When the experts get around to pinpointing the peak of the economic expansion that begain in the spring of 1975, they will probably settle on last March. The downhill slide into recession began in April.
Almost every economic forecast now includes a recession of one dimension or another, and even President Carter has begun to use the word. Last week, his key economic advisers warned him that the recession could become severe enough that some kind of government action might be needed to soften its impact, perhaps a tax cut early in 1980.
How long and how deep the slide will be is, as always, uncertain. Most forecasters now believe the decline will extend into the first quarter of 1980, conceivably longer. They expect a drop in gross national product - the nation's total output of goods and services - of between 1.5 percent and 2 percent.
A reduction in output close to the lower end of that range probably would push unemployment up to the neighborhood of 7.5 percent from June's 5.6 percent rate. A 2 percent plunge in GNP probably would mean an unemployment rate nearer 8 percent, or 8 million people out of work.
A recession of that size would be more severe than the one of 1970 or than the one of 1960 that cost Richard Nixon that year's presidential election, but less damaging that the one in 1957-58 that boosted the unemployment rate 3.8 percentage points and much, much milder than the 1974-75 slump in which output fell 5.7 percent and unemployment rose 4.3 percentage points to 9 percent.
The slide began in April when the nationwide Teamsters strike put a substantial crimp in production. The gasoline lines that hit in May insured that it would continue.
Even without those special factors, however, inflation and sheer age were already driving nails in the coffin of the nation's second longest postwar business expansion.
The president and some of his aides have been quick to blame the large oil price increases this year by the Organization of Petroleum Exporting Countries for the increased likelihood of recession and continuing high inflation.
"It is clear that the economic impact of the OPEC action will be severe," White House press secretary Jody Powell said aftet the meeting between Carter and his advisers. "It is also clear that the extremely large increases in prices since December are the root causes of our economic problems.
Carter and Powell were following a scenario laid out by the president's domestic policy adviser, Stuart Eizenstat, in a June 28 memo obtained by the Washington Post. In that memo, which dealt mostly with the energy dilemmas facing the administration, Eizenstat told Carter, "Inflation is higher than ever. A recession is clearing facing us. (Indeed, when our July budget forecast comes out with a zero GNP estimate we should not attempt to avoid the obvious, as [President] Ford tried to do, but we should be honest and admit a recession is likely.)"
v. e have a better opportunity than ever before to assert leadership over an apparently insolvable problem," Eizenstat also wrote, "to shift the cause for inflation and energy problems to OPEC . . ."
As Carter continued his consultations at Camp David with governors, aides and others at week's end, all bets were off on the future course of the administration's economic policy.
Even before Carter began his unexpected, sweeping reappraisal of policy matters, there was no concensus on what economic policy moves, if any, are needed from the administration.
For one thing, while the country clearly is headed into recession territory, there are major uncertainties ahead. Two of the larger ones: Will there be additional disruptions to the supply of oil, and will business begin cutting back its plans to invest in new plants and equipment in the wake of the large, continuing drop in consumer spending?
There is little the administration can do in the short run to guard against another oil supply problem such as the one caused earlier this year by the Iranian revolution. When Libya's Col. Qadaffi was quoted in an Arab magazine published in Paris saying that his country was planning to stop its daily exports of 2 million barrels of oil, everyone simply hoped he didn't mean it.
The greater danger is that Iran will be unable to sustain indefinitely its current oil production level of between 3 million and 4 million barrels a day.
With the world alreay short more than one million barrels of oil a day relative to deman, such a further shortage, if prolonged at all, could well mean gasoline rationing the U.S. - if Congress would give legislative authority for it, which it so far has refused to do.
Another 2-million-barrel-a-day shortage would "put severe upward pressures on the spot oil market and significantly worsen the oil-induced slowdown in the world's economies," says economist Alan Greenspan, former chairman of the Council of Economic Advisers.
Short of such a dramatic turn of events, both government and private economists are uncertain how purely domestiv circumstances will unfold.
So far, much of the economic decline has centered on consumer purchases. Adjusted for inflation, consumer buying has been falling sharply since the beginning of this year. In May, for example, retail sales were running 4 percent less in real terms than they were in the fourth quarter of 1978.
The gasoline supply and price crunch has hurt sales. Shorter lines at service stations would help sales generally, but the pinch on pocketbooks would remain.
Much of the falloff in buying has been concentrated in autos and trucks, a situation that isn't expected to improve soon. Otto Eckstein of Data Resources Inc., an economic consulting firm, thinks retail car sales will drop to a 9.9-million-unit rate in the fourth quarter of this year from an 11.7-million-unit rate in the first quarter.
But Eckstein predicts that the fourth quarter will be the trough of the recession. Greenspan, who is forecasting a recession beginning in earnest in that quarter and lasting through the second quarter of 1980, expects car sales to plummet to a 9-million-unit rate before the recession is over.
New housing starts should be below a 1.5-million-unit annual rate early next year, down from about a 1.8-million rate last quarter.
There is not much agreement among forecasters on what business will be doing. Yet that may be the key to just how bad the recession gets. Certainly it is one of the things administration economists will be forcussing on as they advise Carter on whether there should be a tax cut or other economic stimulus in 1980.
At the moment, industrial and commercial construction is so strong that construction union wages are rising very rapidly again after years of modest settlements. Order backlogs for equipment - particularly machine tools - are large, and new orders still are flowing.
The world is not like it was in 1973 and 1974 when shortages of many materials led business to stockpile inventories and keep on ordering like mad long, long after the consumer had turned cautious. There is no large overhang of unsold houses or unrented office space. And this lack of imbalances means to the forecasters that what lies ahead should be classed as a mild-to-moderate rather than severe, recession.
But it is also coming with inflation tripping along at nearly a 14 percent annual rate. Greenspan's longer and deeper recession would cut that rate about in half during 1980. Along with a shorter, shallower recession ending in the fourth quarter of this year, Eckstein predicts the consumer price index will be rising at a rate of mopre than 8.5 percent rate during much of 1980.
Inflation numbers like that mean that Carter will have to move slowly and gingerly to give the economy any boost next year. "If we are going to make any progress against inflation, we can't afford to turn and run the other way at the first sign of weakness in the economy," was the way one adviser put in last week.
That, in a nutshell, comprises Carter's election-year dilemma, a dilemma that his economic and political advisers had hoped he might escape. OPEC has made sure he won't.