President Carter said today that a recession is "much more likely than it was before" for the United States and the world because of the oil price increase announced last week by the Organization of Petroleum Exporting Countries [Opec].
Speaking to reporters aboard Air Force One en route to Washington from a week-long Far East trip, the president said that OPEC price increases since last December could cost Americans 80,000 jobs and add 2.5 percentage points to the inflation rate by the end of December 1980. The gross national product, he added, could be 2.5 points lower by 1980 than it otherwise would have been.
Aboard Carter's plane today, an administration official for the first time put a tag on what the new OPEC crude oil price will cost the United States next year: $70 billion. That is $12 billion more than this year's estimate for importer oil and $25 billion more than the United States spent to bring in oil last year.
The higher cost is almost certain to impose new strains on the dollar in foreign exchange markets.
Carter's comments were by far his most pessimistic assessment of the economic situation facing the country. For the first time, he has conceded that a national recession, rather than simply an economic slowdown, is a definite possibility next year, when he is expected to seek reelection.
The president said that he and congressional leaders agreed before he left for the Far East to establish two administration-congressional task force, one to deal with energy and the other with inflation.
He did not say exactly what the two groups will do, but said that the energy unit will be asked to develop a standby gasoline rationing plan to replace a plan developed by the administration that was killed by the House.
The president did not suggest that he would imposed rationing, saying he would only seek authority from Congress to do so.
Cater's comments clearly were intended to reinforce the image of a president rushing back to Washington to deal with the energy shortage and its economic consequences.
Initially, the president planned a three-day vacation here at the end of his visit to Japan and South Korea. But last week, in the midst of a seven nation economic summit conference, White House officials announced that Carter would skip the vacation and return to the capital.
The economy has been sliding for several months. After rising at an annual rate of 6.9 percent in the last quarter of 1978, gross national product rose at a rate of only 0.8 percent in the first three months of this year.
Unofficial reports in the past week indicated that the growth rate may have turned negative in the second quarter.Officials traveling with the president would not confirm a report that a preliminary "flash" based on April and May performance indicated a minus 2.4 percent figure for the second quarter.
However, the officials did acknowledge that the second-quarter rate probably will be negative. An administration official aboard Air Force One said today that precise estimates will be made in about 10 days and predicted that "for the rest of the year, the growth rate is going to be about zero."
The president's estimate of the likely impact of the OPEC price increase on economic growth and the inflation rate were both more pressimistic than estimates he voiced only Friday at the economic summit conference.
Moreover, if his prediction that the-price increase will cost 800,000 jobs proves correct, he appears to be forcasting an unemployment rate of about 6.5 percent by the end of 1980.
Altogether, the president was predicting that the nation would be feeling the accelerating pain of energy shortages and higher prices through next year's presidential campaign.
Carter arrived here early this morning for a refueling stop on his trip from Seoul at the conclusion of a two-day state visit to South Korea. Before he left the South Korean capital, Carter and President Park Chung Hee issued a communique calling on North Korea to agree to negotiations with the United States and South Korea aimed at eventual reunification of the Korean peninsula.
Secretary of State Cyrus R. Vance called the proposal a "major diplomatic initative," but it was clearly overshadowed by the energy and economic issues that Carter spoke of after leaving Seoul.
The key factor is these issues was OPEC's decision to increase the base world oil price by 25 percent. The oil cartel's decision was announced in Geneva last Thursday, the first day of the Tokyo economic summit attended by Carter and leaders of six other industrialized democracies -- Britain, France, Germany, Italy, Canada and Japan.
In response, the economic summit participants agreed to specific limits on the amount of oil they will import through 1985 and issued a joint declaration condemning the OPEC action.
Carter today sharply criticized the OPEC price increase, as well as what he called an "excessive amount of timidity," demonstrated by oil-importing countries in their dealings with the cartel.
"I don't see how the rest of the world can sit back in a quiescent state and accept unrestrained and unwarranted increase in OPEC's oil prices," he said. "There is no doubt all seven of our nations [at the Tokyo summit] agree very strongly with this deep concern. We also agree that the 60 percent increase in six months [in the OPEC price] is unnecessarily high and completely unwarranted."
Although Carter's comments were unprecedentedly critical of OPEC's pricing policies, he declined to say what the United States can do.
"I will let the press speculate on what can be done," he said.
"The first thing I think," the president continued, "is to let all the consuming nations on earth, both advanced industrialized nations and those that are semi-developed or very poor and poverty-stricken, realize the serious threat that has already been mounted to the world economy and what more serious threats can be mounted in the future unless there is some public, concerted statement of concern toward the OPEC nations.
"I think we all recognize that so far we have been timid. I think the statement in Tokyo collectively might have some special significance in the future. We will have to wait and see."
Carter stressed that "the devastating blow" of sharp oil price increases is most acutely felt in the developing nations.Their extra cost for oil is estimated to be at least $8 billion. Since they already have substantial balance-of-payment deficits, this new burden will force them to borrow more in world financial markets. In some banking circles, it is believed that the strain could bring on a crisis for some countries and for some leaders. CAPTION: Picture, Aboard Air Force One en route from Seoul, Carter says higher oil-import price could cost 800,000 jobs, AP