According to the separate household survey measure, employment posted a gain of 179,000 in October. The unemployment rate slipped to 4.7 percent, its lowest level in 24 years. In addition to the employment data, BLS also produces a variety of statistics on prices. For most of 1997 we have reviewed these data and found no evidence of a real pick-up in inflation. As I have noted many times before, economic and employment growth do not create inflation.
Inflation is a result of excessively expansionary monetary policies.
Gradual disinflation and stable prices are totally different from deflation and falling prices. Fortunately, a careful and balanced examination of the evidence does not show real evidence of deflation. There is no evidence of a sustained general decline in prices. In addition, according to one point of view, it would be difficult to view the recent increases in average hourly earnings as consistent with deflation. With respect to monetary policy, it is clear that a goal of price stability precludes either inflation or deflation.