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US may be seeing signs of inflation: Greenspan

Former Federal Reserve Chairman Alan Greenspan said a rising..

Former Federal Reserve Chairman Alan Greenspan said a rising US debt burden could derail the current expansion and warned the tight labour market could lift inflation.

“Im beginning to see the first signs of it,” Greenspan said about inflation during an interview on “The David Rubenstein Show: Peer-to-Peer Conversations” on Bloomberg Television. “Were seeing it basically in the tightening of the labor markets first, which, as you know, have gotten very tight now. Were beginning finally to see average wages rise, and clearly theres no productivity behind it.”

Inflation measured by the the Feds preferred gauge of price pressures known as the personal consumption expenditure index was 2 per cent — at the central banks target — in the 12 months through September after running mostly below that threshold since 2012. A separate gauge, the consumer-price index, rose 2.5 per cent in October from the year before, according to a Labor Department report Wednesday.

Unemployment has falling to 3.7 per cent, the lowest level since 1969, and average hourly earnings are creeping up.

Greenspan said a lack of productivity growth meant “youre getting into a system now which has no outcome thats in equilibrium other than inflation and no productivity growth.”

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