President Carter recently said he would judge how well he did on his State of the Union message by the reaction in the stock market.
The message, however, was delivered into the maws of a massive snowstorm that swept the northeast and delayed the opening of stock exchanges in New York until noon. The Dow Jones Industrial average today finally clsed off 1.73 points follwing an abbreviated session on the New York Stock Exchange that was market by light trading.
The reception of his speech in the business and financial community could also be described as chilly. Business leaders and economists complained that the speech contained little that was new and did not help to clarify pressing issues comfronting the nation, such as the outcome of energy legislation currently deadlocked in a House-Senate conference committee.
In Europe the dollar dropped sharply in the first hour of trading on foreign exchange markets in reaction to the message and the absence of any remarks that might have bolstered the U.S. currency. But by this morning the dollar recovered part of its losses.
Walter E. Hoadley, executive vice president and chief economists of the Bank of America, said he agreed with President Carter's optimistic reading of the state of the economy. But Hoadley added, "We have a confidence crisis, not an economic crisis. The President addressed himself more to the economic than to the confidence problem, and that's why he has some difficulty in getting support."
Irving S. Shapiro, chairman of the Dupont Co., and the head of the Business Roundtable, said the speech's 'general tone on economic issues is positive. I was impressed," he added, "with his recognition that many of our problems must be solved by the private sector, that government cannot solve them."
But Shapiro said the plan to set up a voluntary anti-inflation effort "raises the spector of wage-price guidelines."
Richard S. Peterson, senior vice president and economist for the Continental Illinois Bank, said Carter's proposal for voluntary wage and price restraint by labor and business "harks back to the WIN program," referring to the Whip Inflation Now campaign that President Ford launched, and which was widely derided as ineffective.
Peterson expressed disappointment that Carter said his tax cuts would be tied to a program of significant reforms to bring in more revenues.
"I thought they were going to move to a cleaner tax bill, but what I got out of the message is that reform is going to be an important element," said Peterson.
"This will only wind up in delays and add to continuing uncertainty. I don't believe in the concept of business confidence," he said. "I do believe in uncertainty, which retards business spending. The delays we're having in getting legislation through Congress are detrimental in business planning and are contributing to the slowdown in economic activity, and I don't see that clarified in the message last night."
During the speech, Carter, in listing his priorities for solving the energy crisis, mentioned increased production first, elicting a burst of a applause from some in the audience. Some oil and gas producers took the statement as an indication that Carter has shifted his emphasis away from conservation and toward more production.
"That did seem like a signal," said Ted Erick, the chief economist for Standard Oil of Indian. "But those are just words. What we need is a new plan . . . one would think that they might call off some of their dogs in Congress and generally try to cooperate and get something going in the area of compromise."