THE WASHINGTON POST, TUESDAY, MARCH 13, 1984
The latest numbers show the economy overheating rapidly. It would be appropriate for the Federal Reserve Board to hit the boom over the head with an unambiguous warning.</br></br>But foreign connections and political considerations make it risky to use such crude measures. So Chairman Paul Volcker must try to achieve large effects by subtle signals. We are back to fine-tuning.</br></br>The rapid decrease in unemployment is perhaps the most striking sign of economic takeoff. The jobless figure has come down from 10.6 percent in November 1982 to 7.7 percent last month. That drop is much faster than the norm for previous recoveries, and exceeds expectations by far.</br></br>By the middle of this year, labor markets will be tightening. Unions will be in position to bid up wages in such basic industries as autos. Thus any rise in living costs will be transmitted throughout the system.</br></br>Such rises are almost inevitable. Food and petroleum prices have been firming as demand picks up all over the industrialized world. More important, final sales in this country have been outpacing inventory growth.