Federal Reserve Board Chairman Arthur F. Burns yesterday warned that there are "disturbing manifestations of price pressures in our economy" even after accounting for the effects of the severe winter weather, weather.
Burns also testified before the Senate Budget Committee that whether or not President Carter moves to protect industries like shoes and color televisions, he will be subject to severed criticism.
"My heart goes out to President Carter" on the trade issue, Burns said. "He's going to get it in the neck no matter what he does."
In wide-ranging testimony, Burns also reiterated his reservations about the economic stimulus package being put together by Congress and the President, but said that "such reservations . . . sould not be interpreted to mean that the Federal Reserve will stop short of doing what it can to foster a satisfactory rate of economic growth this year."
He said President carter's goals of reducing unemployment to less than 7 per cent and reaching an economic growth rate of 6 per cent this year "appear to be entirely reasonable."
But Burns said the is worried about a reignition of inflation, and he warned that "substantial amounts of idle capacity and manpower provide little assurance that price pressures will not mount as the economic growth rate speeds up."
Historically, sensitive commodity prices start rising "at or close to the very beginnings of a business cycle upswing," and the prices of consumer goods and service "gather substantial upward momentum well before full utilization of resources is achieved," the central banker said.
On the trade issue, Burns said the President will have to balance domestic employment against inflation and the threat of retaliation by the nation's trading partners.
The International Trade Commission, which administers many of the nation's trade laws, has recommended that the President impose a combination of tariffs and quotas on imports of shoes, a lower quota on imports of sugar and a quintuple tariff on color television sets.
The commission made the recommendations after determining that imports were hurtinjg the domestic industries but not that the foreign competition was unfair.
Burns told the Senate panel that "when we move protectionist, retaliations will follow. Other nations are not going to stand still" if the United States starts erecting trade barriers.