Masonry Magazine October 1987 Page. 39
WASHINGTON WIRE
continued from page 25
Wage increases might not lag too far behind. Once wage costs start rising, though, the seeds of an old-fashioned wage-price spiral may be sown-reversing hard-won gains of recent years.
FEDERAL RESERVE CREDIT-CONTROLLERS SEE INFLATION as the main concern. Officials are apprehensive about the new job, production and orders figures. They don't want to risk letting inflation get rolling as in the late 1970's. They know it is critical that they "stay ahead of the curve"-that they act forehandedly to head off a wage-price spiral before it can really get going.
BUT NO ONE CAN PREDICT WITH CERTAINTY what the trigger point will be. If they wait until they actually see it, though, action could come too late. If they delay too long, there's a risk that they will be playing catch-up: it could take bigger doses of restraint to deal with the inflation later on.
Neither the world's economy nor its financial system are strong enough to tolerate the sharply higher interest rates that could follow from a massive tightening of monetary policy by the Fed.
OFFICIALS WONDER: WOULDN'T IT BE BETTER TO MOVE SOONER than later to do a little tightening now and alleviate the need for more in the future? Wouldn't it be better to throttle back business a bit to head off inflation? A slower economy would deflate psychology before it can be set in concrete. And, as inflation eases, there'd be less danger of labor markets tightening. Potential trouble from capacity constraints would be reduced substantially. What's more, the Fed would like to get any tightening completed before 1988; officials don't want the Fed to become embroiled in election-year politics. Thus, a move could come this fall with a decision to hike the discount rate.
It wouldn't take very much higher interest rates to do the job. Some experts feel only a percentage point more would be needed on rates to get a slowing in growth to, say, 2%%, the rate analysts see as the economy's long-term potential.
EMPLOYERS SHOULD BE WARY OF FRESH NEW ENFORCEMENT ACTIVITY by OSHA-the government's six-year old Occupational Safety and Health Administration. Recent OSHA actions include slapping big fines on a meat-packing firm for not reporting 1,000 job-related injuries over a two-year period. A major auto firm was also hit with steep fines. Some are complaining that the agency is coming down hard on them for fairly minor health and safety infractions.
OSHA says the intensified enforcement is the result of lax policies on the part of business in policing itself. Many companies apparently decided they had little to worry about from the undermanned agency and relaxed safety procedures. Now, they are advised to focus more effort on compliance.
LEGISLATION IS MOVING IN CONGRESS TO BEEF UP antitrust enforcement. The government would get more information and more time for analyzing large mergers before deciding on the impact of such transactions. One bill continued on page 42
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MASONRY-SEPTEMBER/OCTOBER, 1987 39