Looking for a speed limit

Article Abstract:

The relationship between inflation and unemployment has implications for stock prices, since low unemployment means that economic activity is high, so profits are high, and low inflation also helps stock prices. United Kingdom unemployment has fallen in 1999 to levels not seen since 1980, and unemployment has stayed at a low level. Young people joining the labor market and the long-term unemployed returning have accounted for much of the drop in unemployment, and these workers are seen as unlikely to have much of an impact on wage rates. Unemployment may fall further without leading to a rise in inflation, though there is concern that inflation expectations have not dropped.

Prices, Unemployment

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Inflation not dead, just sleeping

Article Abstract:

Roger Bootle argues that UK inflation is likely to return to zero, as companies and labor unions lose power to push up prices. Technology and cheap labor from emerging economies mean individual companies cannot buck the market. There are doubts as to his analysis, since productivity improvements are not large in the 1990s, and imports from Asia are a small proportion of total UK imports. Producer power has not been reduced, as Bootle argues, rather employers have gained power and labor has lost power.

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