The financial community reacted with disappointment to President Carter's inflation speech yesterday, but business leaders were more receptive to the president's call for voluntary, restraint among all sectors of the economy.
In the money markets, analysts said the president failed to address convincingly the major factors they feel are driving up price levels: the ballooning federal budget deficit and the growth of the nation's money supply.
But business leaders, such as General Motors Corp. Chairman Thomas A. Murphy, expressed relief that the President continued to reject wage and price controls and commended the "president for his statement on this problem."
Murphy pledged that GM would "redouble our efforts in our budgeting and daily operations to exercise maximum discipline over our costs in order to achieve decleration of cost and prices in line with the President's program."
The President's program - the broad outlines of which have been rummored for weeks - failed to convince either stock market investors of foreign currency traders.
The stock market added to its slide after the President's address, closing down 3.47 points for the day as measured by the Dow Jones Industrial Average and the dollar dropped sharply in late trading following the speech."
Financial leaders concluded that the lack of bite and surprise in the President's remarks and his failure to stress the deficit and mongrowth means that fighting inflation in the months ahead will continue to lie with the Federal Reserve Board and a policy of tighter money and higher interest rates.
But Federal Rserve Chairman G. William Miller, who has warned repeatedly that the nation's central bank cannot be the sole fighter against inflation, applauded the President's program.
Miller said the "Preisdent has made practical and effective proposals for turning the rate of inflation downward and restoring American confidence and world confidence in our economy and our money. His program hits at the roots of the problem: the upward pressure on prices caused by rising costs and a declining dollar; and the growing dependence on imported petroleum."
REp. Robert N. Gialmo (D.-Conn.), chairman of the House Budget Committee, was equally laudatory, although he said he said he regretted that Carter "did not endorse a roolback in Social Security taxes as recopmmended by the budget committee. Such action could contribute significantly to the deceleration of inflation by reducing employers' could costs overall."
Gary Shilling, senior vice-president and chief economist for White, Weld & Co., had a different view. "Obviously the administration is not really willing to bite the bullet and declare all-out war on inflation," Shilling said, calling the measures "nothing to get anybody very excited."
Shilling said foreign disappointment may well trigger a further selling of dollars and said the Fed will also be under heavy pressure. "On the one hand he (Miller) doesn't want to precipitate a recession by tightening credit . . . but if does nothing he will have the same credibility problem (former chairman Arthur F.) Burns had, which was all talk and no action."
Henry Kaufman, Salomon Brothers partner and chief economist, expressed disappointment that "one issue the President didn't tackle, and should have, is lowering the budgetary profile of the federal government. A $60 billion deficit under the current circumstances is inflationary."
Alan Greenspan, chairman of the Council of Economic Advisers in the Ford administration, called the speech "eloquent" and "interesting" and said "if it was the first time I heard it I would be impressed.
"The trouble is I've heard it before, and the President has rarely adhered to thespeeches he has enunciated."
But the President got support from top business leaders like GM's Murphy and representative of the Business Roundtable, an organization of chief executive officers of large industrial companies.
"We are encouraged by President Carters statement that this administration is ready to follow anti-inflationary policies in the management of the federal government," according to a statement issued in the names of Business Roundtable chairman Irvin S. Shapiro, who is also chairman of DuPont, and the two vice-chairmen of the business group, General Electric chairman REginald Jones and GM's Murphy.
"While there may be full agreement on all facets of the President's program for controlling inflation, we endorse his prority on this grave nations problem," they said.