply. Last week, Federal Reserve Chairman Arthur Burns pledged in unusually strong terms to pursue that policy—even at the price of further hurting the sliding housing industry. Now, in opposition to...