(June 4) – “U.S. Federal Reserve Board Chairman Alan Greenspan said Monday that inflation is ‘not a significant problem’ in the U.S. economy but stressed that the Fed is keeping a close eye for signs of potential inflationary pressures,” the Wall Street Journal is reportiong today..

“‘nflation is not a significant problem at this moment,’ Mr. Greenspan said, adding that ‘there is also very little in the way of short-term inflationary expectations. But we are obviously watching.’
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“The inability of businesses to pass along higher prices to consumers as well as the strong U.S. dollar are keeping inflation in check, Mr. Greenspan told participants at an International Monetary Conference in Singapore. He delivered his comments from Washington via teleconference.

“A recent fall in labor productivity was widely expected following the unusually high productivity levels experienced recently, he said. ‘We’ve come off a very high level. There was a real surge in 1999 and early 2000 … that were beyond long-term growth trends.'”

“‘All evidence still support a fairly solid level of productivity,” he said, adding that the level ‘will be markedly above [the average annual] 1.5% rate the U.S. experienced during the 20 years preceding 1995.'””

While rising labor costs and slowing productivity have not triggered any inflation, they have cut into corporate profits, Mr. Greenspan said. But he added he was encouraged by signs that U.S. gasoline prices could be coming down in the months ahead.