Jobs and Jawbone

President Nixon has made it clear that he thinks his economic policies will be in trouble if unemployment reaches 51%. That was just about the average jobless rate during the early 1960s, when the Democrats were in power, and that is what Nixon calls "the critical number." Last week the Labor Department reported that unemployment rose too close to the critical zone in May, increasing from 4.8% to 5% of the nation's work force.

Hurt worst were full-time workers, mostly blue-collar whites on whom Nixon counts for political support. All together 270,000 jobs were lost last month, including 100,000 because of rubber, trucking and construction strikes. Now the great question vexing Nixon's policymakers is whether the figures will become much worse. The President's chief economist, Paul McCracken, still declines to call the current slump a recession (his own word is "recedence"), and he insists that the economy will bottom out at about its present level.

If it does not, the Government could work against a further unemployment rise by drifting into a bigger budget deficit or expanding the money supply faster. But the Federal Reserve Board, which was forced to pump out money in the past two months to avoid a grave shortage in the banking system, lately has been gently reducing the rate of increase. In order to give the board more room to expand money without bringing about further inflation, many of Nixon's advisers--and Congress--have been prodding him to adopt some form of "jawboning" or wage-price guidelines. At week's end, the President was pondering just that, and it seemed more likely than ever that he would soon take a more active role in waging a fight against rising prices.

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