Long-Run Dangers of Inflation Have Now Become Short-Run
NEW YORKÛÓThe American people have become so accustomed to inflation in recent years that it is difficult to find words that adequately convey an idea of the dangers involved. Arthur Okun, the PresidentÛªs chief economic adviser, contrived a fitting analogy the other day when he compared the U.S. economy with a fat lady munching candy.</br></br>"Nobody can promise her a lovely figure overnight if she stops nibbling. Nobody can legitimately warn her that one more piece would do incalulable damage. And foregoing the candy means sacrificing a lot of fun in the short run. But the more she overindulges, the more serious the risks become. The time to stop our economic overindulgence is now.Û</br></br>In its competition with other industrial countries, the United States is fast becoming the ÛÏfat lady" of international trade. The rate of growth of The NationÛªs imports is closely related to the growth of Gross National Product. When GNP grows at high rates, imports rise even more rapidly. In years when the economy has expanded by 8 per cent or moreÛÓas it is likely to do this yearÛÓimports have increased by more than 15 per cent.</br></br>First-quarter trade figures, compiled by the Census Bureau, confirm that a big upsurge in imports is under way. Imports in the Janu-ary-March period (seasonally adjusted) rose 10 per cent over the fourth quarter and topped the year earlier period by 17 per cent. With the economy expanding rapidly and with consumer spending climbing steeply, imports will continue to increase.</br></br>IF WE ASSUME that commercial exports (excluding foreign aid and other government-financed exports) will grow by 8.0-8.5 per cent this yearÛÓwhich is a generous assumption in view of