Translating Greenspanese

It is "time for Alan Greenspan to say what he means," wrote one respected economic columnist this week. That seems to ignore the fact that Mr. Greenspan always says what he means - all four sides of it.

In essence what the world's most powerful central banker told Congress in his most recent report is this:

Two heavy kids are sitting on opposite ends of a seesaw called America's living standard. One kid is the temporarily slowed Asian economies. They are holding down US inflation by offering consumers lower-priced goods, and by slowing the torrid pace of US business growth by buying fewer export goods and services.

The pudgy kid at the other end of the seesaw is America's long growth streak, which has created so many jobs its hard to find enough workers to fill them. This drives up wages. More spendable income and an ever-rising stock market create new buying power for houses, goods, vacations, etc., to fuel future inflation.

The two kids are pretty well balanced. But Greenspan warns that the second one may be gaining weight. In which case he'd have to put his thumb (higher interest rates) on the scale to ward off inflation.

But that's a warning about the future, not the present. America's 5.4% growth spurt in the first quarter of 1998 should level off to just over 3% for the year, and will drop to between 2% and 2.5% next year, Greenspan said. That could keep the kids in balance a while longer without the Fed chairman's thumb. Especially if labor productivity continues to make gains.

The long golden economy may be teetering a bit. But neither side of the seesaw has plunged yet.