What worries you most: That the immediate future will bring slower than desired growth or higher than desired inflation? If you answered "inflation", you are not alone. Here's what the world's finance ministers and central bankers had to say after putting their heads together this past weekend:
G-20 members noted that the world economy continues to expand at a solid pace, with growth above its long-term average for the fourth consecutive year. The outlook remains positive. Global economic growth is expected to slow slightly from the rapid pace of the past few years... Above average growth in the global economy has seen spare capacity decline which, combined with buoyant energy and mineral prices, has increased the risks to inflation.
Maintaining strong world growth and containing inflation will require ongoing adjustments to monetary and fiscal policies while ensuring appropriate exchange rate flexibility and structural reform.
And then there is this, from Bloomberg:
Accelerating wage growth around the world is making central bankers less willing to cut interest rates than some investors expect. The concern: The increasing labor costs may trigger a renewed rise in inflation even as energy prices abate.
"Wages are creeping up,'' former Federal Reserve Chairman Paul Volcker told the Concord Coalition, a fiscal-policy watchdog group, in New York Nov. 14. When it comes to inflation, Volcker said, "we're a little bit on the edge.''
In the U.S., unit labor costs rose last quarter at the fastest pace in almost 25 years. Germany's largest steelmakers, ThyssenKrupp AG and Salzgitter AG, are giving workers their biggest pay raise in more than 10 years. New Zealand wages increased at a record pace in the third quarter.
There's more to come. The International Monetary Fund expects unit labor costs at manufacturers in advanced economies to chalk up their biggest increase in six years in 2007...
ECB President Jean-Claude Trichet told reporters today central banks shouldn't be "complacent'' about inflation risks...
"The main risk to the inflation outlook in the medium term surrounds the behavior of pay growth,'' Bank of England Governor Mervyn King told reporters in London Nov. 15.
The article does note that there is controversy about how well labor costs predict inflation, but the general message is pretty clear: If you ask the world's policymakers what is making them itchy at the moment, the answer is the prospect of too high inflation, not too little economic growth.