Big business leaders, joined by Federal Reserve Board Chairman Paul A. Volcker and Treasury Secretary G. William Miller, sounded cherry about the nation's Fed moves are a major step toward curtailing inflation and boosting the nation's economy.
Appearing at a meeting of the Business Council at the Homestead, Volcker and Miller joined business executives in saying the Fed's strategy -- raising interest rates while tightening the money supply -- will provide industry with stability and a better sense of the government's economic intentions.
"The basic thrust of the announcement is to provide more assurances of control over the money supply and over bank credit expansion," Volcker told reporters after a closed-door session with council members.
"It does not mean no growth," Volcker said. "It means moderate growth in both money supply and credit." Asked about President Carter's statement on Thursday in which he called interest rates "too high," Miller said the administration continues to believe the moves by the independent Fed board were in the nation's best interests.
"I think the president looks forward like all of us to the day we have nipped inflation in the bud and that's the day we'll begin to see interest rates come down," Miller said.
Although neither government official would say when that would be, Miller said the nation is currently in a recession that started in the second quarter of the year and will continue over a total of four quarters.
"The point is not what's going to happen in the next few months," Volcker added. The question is are we establishing a better base for resumed growth in the long run."
Meanwhile, the Business Council, a group of the nation's leading executives, released its own economic forecast, a study based on the views of 20 industry economists. Their report, prepared before the most recent Fed action, predicted that the economy will begin to recover in mid-1980.
Unemployment, they predicted, would have a quarterly peak of 7.1 percent in the middle of next year, although some of the economists predicted a peak rate of 7.7 percent next year.
Inflation also will begin to wind down and the consultants' survey indicated consumer prices will be rising at an 8 percent rate through 1980.
At a session with reporters Thursday night, the council's executive committee expressed unanimous and unequivocal support for the Fed's dual actions: tightening money supply and increasing the interest rate to 12 percent -- a unique combination of fiscal maneuvers.
"I have yet to meet a businessman who is not supportive of these moves," said Reginald H. Jones, chairman of General Electric Co.