US Federal Reserve Chairman, Alan Greenspan, warns that the low level of unemployment in the US could accelerate inflation. Drops were noted on the start of the day’s trade in New York
US Federal Reserve Chairman, Alan Greenspan, warned today (Wednesday) that the low level of unemployment in the US could eventually accelerate inflation. Greenspan’s statement was made against a background of long range growth without inflation in the US, and immediately caused a 1% fall in the Dow Jones index, with the start of the day’s trading in New York.
Greenspan noted that the increase in the creation of new jobs slowed down considerably in August and September, yet not sufficiently to bridge the gap between employment demands resulting from expansion of the workforce. Therefore, work market performance in the US this year indicated that the economy was not on a good track, according to Greenspan, in his address in the Congressional Committees.
Greenspan further noted that there were few visible signs of a rise in wages trend, but that demands should be expected. The slowdown in the US economy could prevent inflationary pressures. Economic growth in the US during the first half of the year was at the annual rate of 4%, 1% higher than regarded as desirable by the central bank. US interest rates have not risen since 25th March.