LKE Banquo's ghost, inflation continues to haunt the nation—and the Nixon Administration. Frightened by that specter, housewives are organizing a nationwide boycott of meat counters, union chieftains are threatening to press for fat wage raises, and Congressmen are calling for a return to the stringent controls that existed until January. From the very moment that President Nixon loosened those controls, Democratic politicians and economists warned that Phase Ill's anti-inflation forces were simply too weak. Last week, when results of the first full month of Phase III were reported in Washington, their predictions turned out to be disturbingly accurate. In short, the Government confirmed what has become the bane of every householder and a prime topic of conversation across the U.S.—sky-high prices.
Retail prices in February spun up by .8%—a 22-year record that amounts to a grim 9.6% inflation rate on an annual basis. Herbert Stein, the usually Panglossian chairman of the President's Council of Economic Advisers, conceded: "The news on prices has been bad."
Since food prices accounted for about two-thirds of the jump in consumer costs, many of the President's critics favored putting a freeze on farm-commodity prices—and even some of his advisers declined to rule out that idea. Former CEA Chairman Walter Heller, a member of TIME'S Board of Economists and until now a firm opponent of farm controls, for the first time reluctantly concludes that such a freeze may become necessary. "It's economically distasteful, but may be needed to block a new price-wage spiral," he says. Many economists still fear, however, that a freeze or stern controls on the prices of agricultural products would lead to food shortages and even rationing. Farmers and ranchers will not produce enough unless the price is right.
No Zigs. In an effort to hold down meat prices, the Cost of Living Council ordered packers to pass along any variations in their cattle costs on a dollar-for-dollar basis, without tacking on their customary profit markup. For the most part, Nixon and his advisers seemed determined to ride out the squall without taking one of their sudden, celebrated zigs in policy. In fact, the only thing they seemingly wanted to change was the nation's eating habits. After the President had endorsed fish as a "patriotic" dish and Federal Reserve Chairman Arthur Burns picked cheese, last week COLC Deputy Director James W. McLane jokingly came up with the ultimate meat substitute: abstinence. "Eat a little less," he advised.
Stein insisted that inflation by year's end would be running near the President's 2.5% target—even though February's price increases alone had, in effect, "used up" about a third of that. COLC officials predicted that the Administration's long-range effort to increase farm supplies might well hold monthly price rises to "near zero" by year's end.