The chairman of the Federal Reserve Board predicted yesterday that unemployment will rise moderately next year as the economy slows down, but said there is no evidence that a recession will occur "unless we talk ourselves" into one.
G. William Miller's prediction of an increase in unemployment next year is at variance with the official administration position.
Officials such as Charles L. Schultze, chairman of the Council of Economic Advisers, say the economy will grow 3 percent or slightly more in 1979, fast enough to keep the unemployment rate from rising above 6 percent where it has hovered most of this year.
Miller said that because of actions already taken to fight inflation and to support the dollar, the economy will grow between 2.5 percent and 3 percent in 1979.
The projected growth, Miller said, may result in "some modest increase in unemployment," but it also provides time to combat inflation without experiencing big increases in demand pressure.
At a breakfast meeting with reporters, Miller said the nation should expect slow economic growth - in the range of 3 to 4 percent - for the next five to seven years. Such slow growth will enable the administration to slowly wring inflation out of the nation's economic fabric, he said.
But Miller had harsh words for the growing number of economists and financial analysts who are predicting a recession for 1979. He said they seem to be welcoming an economic setback next year.
He said there is no evidence of a serious economic decline in the "reality of today." Only "through clamor and noise and pessimism could we talk ourselves into a recession," Miller said.
He said that a recession is not a good policy because it would do little to fight inflation and would sharply boost the federal budget deficit. Miller accused Wall Street and others of having a "death wish" about the economy.
Miller said later that his prediction of five to seven years of moderate economic growth will not mean that unemployment will remain near 6 percent until 1985.
He said that the big crop of post-War babies has entered the labor force already and that unemployment should fall slowly, but steadily throughout the first half of the 1980s, as fewer workers start looking for jobs and today's young workers gain experience.
But the need to keep the economy growing moderately and the need to reduce the overall size of the government will rule out major new government initiatives such as national health insurance between now and 1985, he conceded.
"What are the social benefits of well-meaning social programs that destroy the social and economic base of the country . . . that wreck the wealth and income of all?" he asked rhetorically. He said that an 8 percent inflation rate is the equivalent of a $160 billion tax on all Americans.
Once the nation gets federal spending down from 22 percent of total output to 20 percent, then the country can order its priorities and decide which new initiatives it wants. But until then the federal government should not expand its horizons, he said.
Miller also said that the recent strengthening of the dollar is not due to massive government intervention, but rather to the recognition on the part of foreigners that the United States has made "substantive" changes in policy to fight inflation.
In a related development, the deputy director of the Council on Wage and Price Stability said the nation must be prepared to face more strikes than usual next year if the administration's anti-inflation plan is to succeed.
Robert Russell, speaking at a Dallas briefing on the wage-price program, said the program would be a "sham if we allowed companies to settle outside the guidelines because of the mere threat of a strike."