ALBERT L. KRAUS - MARKETS & MONEY DISCOMFORT INDEX MAY NEED CHANGE

ALBERT L. KRAUS - MARKETS & MONEY DISCOMFORT INDEX MAY NEED CHANGE

Weather forecasters talk of a discomfort index, obtained by adding the temperature level to the humidity rate. When this rises, people become progressively distressed.

Similarly, politicians talk about an economic discomfort index, obtained by adding the unemployment rate to the inflation rate. When this rises, voters become increasingly unhappy with the party in power.For some time, the economic discomfort index has been holding steady or moving down, a situation that would seem to bode well for the Republicans and their likely presidential nominee, Vice President George Bush.

But there are ominous forebodings, including last week's ABC/Washington Post poll that showed Massachusetts Gov. Michael Dukakis, the leading contender for the Democratic nomination, neck and neck with the vice president in overall voter approval.

Has the economic discomfort index fallen? Or has some new factor entered the equation, requiring its significant revision?

In 1980, when Ronald Reagan was bidding for the presidency, who could have guessed that eight years later:

* The steep rise in oil prices, with accompanying lines at gasoline stations, would be a thing of the past, and that energy prices actually would decline for a time, ending only a shade higher than eight years earlier.

* Other consumer prices, which were climbing at double-digit rates in 1979 and 1980, would be brought under control and be thought of as a matter of little concern.

* The unemployment rate, then 7 percent, would have fallen steadily to 5.7 percent, the lowest level in recent years, and that more than 16 million persons would be added to the job rolls.

These speak well for the current state of the economic discomfort index and GOP chances at the polls. At the same time, however, who could have guessed eight years ago that:

* The federal deficit, then $61 billion, or 2 percent of GNP, would have reached $204 billion by 1986, more than doubling as a percentage of GNP, to almost 5 percent.

* The merchandise trade deficit, then $25 billion, or less than 1 percent of GNP, would climb eight years later to $144 billion, or more than 3 percent of GNP.

* The United States would swing from a net creditor to a net debtor position, with foreigners holding more than $400 billion in U.S. assets or debts.

This series of facts, less happy than the first, would seem to have little relationship to the economic discomfort index. The two series, however, are not unrelated.

The budget deficit helped create the growing trade deficit by adding to the pressure on domestic savings, not overabundant in any event, and thus pushing up interest rates.

Higher interest rates encouraged capital inflows from abroad, boosting the level of the dollar in world currency markets.

An overvalued dollar sucked in imports and helped price U.S. exports out of world markets.

The resulting trade deficit contributed to the defeat of inflation by siphoning demand from U.S. factories and labor to low-cost operations overseas.

Now, the process is being reversed. The dollar has been brought down in world currency markets. And U.S. producers, forced to cut costs and tighten operations during the lean years, have begun to regain market share. Why should voters be unhappy?

The answer is that they may not be. The presidential election is a drama that still has to play out.

But if there is unhappiness, it stems from the fact that the revival of U.S. industry has not been without cost.

Increasingly, Japanese, Canadians and Europeans own U.S. hotels, office buildings and shopping centers, control U.S. corporations and exert influence in U.S. banking and securities markets.

There is a vague feeling on the part of at least some voters that the country is in danger of becoming an economic vassalage of foreign owners and creditors. It's a feeling reflected in the polls that report voter uneasiness over what is seen as a decline in U.S. leadership and world eminence. It's a feeling reflected in the congressional hearings now being held on foreign economic influence in the United States.

Does the economic discomfort index need to be revised to include this new factor? Possibly. The remaining primaries and the presidential campaign should hold the answer.