Charles L. Schultze, President Carter's chief economist, today all but declared that the recession is over, telling members of the American Economic Association here that the slump may end sooner and be milder than expected.
Schultze, chairman of the president's Council of Economic Advisers, told association members at their annual meeting that recent statistics suggest that the latest administration forecast, made in July and predicting that the recession would hit bottom in the fourth quarter, "may be too pessimistic."
"It is still too early to change the the forecast," Schultze said, "but the data are coming in the direction of a somewhat quicker end and a somewhat milder recession."
Schultze cited recent statistics on employment gains, lower unemployment rates and new orders being received by manufacturers as evidence that an end to the decline may be at hand.
Schultze noted that August was the fourth month in a row that the nation's unemployment rate has been in the 7.8 to 7.6 percent range. In the July forecast, the administration predicted that unemployment would average 8.5 percent in the fourth quarter and would peak somewhere between 8.5 and 9 percent early in 1981.
These brighter economic signs Schultze said, "confirm the wisdom" of President Carter's decision to propose a "relatively cautious" program of antirecession spending and tax cuts, most of which would not be enacted until next year.
The economists came to hear Schultze defend Carter's economic record, and representatives of two other presidential candidates explain why those men would do a better job.
Schultze's predecessor in the Ford administration, Alan Greenspan, now adviser to Republican presidential nominee Ronald Reagan, drew a laugh when he said that "Charles sounded like I sounded in the 1976 campaign."
He said that campaign statements by all three candidates -- Carter, Reagan and independent John B. Anderson for a cautious fiscal policy and incentives for investment to combat inflation, while rejecting wage and price controls, represent "a remarkable convergence" of the appropriate economic policy to be followed in the 1980s.
He did acknowledge, however, that there are "differences in program detail."
Anderson's representative, Hendrik Houthakker, a Harvard economist who was a member of the CEA in the Nixon administration, took issue with Greenspan's emphasis on the similarity of the candidates' economic positions.
Houthakker attacked Carter for following what he called "unduly stimulative fiscal policies for the last four years" that he said have helped create some jobs but at the cost of much higher inflation. Anderson, he said, "does not favor a fiscal policy that will stimulate, come hell or high water."
Reagan, Houthakker said, claims to favor lower taxes, much higher defense spending and a balanced budget. The audience burst into applause -- the only time that happened during the two-hour session -- when Houthakker said he "would like to see any econometric model that will provide a reconciliation of that program."
Only moments before, Greenspan promised that Reagan would provide details of how that could be done "sometime in the next couple of weeks."
Earlier this week, administration officials estimated what Reagan's tax-cut proposals would mean in terms of lost revenue, and what his defense plans would cost. Even with rapid economic growth, balancing the budget would require massive cuts in other federal spending programs, the Carter officials maintained.
Greenspan took issue today with those estimates, saying that the revenue loss from Reagan's tax proposals would be closer to $1.92 billion in 1985 than the $285 billion estimated by the Carter officials. Part of the difference lies in Reagan's support for a Senate Finance Committee proposal for changing business depreciation allowances that would lose less revenue than the so-called 10-5-3 proposal Reagan earlier said he favored.
In a last-minute action, David Henderson, an economist at Santa Clara University, was added to the panel to speak on behalf of Ed Clark, the Libertarian Party's presidential candidate. Clark's favors virtually no role for the federal government in managing the economy including no regulation of business, no tariffs and "drastic" tax cuts, Henderson said.