Eckstein Sees Worse Inflation, Says Controls Should Continue

Otto Eckstein, professor of Economics, predicted in testimony before a Senate banking subcommittee Wednesday that inflation this year will be the worst the country has experienced since 1947.

Eckstein, who was a member of the Council of Economic Advisers during the Johnson Administration, recommended that wage-price controls be extended under a new program after the current Economic Stabilization Act expires April 30.

Such a program should not include another wage-price freeze, he said, but must provide careful monitoring of wage and price changes to prevent shortages that contribute to instability.

However, Eckstein added that even with controls the consumer price index will probably rise 8.9 per cent this year because of the energy shortage, rising wages, higher food prices, and industrial price increases.

James S. Duesenberry, Maier Professor of Money and Banking, said yesterday that most economists were expecting "at least another 7 per cent" increase in the consumer price index, but he added that it is difficult to predict.

Duesenberry said the wage-price program that Eckstein proposed would probably replace current control requirements with less-stringent review procedures. The new program would "cut off the extremes of wage settlements and price increases," while permitting moderate changes, he said.

John V. Lintner Jr., Gund Professor of Economics and Business Administration, said that in addition to increasing retail 'prices, current wholesale industrial commodity price hikes would help lead to further increases in wholesale prices.