Fed Chief: Economy in 'Test Period': Business Leaders Warned to...
HOT SPRINGS, Va., Oct. 7ÛÓ Federal Reserve Chairman Paul A. Volcker, who met with leaders of the nationÛªs largest corporations here today, later warned that prices and wages should be restrained as the economic recovery continues.</br></br>Volcker told reporters at the fall meeting of the Business Council that ÛÏwe are entering a testing periodÛ when price increases and wage demands must reflect the low inflation levels of the past year and not the higher expectations of the past decade.</br></br>ÛÏWe live in a different world,Û he said, and the important question is" whether ÛÏwage decisions and price decisions reflect what I believe is the new reality.Û</br></br>Earlier, the business leaders predicted a strong but lopsided recovery in 1984, with gains in the consumer sector undercut by a serious weakness in American exports.</br></br>Members of the Business Council representing 65 of the biggest blue-chip corporations gave a generally optimistic outlook for the economy, but expressed concern and frustration over the inability of the Reagan administration and Congress to reduce the record budget deficits that are projected for the mid-1980s.