Worry for Ford in His Strong Suit

The pause that descended on the nation's economy last spring is hanging on much longer than almost anyone expected. Though most economists and businessmen are still confident that the recovery will soon regain its momentum after six months of quietly marking time, the sounds of cough and sputter in the economy, just three weeks before the election, are worrisome for President Ford. Earlier this year it seemed that the then steadily brightening picture in jobs, prices and profits, following the worst recession since World War II, would be Ford's strong suit in the campaign. But the now lagging recovery has become an issue for the Democrats. Last week they could find new ammunition to use against the Administration in the economic measures that mean most to voters:

JOBS. The Labor Department reported that after rising for three months in a row, the nation's unemployment rate showed a slight improvement; it edged down to 7.8% in September, from 7.9% in August. But while the level of unemployment among women, young people and blacks declined slightly, the rate for household heads, the backbone of the labor force, rose from 5.2% to 5.4%. Thus the last jobless figure to appear before the Nov. 2 election shows that 7.4 million Americans are still unemployed--a statistic that is certain to cause Ford trouble.

PRICES. The Wholesale Price Index for September rose by .9%, or about 11% at an annual rate--the biggest rise in eleven months. The index reflected sharp rises in the cost of food and industrial commodities that are bound to show up to some degree in higher retail prices over the next few months.

STOCKS. Even before the arrival of the newest numbers on jobs and prices, investors were making their jitters about the economy felt on Wall Street. During the past nine days of trading, the Dow Jones industrial average dropped a steep 61 points. Last week, the Dow fell 28 points, to close at 952, its lowest level since mid-February.

The slowdown in the recovery has not been all that sharp. The economy's rate of expansion--which determines how rapidly jobs, sales and profits are created--swung from a robust 9.2% in the first three months of the year to a slower but still healthy 4.5% in the second quarter. Lately, though, a spate of figures coming out of Washington has suggested a further decline. The leading indicators dropped in August for the first time in a year and a half. Nonresidential-construction contracts hit their lowest level of the year.

Government growth figures for the July-September period will not be out until early next week, but many experts are already shaving their earlier forecasts of an increase of about 4% in the nation's output of goods and services to 3%--or less. Alan Greenspan, chairman of the President's Council of Economic Advisers, says the prime reason for the slowdown is that businessmen piled up big inventories early this year, and had to hold back on new orders until the backlog was reduced. Greenspan believes the economy will pick up speed in the current quarter and go on expanding strongly through 1977.

Still, most economists have been surprised by the persistence of the slowdown. One of the most puzzling factors: the recent realization that over the past six months federal spending has fallen $10 billion to $15 billion below expectations. Perplexed officials at the Administration's Office of Management and Budget are now sifting through their figures to determine whether the unforeseen reduction is merely caused by a temporary slowdown in expenditures that will be made up in time or whether it represents an actual reduction in the level of Government outlays.

Sharp Debate. Besides those missing billions, the recovery has been slowed by cautious spending by consumers and particularly businessmen, who are worried about high unemployment and inflation. Prices are now advancing at an annual rate of about 6%, up from 1.2% early this year but still well below last year's peak of 12.7% in July.

Whatever the cause, the slowdown has sharpened the debate over how expansionary Government policy should be. Generally, Republicans favor moderate expansion--4% to 5%--to achieve growth without devastating inflation. Democrats assert that because the economy is operating so far below capacity, rapid expansion would not only have little effect on inflation but would bring down unemployment. The argument over how rapid the recovery should be is certain to continue after next month's election, no matter who wins.

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