The United States' oil deficit will more than double during the next seven years and trigger a continuing weakening of the dollar that is "potentially disastrous," a British economist predicted yesterday.
Michael Spicer, a member of Parliament and President of Economic Models Ltd., presented a gloomy analysis of U.S. economic prospects in a speech to California business executives here.
Relying on a computer analysis of U.S. economic prospects that assumed passage of a pending Senate compromise of President Carter's energy proposals, Economic Models forecast an increase in the oil deficit from $48 billion in 1978 to $102 billion in 1985.
By that year, according to the forecast, imported oil will account for 65 percent of U.S. consumption.
"This inability of the United States to control its oil deficit over the next seven years will result inevitably in the continuing weakness of the dollar," Spicer said. "The dollar is expected to fall, for example, from its present level of around 235 yen to 175 yen in 1983 and from 2 German marks at present to 1.7 German marks in 1983."
From a base index of 100 in 1971 the U.S. dollar, when measured against world currencies, has declined to a present exchange rate of 86.9. Economic Models predicted that this exchange rate would reach 78.6 by 1983.
In an interview before his speech, Spicer said the most troubling aspect of this dollar decline is that it could lead members of the Organization of Petroleum the Exporting Countries (OPEC) to seek an exchange substitute for the dollar. He said dollars are being converted into marks or Swiss francs, but continued decline would make the dollar "no longer fully convertible" into these currencies.
"The dollar has been the base for the world monetary system," Spicer said. "It is being called into doubt . . . once we no longer have a firm reserve, the whole basis of credit is called into question and the whole basis of trade is threatened."
The bright side of Economic Models' dark forecast is that devaluation of the dollar will result in a much stronger growth of U.S. imports, which were predicted to grow by 5 percent annually over the next five years compared with a 3.5 percent annual growth in imports.
Among other things, this dollar devaluation would cause foreign automobiles to lose their price advantage.For this reason, Economic Models anticipates that the present 19 percent foreign car share of lthe U.S. market will decline to 15 percent within the next two years.
Because of the export growth, Economic Models forecasts an economic growth of around 3 percent during the next several years, rising above 5 percent in 1980.
"These growth figures will mean that the rate of unemployment will remain slightly below the 1977 level of 7 percent during the next few years," the economic forecast continued. "This price for this growth will be a rise in the rate of inflation. Consumer prices will grow an average of eight percent per year."
Spicer, a 35-year-old economist, is considered one of the financial experts of the Conservative Minority in Parliament. Economic Models Limited recently became a wholly owned subsidiary of Computer Sciences Corp., a U.S. firm with offices in Los Angeles, Chicago and Beltsville, Md.