Inflation Rate Seems ‘Eerily Calm’ Fed Finds Prices Restrained Despite Economic Strength

Despite a decline in export sales, the economy in all regions of the United States remains strong - so much so that inflation seems “eerily calm,” the Federal Reserve said Wednesday.

“Industrial activity is on the rise in most parts of the country, with orders and production up. Most districts, though, are experiencing a decline in exports to Asia,” the central bank said in its “beige book” survey of regional economic conditions.

American consumers continue to spend strongly on everything except cars, said the report, based on information collected through March 9.

Federal Reserve Chairman Alan Greenspan and his colleagues have been counting on the impact of the Asian financial crisis to dampen growth and ease labor shortages in the United States.

So far though, that doesn’t seem to be happening, the beige book said.

“The demand for labor remains strong with nearly all districts reporting shortages of workers at the entry level and in certain skilled categories,” it said. “Widespread labor market tightness appears to have increased the degree of wage pressures.”

Despite that, “pressures on product prices remain eerily calm,” it said. “Domestic competition, productivity gains and the Asian situation help to constrain production costs.”