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The rising fears of recession show that the Administration is at last making headway in its difficult fight against inflationary psychology. All year, Nixon's economic lieutenants have been trying to create a degree of uncertainty in the minds of businessmen, labor and consumers about the prospect for continued prosperity. Many experts find the present outlook no cause for alarm. Arthur Okun, the former head of the Council of Economic Advisers, calls the chance of either a recession or a continued boom "a long shot." By his handicapping, the Government stands a 50% chance of bringing the inflation rate down to about 4% without causing a politically unacceptable rise in unemployment. Still, Okun insists—as do the other members of TIME's Board of Economists—that it is high time the Federal Reserve eased its monetary brakes.
Economists tend to agree on the business profile for 1970: a rise in jobless ranks to 4¼% or 4½% of the labor force; 4% price inflation, probably tapering off toward year's end; sluggish 2% real growth in the over-all economy, which will expand from $933 billion to $985 billion or $990 billion. A few sectors of business anticipate substantial difficulties. Auto manufacturers (except Ford) have already curtailed production a bit, and some retail merchants figure that they will have to hustle to maintain their sales volume. "The consumer is beginning to stiffen up," says Ralph Lazarus, chairman of front-ranking Federated Department Stores. "We expect that after Christmas he will become a tough buyer, more value-conscious than in a long time."
In the decade that opens next month, thoughtful business leaders realize they face responsibilities that go beyond the traditional definition of business, and they seem ready to do more than merely pay lip service to them. Next to inflation, recession and the need to end the Viet Nam War, the most talked-about subject among high executives is what role the corporation can play in reversing the decline of cities, building housing for the poor, finding and training blacks for jobs. Walter A. Haas Jr., president of San Francisco's Levi Strauss & Co., believes that industry's first big task is to put an end to polluting the environment. "We are debauching the country," he says. Meeting such new goals will plainly require some extraordinary changes of attitudes among both businessmen and politicians. At the extreme, business may have to renounce its allegiance to all-out economic growth in order to halt the chemical and bacterial poisoning of air, land and waters. During the 1970s, the nation may also face a chronic shortage of capital to finance its seemingly boundless appetite for roads, airports, schools and many other projects. Continued inflation would disrupt the delicate mechanism through which most of the capital must be generated. Recession would force the U.S. to reallocate its resources to alleviate personal hardships.
Recipes for Reform
If the nation's resources are to cover its future needs, Government, business and labor will have to