Not hostages, not Afghanistan, not draft registration but inflation seems to many observes here the ultimate issue in the 1980 election. The economic issue is waiting there in the wings, ready to roar out, many feel, if and when the stage is cleared.
Nobody can mistake the advance signals:
* Most American families failed to improve their standard of living in 1979.
* Inflation continues: producer prices jumped 1.8 percent in January, which is a seasonally adjusted annual rise of 19.2 percent, the biggest monthly increase since November 1974.
* The Federal Reserve System promptly raised its discount rate by a full percentage point to an all-time record of 13 percent in the effort to curb inflation by restricting credit.
* Some economists for almost the first time began serious debate on wage-price controls, weighing their acknowledged disadvantages against the continuing problem.
* Wall Street recognizes new trends, and after rising above the 900 mark to a 17-month high last week on the Dow-Jones industrial average, slumped sharply to 884.8 in two days of heavy selling.
* Protectionism found friends in Congress with a drive to limit imports of small foreign cars added to restrictions already imposed on foreign shoes and textiles.
* Amid these arcane technical developments, American housewives complained to husbands that the price of veal cutlets was $5.69 a pound. And experts predicted gasoline is headed to $1.50 a gallon by year's end.
There was good news amid the bad. Productivity was up: Federal figures showed last month's output making the largest jump in four months -- 0.3 percent , indicating that the peek-a-boo recession hasn't appeared yet. Washington's confusion includes those who expect and want a mild recession (in the hope that it will curb inflation) and those who fear that a recession, once started, will be hard to control.
Only excitement over the Iranian and Afghanistan crises, it is believed, diverts attention from what's going on in the economy. In preliminary debates, like that in the New Hampshire primary, there is criticism of the Carter administration's handling of the economy, but conflicting views of remedies. If and when the US hostages are released, debate will almost certainly swing around to these domestic matters.
Inflation normally brings social unrest. The strike by firemen in Chicago may signal a wave of pressure tactics to keep wages up to rising prices. Also, for the third consecutive year farmer groups are visiting Washington demanding higher returns.
The rise in producer prices to a chilling annual rate of 19.2 percent, as reported by the US Labor Department last week, is ultimately reflected in higher retail prices, though at lesser rates. Retail inflation stands at 13.3 percent. Union wages are increasingly indexed to cost of living, but for most workers, pay lags behind purchasing power.
What causes inflation? Last year higher imported oil prices put a "tax" of $ 60 billion on consumers. This has not yet worked its way through industrial prices, and may reach $76 billion, equivalent to a 2 percent tax on gross national product.
Inflation is attributed to other causes: lower production, government regulations, money supply, welfare programs, inadequate investment, and budget deficits.
President Nixon imposed price controls on Aug. 15, 1971: they worked briefly but prices bounced back when controls were removed. They involve gigantic bureaucratic supervision. Barry Bosworth of the Brookings Institution, the former White Hosue guidelines administrator, now favors controls; Brookings president Bruce Maclaury says he backs them if included in a larger package. Most economists disagree. Sen. Edward M. Kennedy unexpectedly endorsed controls declaring, "We can cut inflation by half within a year without inducing serious unemployment." The public favors controls according to opinion polls.
The economic storm seems rising and may well dominate 1980.