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These countries argue with some justification that it is all but impossible to make important decisions on trade and investment when the value of currencies can rise or fall as much as 20% within six months, as some in fact have. Schmidt believes that volatile shifts in exchange rates contributed substantially to the recession by reducing business investment and curtailing trade. But U.S. officials, notably Treasury Secretary William Simon, are strongly in favor of continued free-floating exchange rates. They view any move away from that as a step back toward the old system of rigidly fixed exchange rates that produced one disruptive monetary crisis after another.
On an even more important topic, U.S. officials are bracing themselves to resist some polite arm-twisting by the Europeans, who believe that a fast U.S. upturn would mightily help to lift other economies out of recession by increasing American demand for imports. Giscard, Schmidt and other leaders are particularly interested in persuading Ford to avoid any actions that might slow down the U.S. economy, such as letting New York City go bankrupt, cutting Government spending or allowing interest rates to rise. Their entreaties will get a sympathetic hearing from Ford, but nothing else. Administration policymakers assert that they cannot make critical economic and political decisions solely to help other nations; they must above all be careful not to speed up inflation.
But Ford's most telling argument in turning aside pleas for more action will be that by cutting taxes $22 billion this year, the U.S. has already done more to stimulate its economy than any other nation represented at the summit—and with results that show.
Despite its difficulties, the U.S. seems well on its way out of recession. Most members of the TIME Board of Economists are concerned about the latest rise in prices and joblessness. But even such inveterate critics of Administration policy as Walter Heller, Arthur Okun, Joseph Pechman and Otto Eckstein are satisfied that recovery is about on schedule, at least for now. Says Okun: "If anything, people are revising the level of their forecasts upward from last summer."
Real G.N.P. shot up at an 11.2% annual rate in the third quarter, mostly because businessmen at last stopped living off their shelves and out of their warehouses and started filling sales orders from new production. The end of inventory liquidation gave the economy a one-shot jolt that will not be repeated, so the fourth-quarter gain will be considerably more modest. But that will not represent any real setback. The Administration this week will officially predict a 6% growth for next year. That will be enough to bring unemployment down, though at an agonizingly slow pace. The October jump in unemployment reflects a sharp increase in the number of job seekers, many of them women, who were encouraged to seek work by the brightening economic outlook. Before then, they had not even bothered to look. White House economists foresee for 1976 an unemployment average of about 7.5%—higher than the rate in any other major industrial nation.