Business: An Unemployment Wallop

As the recession hits, the long gray jobless lines begin to form

From the moment economists first began warning six months ago that the Administration's inflation-fighting tactic of pushing up interest rates would bring on a recession, Jimmy Carter has been countering with calm assurances that any downturn would be "mild and brief." All winter long it seemed as if he might be right. Unemployment, a major indication of economic health, hovered steadily at an unsatisfactory but acceptable 6% of the labor force.

By last week it looked as if the President's promises of a tame little downturn for 1980 were wishful thinking. The Labor Department reported that during April the nation's jobless rate ballooned by a startling .8%, pushing unemployment to a full 7%, tossing some 825,000 workers into the street, and swelling the ranks of the nation's unemployed to 7.3 million. It was the largest rise in overall unemployment since January 1975 and the biggest climb in the jobless rate among males since 1949. Their unemployment rate leaped a full 1% during the month, to 5.9% of the labor force. The highest adult unemployment rate of all, 11.4%, was registered by nonwhite females.

The jobless surge shows that the Administration's painful, but unavoidable, policy is at last beginning to take hold. Supporting evidence that the economic downturn could be a lot sharper than previously expected came from the Commerce Department. It reported that its index of leading economic indicators, which predicts future economic movements, plunged 2.6% in March. That was the largest one-month drop since the 1974-75 recession. Anti-Inflation Adviser Alfred Kahn, with his characteristic candor, said last week: "The country now faces the dilemma we have so long feared, the twin ugly evils of accelerating inflation and the long-predicted recession."

Though the figures made gloomy reading, President Carter pressed ahead with his Pollyannaish forecast, telling accounting firm executives that recently lowered interest rates and a hoped-for drop in inflation by this summer mean that the nation has "turned the corner" on the economy. In fact, it looks as if U.S. business has turned the corner and come face-to-face with an unexpected precipice.

Businessmen and economists are now beginning to wonder about how deep the plunge could be. During the nation's last recession, the worst such drop since the 1930s, unemployment rose from 4.8% in November 1973 to 9% in May 1975. Experts are concerned because the U.S. is entering the current recession with a much higher number of unemployed. Also trou bling is the rising so-called full employment level. Until a decade ago, Washington officials considered 4% unemployment to be in effect full employment. Any attempt to push the jobless rate below that would only result in higher inflation. Today many specialists believe that such a rate is much steeper. Says Stanford Economist Robert Hall: "For the foreseeable future, we may have to adjust to a full employment or sustainable unemployment rate of between 6.5% and 7%." That would mean an additional 2 million to 3 million Americans without work.