While a housing boom is under way, it could be dissipated, along with other favorable economic news, in a furry of double-digit inflation figures by early next year, two economists noted in a recent report.
Kenneth J. Thygerson and Dennis J. Jacobe reported that the "overly stimulative" monetary policies of the last six months-plus a "sharp production upturn" following recent plant closings and layoffs "will create booming economic conditions which will become apparent as early as the second quarter" of 1977.
Thygerson is chief economist and Jacobe an economist for the United States League of Savings Associations, based here.
The housing industry will share in the 1977 boom, Thygerson and Jacobe said. They predicted that single family housing starts this year would surpass the record 1.3 million units in 1972, with "new strength" in the mult-family sector pushing total starts to as much as 1.9 million.
A "plentiful" supply of mortgage money at the nation's savings and loan associations will aid the housing boom, the economists said.
But Thygerson and Jacobe also had words of caution.
The "long term substance" of the country's energy supply problems will be apparent again next winter, with the timing of the next energy crisis dependent upon weather during the remainder of this season, the amount of energy used this summer for cooling purposes and weather conditions next winter.
"The worst aspect of the energy crunch is its inflation potential," Thygerson and Jacobs insisted.
"Stimulative monetary policies, big federal budget deficits and an economic boom all create an increasing demand for goods," the economists noted. "But when the inevitable energy crunch restricts the supply of goods and services, then we have a rising probability of a return to double-digit inflation."