Inflation talk is back. More and more economists are worrying about price increases. The bond markets are anxious, too. If inflation rises, interest rates will soon move higher and the price of outstanding bonds will slide.
Roger E. Brinner, chief economist at Data Resources Inc., says the ``fear and loathing'' in the bond markets has escalated since spring.
So far economists aren't talking of a return to the double-digit inflation that troubled the nation in 1978 and '79, damaging Jimmy Carter's prospects for reelection. Economists, after seeing so many colleagues get burned in the last two or three years with high inflation forecasts that did not pan out, are cautious in this area.
The consensus among economists shows consumer prices going up 1.9 percent this year and 3.2 percent next year. Some economists, however, are especially gloomy on inflation.
For example, Joseph J. McAlinden of Dillon Read Equity Research predicts inflation next year of 5 percent and ``even higher'' in 1988. Another Wall Street economist, Sam Nakagama, sees the consumer price index climbing 4.9 percent over the next year. Several other economists, among them H.Erich Heinemann of Ladenburg, Thalmann & Co., are talking of inflation about 4 percent next year.
Here is some of their reasoning:
Two years of rapid growth in the nation's basic money supply, the fuel for the economy, is beginning to have an effect on prices.
``The current monetary expansion in the United States has been more rapid than that which caused the great inflationary surge of the '60s and '70s,'' notes Mr. McAlinden.
So far, a sharp drop in the velocity of money - how fast it turns over among individuals and businesses - has meant that the additional money has not produced rapid economic growth or more inflation. McAlinden maintains that the collapse in velocity will not last much longer. People will hold for a shorter time the money they have in currency and checkable accounts.
This narrow measure of money, known as M-1, has been rising at an extremely rapid 17.9 percent annual rate in the past six months. But some economists suspect that institutional changes in the money markets have made that measure nearly meaningless.
In recent weeks, broader measures of money that include some elements of savings (versus money supposedly used only for transactions) also have been growing faster. The measure called M-2 is growing above the generous target range established by the Federal Reserve. M-3 is at the top of its target range.
As a result, at the Sept. 23 meeting of the Fed's policymaking Federal Open Market Committee, the members spoke of the ``potential need for some slight firming of reserve conditions'' - tighter credit. Henry C. Wallich, the senior member of the Fed board, worries publicly about this ``potential for inflation.''
Another inflationary factor is the decline in the value of the US dollar, raising the price of imports. Wholesale prices of imported products other than oil rose 10.2 percent in the year ended September. It could be that oil prices will also rise. Other commodity price averages have already started to climb.
So far there are no apparent inflationary capacity strains on the nation's industral structure. Industry operated at 79 percent of capacity in October, down 0.2 percent from the month before.
But those economists expecting more inflation also tend to predict more rapid economic growth in the year ahead. It could be, as McAlinden says, that we are seeing ``disinflation's death knell.''