Wages and inflation worry economists

WASHINGTON, June 4 (UPI) -- Inflation and wages rising in tandem, each pushing the other upward, could push the U.S. economy into a slump unseen since the 1970s, economists said.

Inflation, the focus of Federal Reserve Chairman Ben Bernanke's monetary policy speech Tuesday, has become a standard expectation, The Washington Post reported Wednesday.

Consumers expect a 7.7 percent rise in prices this year while investors expect a 3.4 percent rise, the Post reported.

"We're at the edge of the cliff right now," Scott Anderson, an economist at Wells Fargo told the Post.

The economy, he said, is in the "embryonic stage" of a repeat of the 1970s.

But, some feel wages are not in position to push inflation. Distressed manufacturers are not able to bump wages substantially and unions have lost clout, they say.

"There is no evidence that wages have started to spiral up," Janet L. Yellen, president of the Federal Reserve Bank of San Francisco, said recently.