Policy Statement

All the market economies of the world are in the throes of a persistent decline in productivity growth that has produced stagflation every-where. Now, hesitant and uncertain steps to slow inflation have imposed a mild recession and intensified the underlying problem. The peak-to-trough decline in output for the United States during the current recession is likely to be below the average for postwar recessions, and the recession seems likely to end in the next few months. Yet, discussion of a worldwide depression has become common, and proposals for reinflation are widespread. There are two principal reasons for this wide gulf between the facts about the current recession and the rhetoric about a major depression. The first is the position of major industries such as steel, autos, and trucks in all the industrialized countries. The second is the pervasive uncertainty about future fiscal policy and current and future monetary policy