THE WASHINGTON POST, TUESDAY, AUGUST 10, 1982
-ÛA lagging indicator,Û the White House said when the unemployment statistics-'for July rose to the highest lever sitfie 1941. As if a jobless rate of 9.8 portent was part of the familiar postW8?^icture of ups and downs signaled By leading and lagging indicators.'</br></br>In fafct, the unemployment numbersÛÓlike those for inflation, interest rates and the budget deficitÛÓhave recently gone way beyond the experience ;of the postwar era. Prudence suggests, that instead of pretending we know exactly what is happening to the economy, we acknowledge that we are on'uncharted seas where anything might- happenÛÓincluding a prolonged recession.</br></br>The economic features of the last 40 years, are, to be sure, well defined. Steads,ÛªÛÏconsumer demand has been the ffloior force for a period of general pfpgperity. So long as income kept %,\ying into the hands of the pubjjjvthe economy kept moving forward For consumers have regularly spent a highly predictable chunk (from 93 to 95 percent) of disposable income.</br></br>Recession, of course, punctuated the fat years from time to time. But in a way that too was well understood, and self-containing.</br></br>Usually an excess of demand over supply, occasionally fed by an international crisis, drove prices up in a brief inflationary spurt. The Federal Reserve Board then acted to slow down demand by restricting the money*-supply. Retailers and manufacturers who had ordered too many goods o'? invested in too much productive capacity were caught with an excess of inventory. As they cut back, there was a slowing of economic activity, which eventually showed up in a layjjjg-off of workers. Unemployment thus figured as a ÛÏlagging indicator.Ûª'