Greenspan Says Pricing Power Returning for Some Companies
April 20 (Bloomberg) -- Federal Reserve Chairman Alan Greenspan said the threat of deflation is ``no longer an issue'' for the U.S. and companies appear to have a greater ability to raise prices.
``It is fairly apparent that pricing power is gradually being restored,'' Greenspan said in response to a question on the economy from Senator Richard Shelby, an Alabama Republican, at a Senate Banking Committee hearing on the banking industry. ``Threats of inflation that were a significant concern last year by all indications are no longer an issue before us. Clearly it is a change that has occurred in the last number of weeks.''
. . .
While commodity prices are rising, labor costs, which account for more than two-thirds of the final cost of goods and services, are still declining, he said. Non-farm unit labor costs fell 0.4 percent in the fourth quarter after a 5.6 percent decline in the prior three months, Labor Department data show.
The yield on the Treasury's 4 percent note maturing in February 2014 rose to the highest since October after Greenspan's comments. The security fell a half point, pushing up the yield 6 basis points to 4.45 percent, at 3:35 p.m. New York time.
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