Reductionin Unemployment Remote, Eckstein Says

Otto Eckstein, professor of Economics, predicted yesterday that there will be no substantial reduction of unemployment until 1973.

Eckstein, who served as a member of former President Lyndon Johnson's Council of Economic Advisors, said that the Nixon Administration could potentially reduce unemployment within the next two to two and one-half years, but predicted that the administration would not take the necessary steps.

"The administration would have to run a full employment deficit to substantially reduce unemployment," Eckstein said yesterday. "They could do this either by raising the level of spending or by cutting taxes. But I don't think they'll do this," he said.

Eckstein's analysis, based on a series of simulation studies which he has conducted, claims that the national economy faces several years of slow growth, too small to achieve full employment.

"There are three reasons for the slow growth and the continuation of high unemployment," he said. "There's the backlog from the recent inflation, there's the cautiousness of the national economic policy in limiting the money supply and not utilizing a full employment deficit, and there's the fact that after ten years of steady growth, businessmen have very large capital stocks, and won't be increasing them greatly."

Eckstein added that the question for national policy was whether to aim for full employment-around four percent-by 1973, or to try merely to keep unemployment around five per cent in the next two and one-half years.

"I think it's safe to say that they will not restore full employment within the next few years," Eckstein said.