We watched Mr. Greenspan testify before congress this week. The speech and the questions were more of what we have heard many times before. As usual they left everyone to define the tone of the chairmen's statements, this time perhaps a bit hawkish on rates. Let us look at the forces at work in the U. S. economy today. Economic growth continues to be brisk, so brisk that it has surprised most economists including the chairmen.
Unemployment remains at very low levels but there has been little if any wage inflation.
Commodity inflation is almost non existent with the possible of some inflation in energy prices. The answer to that question is imbalances in the U. S. economy. First is asset inflation. Also real-estate values are at a peak. Greenspan knows that this will end eventually.