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Article: These cost and price increases are occurring in an environment in which the risks of a spillover into core inflation are increasing.(Washington Report)
- Article from:
- Modern Machine Shop
- Article date:
- December 1, 2005
CopyrightCOPYRIGHT 2005 Gardner Publications, Inc. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan. All inquiries regarding rights should be directed to the Gale Group. (Hide copyright information)
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These cost and price increases are occurring in an environment in which the risks of a spillover into core inflation are increasing. Before the two hurricanes, the output gap was forecasted to be essentially closed by the end of this year. Productivity growth is slowing, and unit labor costs are now rising after several years of decline. Because corporate profits are high, costs pressures may be at least partially absorbed by reduced profit margins. However, the effects of the hurricanes may permanently increase core inflation.
The Federal Reserve will undoubtedly be tracking with acute interest the behavior of the major price indexes and looking ...