Worsening Ills, Re-Thought Ideas

Consumers, borrowers, investors --no one could take encouragement from last week's economic news. Retail prices shot up hi July at a compound annual rate of 10%, a bit less than the June pace of 12.6%, but still frightening. Moreover, the apparent improvement was illusory: it resulted entirely from a drop in food that shortly will be reversed. The Agriculture Department said that retail food prices will jump anywhere from 3% to 7% by year's end.

Short-term interest rates surged still more, and some California savings and loans raised rates on mortgage loans as high as 10%. The stock market recorded one new four-year low after another; the Dow Jones industrial average plummeted 45 points to close at 687, down 99 in the first 15 days of the Ford presidency. Pan American World Airways did investors' nerves no good by asking the Civil Aeronautics Board for an immediate subsidy of $10 million a month, retroactive to April, and warning that otherwise it would be "faced with a threat to its very survival."

The new Administration is unlikely to announce any detailed plans to cope with these ills, at least until the "economic summit" of top Government officials, corporate executives, labor leaders, bankers and economists, which will convene around Sept. 25. Meanwhile, the President and his aides are taking a new look at all sorts of policy proposals. Two old ideas resurfaced to make headlines last week: raise gasoline taxes 10-c- per gal., or $ 10 billion a year, to reduce energy consumption and help swing the federal budget toward a surplus; gradually lift price controls from domestic crude oil to further discourage energy use. Neither proposal is likely to be embraced by the President at a time when slowing price rises is his chief domestic concern, but the two do illustrate how wide--and controversial--is the range of ideas that the Administration is pondering.

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