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Even people who have not yet been badly hurt by the recession are postponing everythuig from dry cleaning to divorce to save cash for the harder tunes that they see coming. Holiday partying is off sharply. In Boston, Local 34 of the Hotel and Restaurant Employees and Bartenders International Union usually finds banquet jobs for at least 500 members over a Thanksgiving weekend; this year only 90 jobs turned up. Many families are buying fewer Christmas presents, and Diana Tollerson, 27, a newly married Atlanta secretary, is decorating her first Christmas tree as a Mrs. with empty L'eggs panty hose containers and popcorn and cranberry chains. Says she: "It's so bleak that people are going to have to make it an especially gay Christmas some way. So one thing we won't skimp on is the liquor."
Are even harder times coming?
Probably. The recession still has some way to go, and though economists fore see an upturn some tune in 1975, it is difficult to pick its timing and predict how far down the economy will go before it turns back up. Indeed, the course of the recession so far is something of a lesson in the hazards of economic forecasting:
its length and virulence have surprised almost everyone.
Out of Shape. After two years of boom, the economy was due for a let down in 1974. Trying to fight inflation with tight budget and monetary policies, as both the Nixon and Ford administrations have done, always carries some risk of producing a slump. Reason: those policies are designed to reduce demand.
Indeed, there is some question whether it is possible to slow a headlong inflation without producing a recession. Still, when the National Association of Business Economists polled its members in September 1973, 68% saw no recession coming. After the energy crisis began, the conventional wisdom was that the U.S. would suffer something like a mild recession in the first half, followed by a gentle recovery in the second half. As late as September, Otto Eckstein, a member of TIME'S Board of Economists, predicted only a "middling recession."
But the 1974 economy has been wrenched out of its expected shape by a combination of unforeseen events and some policy miscalculations. Even before war broke out in the Middle East 13 months ago, the economy was beginning to slow down, partly because rising food prices were leaving consumers less money to spend on other goods and partly because the Federal Reserve was starting to slow the increase in the nation's money supply. But when the Arab oil embargo began to crimp auto-sales and other energy-related businesses last whiter, the Federal Reserve turned on the money spigot again for a few fateful months. That overreaction, coupled with the end of price controls in April and gigantic oil price hikes, led to an explosion of prices accompanied by a surge in borrowing by companies seeking funds to finance expansion and build up inventories.