Here's a happy thought for 1995. Inflation will barely go up at all, and the widespread bond market worries over higher prices will prove to be overblown.

As we check out of 1994, we find that, once again, inflation remained tame despite a year of gangbuster economic growth of approximately 4%.

According to the Bureau of Labor Statistics, the consumer price index for the first 11 months of the year rose at an annualized rate of 2.7%. That compares with increases of 2.7% in 1993, 2.9% in 1992, and 3.1% in 1991. With the exception of 1990, when the U.S. clocked annual price increases of 6.1%, the inflation record of the 1990s so far is a good one.

None of this has impressed Wall Street and the bond market, where expecations of higher inflation in the range of 3% to 4% next year are the currency of the realm. Some analysts believe prices will turn up even more sharply.

This is the tough audience that Fed chairman Alan Greenspan and his colleagues have to play to when they set interest rates, and it explains why there is plenty of talk that rates will have to go higher. Bond prices are pegged to inflation expectations, and bond yields can't go down until investors are convinced inflation is turning down.

But there are reasons to believe that inflation will turn out to be a bugaboo.

Jerry Jasinowski, president of the National Association of Manufacturers, called the threat of inflation "negligible" in a paper he delivered recently at a National Press Club symposium. He argued that the Fed is failing to take into account a raft of changes in the economy that enable it to grow faster without sparking higher prices:

* Industry has more capacity than official measures because it can outsource and make use of global suppliers, as well as use technology to produce more efficiently.

* Manufacturing investment in new plant and equipment is expanding capacity more readily than official statistics can capture.

* Although material costs are rising, they make up only 10% of the final product costs, and most companies are unable to pass them through entirely to customers because of tough competition.

* Labor costs, which make up 70% of the costs of goods and services, have remained tame.

With powerful forces at work boosting productivity growth, Jasinowski argued that the economy is capable of growing faster than the 2.5% pace that Fed officials believe is the speed limit for containing inflation.

In his recent testimony before Congress, Greenspan acknowledged that these arguments "have a significant element of truth." But he went on to say that Fed officials do not believe the U.S. has evolved into a New Age economy that can run faster without stirring up inflation.

Fed officials know that their six increases in rates this year will not bite fully and act to slow growth until 1995.

But no one knows how quickly the economy will cool, and no one knows if the Fed has done enough. The bond market is betting it hasn't.

After the New Year, if consumers keep spending heavily while wage pressures intensify and inflation-sensitive commodity prices keep rising, the conditions will be in place for the Fed to apply more restraint to try to force the economy to bend without breaking.

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