Paul W. McCracken is not a flashy economist. Indeed, when he was chairman of the Council of Economic Advisers during President Nixon's first term, many in the press regarded him as a boring speaker. But this moderate conservative is also respected as being relatively nonpartisan and level-headed, a solid thinker not carried away by the economic fads of the moment.
Dr. McCracken appears today (March 9) before the House Budget Committee and what this economic senior statesman said in a telephone interview may be something of a preview of his testimony:
* On the chances of a depression.
''It is probably higher than any time in the last 40 years, but still quite low.'' In fact, Dr. McCracken regards those depression chances as so low that the public need not factor that possibility into its thinking.
Nonetheless, he finds two trends disturbing:
One is the financial troubles of the thrift industry. Savings-and-loan associations, he notes, lost on average one-fith of their net worth last year, which means half of them lost even more than that.
''There is an anxiety in the banking profession, maybe because banking is less comfortable today.'' Because of their concerns, bankers are trying to match the maturities of their liabilities and their assets. If a deposit is for two years, they will try to lend that money for two years.
The second problem is disorder in the bond market. Bond buyers will purchase only relatively short-term obligations, making it more difficult for corporations to put their balance sheets in better order.
To deal with the first problem, Dr. McCracken suggests the government should assure depositors in S&Ls and mutual savings banks that they need have no concern about the safety of their money.
Some people worry about the nation talking itself into a depression. Dr. McCracken rules that out, saying, ''If the basics (monetary and fiscal policy) are reasonably strong, we are okay.''
* On inflation.
Dr. McCracken figures the increase in the consumer price index of about 5 percent at an annual rate for the last four months is ''an unduly low figure.'' But he also suspects it could be down to a 5 or 6 percent level on a solid basis by the end of this year.
With a recovery in the economy, he explains, there could be strong gains in productivity. Business has cut the fat out of its operations ''more than usual'' in this recession. The slowdown is also restraining wage hikes.
* On the recession.
''We are not far from the economy going as low as it will go.''
Dr. McCracken expects the economy to recover at a moderate pace -- say at a 4 percent annual real rate -- rather than the 6 to 8 percent rate that is more average for the early stage of a recovery. Unemployment, however, could continue to grow for some months after the economy turns around.
The recession, although painful, has brought about some ''needed'' fundamental adjustments. Some trade union wages, such as those in the automobile , steel, and trucking industries, had risen far above the average in manufacturing. Now these wages are in retreat.
''There is no way you can beat inflation, if every union leader has to jump over the other one on wage-rate hikes,'' says Dr. McCracken.
* On monetary policy.
Dr. McCracken reckons the Federal Reserve System will stick to its policy of monetary restraint. ''They don't have much alternative,'' he said. ''If they started to ease up, market interest rates would surge up.''
The fundamental point of monetarism - that a moderation in the rate of money creation will dampen inflation - is proving correct, says the University of Michigan economist.
* On the budget.
Dr. McCracken wants the White House and Congress to compromise on a budget that will provide some assurance that deficits will be declining in 1983 and 1984. A $100 billion deficit is manageable in fiscal 1982 because of sluggish credit demands, he said. But the deficits could grow to the $140-$150 billion range by fiscal 1983-4 ''if we just rock along. . . .''
Though approving of President Reagan's basic economic strategy and concern with national security, Dr. McCracken sees the possibility of some trims in the proposed defense budget. He also suggests a modest increase in the federal gasoline tax, a need for tackling the ''political hot potato'' of over-indexing of social security payments, and possibly a delay in the planned 1983 income-tax cut.
* On supply-side economics.
Some supply-siders have argued that sharp tax cuts would so stimulate the economy that goverment revenues would increase. Says Dr. McCracken: ''The miracle didn't occur. There was never any reason for it to do so.''
Industrial-nation inflation rates* (average annual rate) Country 1979 1980 1981 United States 11.3% 13.5% 10.4% Japan 3.6 8.0 4.9 West Germany 4.1 5.5 5.9 France 10.8 13.6 13.1 United Kingdom 13.4 18.0 11.9 Italy 1.8 21.2 19.5 Canada 9.1 10.1 12.5 Average of above countries 9.3 12.2 10.0 Austria 3.7 6.4 6.8 Belgium 4.5 6.6 7.6 Denmark 9.6 12.3 11.7 Finland 7.5 11.6 12.0 Greece 19.0 21.9 21.5 Iceland 44.1 57.5 51.6 Ireland 13.3 18.2 20.4 Luxembourg 4 .5 6.3 8.1 Netherlands 4.2 6.5 6.7 Norway 4.8 10.9 13.6 Portugal 23.9 16.6 -- Spain 15.7 15.5 14.6 Sweden 7.2 13.7 12.1 Switzerland 3.6 4.0 6.5 Turkey 63.5 94.3 -- Australia 9.1 10.2 9.7 New Zealand 13.8 17.1 15.4
* These figures are a reproduction of each country's official consumer price index. Source: Organization for Economic Cooperation and Development