Keep watch on two kinds of dollars when tracking economic indicators

Watching the economy properly requires close attention to whether an economic indicator is reported in current, inflated dollars or in constant, deflated dollars.

For instance, gross national product in the United States, measured in current dollars, fell in first-quarter 1982. Is there anything surprising in that? After all, the economy is in a recession.

Yes, but the economy has been in a recession since July 1981, and this is the first quarter since the second quarter of 1980 that current-dollar GNP has fallen. In fact, with the exception of that 1980 quarter, current-dollar GNP had not experienced a quarterly decline since fourth-quarter 1960.

Before the first quarter of this year, current-dollar GNP decreased only once in more than 20 years! Inflation has been so dominant that despite four recessions, current-dollar GNP has fallen in only two of the last 85 quarters.

Because of inflation, the US has experienced a two-track economy. Economic measures expressed in current, inflated dollars have moved in different directions or at vastly different rates of change than economic measures expressed in constant deflated dollars.

But as the rate of inflation has drastically slowed, the two diverging tracks have begun to converge. The slowing of inflation began as far back as December 1979; but in more recent months, the inflation rate has fallen to an unusually low figure.

Current-dollar GNP has decreased in this recession but did not decrease at all in the 1974-75 recession. The decreases in deflated GNP this time (-4.5 percent and -3.9 percent, measured quarterly but figured on an annualized basis) are much less than the 1974-75 decreases of -5.1 percent and -8.2 percent. (The one-quarter decrease in deflated GNP in the 1980 recession was -9.9 percent.)

So the almost unique occurrence of a decline in current-dollar GNP is not an especially negative development.

Of course, not much attention has been paid to current-dollar GNP for many years now. In the typical radio or TV report of GNP, it is rarely even mentioned. In a typical newspaper or magazine article you might see it mentioned in a single sentence.

Personal income, on the other hand, is always popularly reported in terms of current dollars. The March figure, for example, was described by one source as up ''only'' 0.4 percent, ''the fourth consecutive month of sluggish growth through the worst period of the recession.''

The official personal income indicator of the economy is a much less publicized figure known as deflated personal income, less transfer payments (such as social security). The revised February data for this deflated indicator showed the first substantial monthly increase since the initial high in August 1981, as the related measure of prices failed to rise for the first time since the recession began. If the price index was again unchanged in March, the deflated personal income figure will show a second successive monthly increase to a level well above that for December.

In other words, the growth in current-dollar personal income has looked so sluggish because prices failed to increase. Real personal income has stopped declining and has turned upward.

Similarly, you have read much about how the growth of the money supply has been slowing for some time now. The money supply, like personal income, is always popularly reported in terms of current dollars.

But with the rate of inflation having slowed so substantially, the deflated M-2 money supply (an offical leading indicator of the economy) reached a low last September and has been growing rapidly ever since.

Such a phenomenon may be the best of all possible worlds - an increase in the deflated money supply stimulating economic activity without fueling inflation.

As the economy girds itself to come out of the recession, it is essential to keep one's eyes on appropriate economic measures. Compare real GNP with real personal income with real money supply; inflated GNP with inflated personal income with inflated money supply. Travel along one track at a time.