President worries as inflation in U.S. starts to climb again

Press, 28 March 1979, Page 9

President worries as inflation in U.S. starts to climb again

NZPA Washington President Jimmy Carter is basking in acclaim after Egypt and Israel signed their historic peace treaty yesterday. But he will not have much time to savour his Middle East triumphs. . The twin perils of inflation and energy’ shortages are threatening the American economy — and the President himself. Inflation is ravaging the wallets of Americans and unless the President does something about it — and soon — runaway prices could wreck his re-election chances in 1980. The Administration and the nation were shocked on Friday when Government statistics showed that in-

flation in February, hit a four-year high. Consumer prices spurted 12 per cent for the month and if unchecked would top 15 per cent for the full year if they continued at that rate. President Carter got a friendly reception in Oklahoma and Texas at the week-end, but he was bombarded by questions on the economy. The President is moving to tighten his voluntary wage-price guidelines and has begun a personal “jawboning” campaign to get business and labour to comply with his largely voluntary guidelines. But in Texas when one questioner asked the President whether the Government is really going to be able to control business in

i its fight against inflation, Mr Carter answered: “It’s I hard to say.” i Tomorrow President Cari ter is expected to announce ■ his plans for cutting Ameri- : cans’ profligate energy consumption and increasing the i United States’ own oil pro- ■ duction. s He is said to be ready to ■ announce a move toward ! eliminating controls on the prices of much domestically- ; produced oil. Such controls keep prices I artificially low — well under ■ current world rates — and t do nothing to encourage • conservation. The action is seen as necessary to spur the search for > domestic oil — drillers say ■ the present low prices do ■ not offer sufficient explors ation incentives — and i development of existing re-

serves not now being exploited. Removal of controls would also mean higher petrolpump prices and presumably lower consumption. And reduced demand would cut the huge outflow of dollars that goes to oilproducing nations to pay for imports. But higher petrol prices would hurt consumers and spark another bout of inflation. Whatever the President does is bound to be political’y unpopular. The Energy Secretary (Mr James Schlesinger) admits the President does not have any easy choices on the intertwined issues of energy and inflation. “The President is trying to reconcile irreconcilable problems,” he says.